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Rising rice: an enterprise in Ghana

SMA successfully bid for a contract to supply schools with parboiled rice (© MOOV-ON productions)
SMA successfully bid for a contract to supply schools with parboiled rice
© MOOV-ON productions

To avoid buying imports, Ghanaian national policy aims to stimulate the consumption of locally produced foods. For example, government institutions - such as schools - are encouraged to buy local, good quality parboiled rice. Having set up an agri-business enterprise, involving buying and processing of paddy, the Single Mothers Association (SMA) in the Upper East region successfully bid for a contract to supply schools with parboiled rice.

The association was formed in 1995 with five single mothers joining together to help each other improve their lives. Having expanded to 600 members, SMA continues to provide rural women with economic empowerment, through a range of income generating activities. However, in bidding for the contract to supply parboiled rice for schools, a key challenge for SMA was to source enough paddy.

With the help of TradeAid, and finance from the International Fertilizer Development Center's (IFDC) 1000s+ project*, an agri-business cluster was established, uniting SMA, the Rice Farmers Coalition (RFC), TradeAid, input suppliers and a bank: over 650 individuals.

Getting farmers on board

To produce high quality parboiled rice, SMA required good quality rice, with a low percentage of broken grains (© MOOV-ON productions)
To produce high quality parboiled rice, SMA required good quality rice, with a low percentage of broken grains
© MOOV-ON productions

To meet the demand of SMA, and support its own members, RFC, with support from TradeAid, created linkages with input and credit suppliers. The input suppliers agreed to supply fertilisers at a negotiated rate and credit was easily attainable because the farmers had a secure market.

"The emphasis has been on using better agronomic practices and application of inputs at the right time, which is key to maximising yields, rather than on increasing amount of land used," explains TradeAid's Desmond Yesseh. Through the application of technological improvements and improved agricultural management practices - including the use of organic fertilisers, growing seedlings in nurseries, timely transplanting and use of improved seeds - RFC farmers increased their average production from 11 to 38 bags per farmer.

In addition to increasing production, farmers began to bulk rice at specific locations to reduce transport costs for SMA and agreed to thresh rice on a tarpaulin or cemented floors to prevent stones being mixed with the rice. "We also make sure that the winnowing is done two or three times so that we are able to remove all of the chaff from it," explains Gilbert Atanga, president of RFC.

To produce high quality parboiled rice, SMA required good quality rice, with a low percentage of broken grains and a better taste. In response, RFC farmers began to use improved jasmine seed - a high quality rice variety preferred by local consumers. SMA also requested that farmers harvest the rice at the right time, before it becomes overripe and too dry. In return for producing increased amounts of high quality rice, RFC was able to bargain with SMA for a higher price.

Financial barriers

Schools are encouraged to buy local, good quality parboiled rice (© MOOV-ON productions)
Schools are encouraged to buy local, good quality parboiled rice
© MOOV-ON productions

Once a price had been agreed for the rice, SMA had to overcome the challenge of having to pay for the rice on delivery. "This required a financial intervention and so a bank was brought on board," Yesseh explains. With a loan from the bank, SMA was then able to purchase rice from the farmers before they were paid by the schools. But due to the high interest rate, Desmond is concerned that this arrangement isn't sustainable in the long-term. The farmers would like to sell more rice to SMA, but the association is reluctant to increase its loan in order to purchase greater quantities of rice.

"The issue is that the RFC expects SMA to pay cash at the moment of purchase and therefore SMA needs a loan," explains Faustina Teni, SMA staff member in charge of the rice processing unit. "One solution would be for the farmers to agree to be paid only part of the sum up front and the rest when SMA has been paid. SMA would then be able to increase its supply to government institutions and buy more paddy from RFC."

"To overcome this challenge, we are looking at increasing the promotion of local rice so that we have more individuals consuming more locally produced rice," Desmond adds. "We are also looking at alternative buyers, such as the military, who would pay cash up front to help solve the issue of accumulating interest rates on loans from the bank."

Spreading success

SMA has increased its revenue (© MOOV-ON productions)
SMA has increased its revenue
© MOOV-ON productions

From fertiliser and seed providers, to the credit institutions, the farmers and SMA members, everyone in the rice value chain has benefitted from being involved in the agri-business cluster. RFC farmers have secured input supplies and a guaranteed market to sell their produce, input providers have increased their business with RFC and SMA has increased its revenue.

The total revenue of the 450 farmers involved has increased from 400,000 to 600,000 Ghanaian cedis (US$300,000) over the last two years, which is about US$650 per farmer per year. With the cash, many have purchased improved seeds and paid for ploughing services and fertilisers, instead of having to rely on credit. Farmers are also able to pay for school fees and subscribe to national health insurance services.

In 2011, the women sold about 120 tonnes of parboiled rice. Most was sold in Upper East Ghana to schools, but they are also marketing it in Burkina Faso through agri-food fairs, which have resulted in contracts with some retailers. Increased revenue has enabled the women to send more of their children to school and have at least two meals a day. The women also benefit by using the chaff to feed their pigs and charcoal that is produced during rice processing for their household cooking.

Some of SMA's increased revenue has been kept to reinvest in parboiling vessels which were purchased to reduce parboiling time. Thirty six women have already received training to use the vessels. This training has now been passed to each of the 200 women involved in rice processing. "The agri-business cluster has boosted the production of rice and the incomes of farmers and SMA members," Teni explains. "The combination of government policy, changes to the way RFC grow, harvest and sell their rice, and SMA's entrepreneurship have reorganised the local rice industry and increased the consumption of locally produced rice."

* From thousands to millions: accelerating sustainable economic growth in West Africa - a Dutch-funded project, now followed-up by the 2SCALE project (2012-2017).

Written by: Marie Loosvelt and Toon Defoer

Date published: September 2012

 

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