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How the harvest can pay for extension

EPFC provides seed and farming advice to smallholder farmers on a contractual basis (© Self Help Africa)
EPFC provides seed and farming advice to smallholder farmers on a contractual basis
© Self Help Africa

One of the key challenges facing extension services across the developing world is sustainability: who is to pay for the service and will they pay the next year and the year after that? Some commentators argue passionately that, because it's for the public good, agricultural productivity is the responsibility of government, particularly given its key role in reducing hunger and poverty. Others argue for a private sector role in extension, pointing to the success of the 'agro-dealer' network across Africa in recent years in supplying both inputs and advice to smallholder farmers.

A new Zambian initiative that links agricultural extension with market-orientated production suggests another way forward. Eastern Province Farmers' Cooperatives (EPFC) provides smallholder farmers with loans of the best varieties of certified seed, training and support throughout the agricultural cycle and, vitally, a link to valuable markets. Registered as a community business in Zambia in 2007, EPFC currently provides agricultural support and market opportunities to more than 1,500 farmers in the Chipata and Katete districts of eastern Zambia.

Focusing on output

Key to the EPFC model is its focus on output. In contrast to the input-driven agro-dealer model, this Zambian enterprise provides seed and farming advice to smallholder farmers on a contractual basis. "Contracts between the EPFC and farmers are straightforward," explains John Hamlin, EPFC founder. "EPFC delivers seeds, training and an honest market at a 'best' farmgate price, while the farmer is obliged to repay the seed loan plus offer a first option to buy the crop. Two bags of seed are paid back in exchange for each bag loaned," Hamlin adds. "The two bags are then used to start two new farmers off."

In the post-harvest phase, EPFC assists farmers with bulking, transport and storage, and sources markets for the farm produce. In recent months, for example, EPFC negotiated the sale of more than 100 tons of certified groundnut seed to the Department of Agriculture in neighbouring Malawi. "I earned an extra US$1,700 in income as a result of my participation in the EPFC scheme last year," says Mbewe Aliness Mwale, a seed grower. "It has allowed me to improve my house, buy livestock and machinery, and to pay for school fees," she adds.

EPFC assists farmers with bulking, transport and storage (© Self Help Africa)
EPFC assists farmers with bulking, transport and storage
© Self Help Africa

EPFC has also helped to organise farmers into self-selected producer co-operatives and associations of between 20 and 70 members, and assists each group to select lead and contact farmers, who provide an effective communications and training network. Some EPFC groups have already established their own local storage sheds and offices, while the main EPFC depot, with a storage capacity of up to 500 tons, acts as not just a marketing and distribution hub, but also as a depot where product is graded, cleaned and stored, pending sale.

EPFC's working costs are met through a share of the final market price achieved, usually around 15 per cent. In this way, the organisation is placing a premium on the output, rather than the input-focused targets of the agro-dealer network. This creates a truly sustainable operation that has built-in incentives to grow. "We believe that providing comprehensive training and business support to smallholder farmers is crucial to their progress," says Hamlin.

Building trust

While there is a range of other actors providing seeds, advice and post-harvest facilities for farmers, Hamlin says that their support tends to be patchy. "A farmer may be able to get his or her hands on seed and some advice through seed suppliers, but there will be no assistance in the post-harvest phase. Quite simply, that's not good enough," he asserts. "If a farmer can't store or transport the harvest, or can't find a market for it, then the smallholder farmer is worse off and will be discouraged from investing in a particular crop for years to come."

EPFC has found that developing trust with farmers is vital - trust that EPFC will buy, that it will pay a decent price for a crop and that it will continue to support farmers in subsequent years. For smallholders, these are massive questions on which their very future depends. "Building up trust with farmers is a slow but necessary process. If EPFC doesn't buy, it can't earn a commission and farmers know that as a result it will not be there to support them with extension services next year," Hamlin says, adding: "Words are cheap, but for farmers, our actions are the real persuaders."

Scaling up

EPFC is working to develop new regional and international markets (© Self Help Africa)
EPFC is working to develop new regional and international markets
© Self Help Africa

Looking ahead, EPFC is currently working on ways to further mechanise production, use irrigation to convert from rainy season to three season farming and develop new regional and international markets. There are, however, several significant constraints, not least a lack of local people with the necessary business skills and experience, and the challenge of securing finance at a manageable interest rate. Other difficulties include poor physical infrastructure, badly organised supporting bodies and the presence of transport cartels.

Despite these difficulties, EPFC has improved the annual cash income for farmers from around US$100 to over US$1,000, with some of its farmers now earning in excess of US$3,000. "Ultimately," Hamlin concludes, "we need to compete successfully in the Johannesburg or London markets with large commercial farmers who have managed to overcome these challenges."

Date published: March 2012

 

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