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Kehinde Mahinde

Kehinde Makinde argues that with marketing, information, training and finance farmers can boost their income
Kehinde Makinde argues that with marketing, information, training and finance farmers can boost their income

Creating wealth for smallholder farmers

Kehinde Makinde is a marketing economist at IITA Ibadan, Nigeria, working on the Rural Sector Enhancement Program (RUSEP).

What is the most effective way in the short term of improving the wellbeing of smallholder farmers? One answer, at least, must surely be to give them access to well paid markets for their farm products. If the public sector, in this case international, public-funded institutions, can achieve this by helping smallholder farmers supply to big transnational companies - why not?

There has been a major shift in attitude by many of the international agricultural research centres in recent years. Without in any way devaluing the contribution being made by plant breeders, pathologists, agronomists and others in their efforts to improve yields of basic food crops - and therefore farmers' wellbeing - much more emphasis is now being put on helping farmers get more money for their effort. How else can we hope to alleviate poverty?

Marketing is not only the key step; it is the first step. But how can a smallholder farmer be expected to knock on the commodity procurement door of a multi-million dollar company and offer the produce from his or her small parcel of land? Alone it is, of course, impossible. But, with the support of the RUSEP - the Rural Sector Enhancement Program that is implemented by the International Institute of Tropical Agriculture (IITA) in collaboration with Nigeria's Federal Ministry of Agriculture and Rural Development (and funded by USAID), smallholder farmers are indeed getting their foot into that door.

Nigeria has the largest domestic market in sub-Saharan Africa and accounts for 40 per cent of the West African regional market. The opportunities are there for Nigerian farmers and there is no reason why the big producers should squeeze out the small - provided that the smaller producers can group themselves into viable producing units that the big processing companies are prepared to deal with. All this takes a great deal of organisation of course. As a first step, RUSEP approaches companies sourcing commodities that smallholder farmers are able to produce. UACN, for example, buys maize, Nestlé buys soybeans and Guinness buys sorghum. But quality standards must be met. Guinness is only interested in buying sorghum if the grain is clean and has the correct moisture content. Similarly Nestlé requires clean and fresh seeds.

When the needs of the company are thoroughly understood, RUSEP works with farmers to help them meet the quality required. They are also shown how to use market information to improve the prices they get for their product. This is not the type of scheme in which farmers simply make their land and labour available with all inputs supplied by the contracting company and products, less costs, sold back a fixed price. Farmers remain in control of their production, buying seeds, fertilizers and crop protection products from the private sector - and selling - as a group. And these farmer groups, strengthened thanks to training by RUSEP, become a formidable negotiating force, providing protection that farmers as individuals would not enjoy. RUSEP also helps farmers overcome difficulties in mobilizing savings and lack of collateral to enable agribusiness entrepreneurs' access loans. In 2002, RUSEP farmer groups obtained a loan from a private commercial bank (Union Bank Nigeria plc) for the purpose buying fertilizers. The loan was promptly repaid at the end of the production season. In 2003, the Bank increased the number of beneficiaries from 432 to 1500 and raised the loan amount from 3.2 million naira to 10.6 million naira.

The results have been astonishing. Farmers have been able to get prices 5 to 10 per cent higher than before. They have also been able to negotiate a higher percentage of the consumer naira. And agro-industrial companies? They have a source of high quality raw materials, conveniently bulked up by the farmers' groups to the quantities required and, by working through RUSEP, they also have the traceability information they need to meet international standards.

Is this the type of scheme that a publicly funded institution should develop? It has certainly attracted considerable interest from donors and development agencies because we are helping farmers to create wealth and this, surely, is what development work is all about.

Date published: January 2004

 

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