Africa in 2020: Less crop loss, more income
Before the coronavirus pandemic, farmers’ cooperatives mainly suffered from fluctuations in global trade and the consequences of climate change. Rabo Foundation therefore focuses on projects that benefit the ecosystem. But we also work on digital solutions to offer better access to financing and markets.
How we work in Africa
In Africa, we encourage local entrepreneurship as much as possible. By supporting cooperatives and companies that create value locally and regionally, we help the farmers benefit from higher incomes. But we also finance local small- and medium-sized enterprises in the food and agricultural sector, because they strengthen the value chain – which also strengthens the farmers.
Financing
We offer farmers’ cooperatives loans with favorable terms. If they do well, then we adjust our terms and interest to reflect the market, so that the organizations can prepare to borrow money from standard local banks in the future. In 2020, in Africa, we provided a total of € 7.6 million in loans, technical assistance, trade finance and grants.
Technical support
We call in local training organizations to help farmers get ahead with knowledge and expertise, for example on how to diversify their crops. That reduces the likelihood of failed harvests, and they learn how to deal with the consequences of climate change, such as extreme drought or heavy rains. The farmers then share the knowledge with others in their cooperative.
Local teams
Our local team in Kenya is an important element of Rabo Foundation’s strategy. The staff speak the language and know the local customs and environment. Our local team also helps us quickly identify new challenges and potential solutions for farmers.
Our training organization ADC in Uganda trains farmers in the area of financial and digital self-reliance.
Our focus in 2020
Although the rates of infection in Africa were relatively low, the continent did suffer other consequences from the global coronavirus pandemic. Some producers of coffee and avocados faced reduced demand from buyers such as the Western hospitality industry. And most African countries don’t have governments that can step in to lend a hand. So in 2020, we set up a Covid Release Fund to provide bridge loans and donations in countries such as Uganda, where one of our partner cooperatives suffered a failed coffee harvest.
Even if an African farmer has a good harvest, there is always the risk that the crops will spoil due to inefficiencies in the chain. So we finance cooling installations powered by solar energy, where farmers can store their products after harvest to keep them fresh longer. The facilities ensure that much less of the harvest goes to waste. We also invest in the Tanzanian company East-African Foods, which has set up an efficient logistical chain to preserve farmers’ products for longer. That earns the farmers a better price for their products, and also limits food waste.
Africa is responsible for only a small percentage of global CO2 emissions, but its people bear the brunt of many of its consequences. Climate change will make it virtually impossible to produce coffee in Uganda in just a few years’ time. So we are helping coffee producers switch to other crops. In addition to this technical assistance, we are also helping farmers to improve their soil, for example by planting trees to improve the soil’s fertility and biodiversity.
A brief selection of what we’ve achieved
By combatting food waste, we’ve structurally improved many farmers’ incomes. Mango farmers in Kenya are a good example. We’ve financed a method for drying their mangos after harvest. That keeps them edible for longer, the farmers receive a better price for their product due to high demand, and it keeps the fruit from spoiling in storage.
Many farmers’ cooperatives and small- and medium-sized enterprises need funding in order to grow, but not every type of funding actually helps them get ahead. For example, if they have to pay exorbitant interest rates for a loan, it can actually make the smallholder farmers’ situations worse. That is why we focus on improving their access to affordable financing. A cocoa processing firm in Uganda used assistance from Rabo Foundation to set up a financial fund for farmers to give them a predictable income. That helped reduce their financial worries and gave them more financial self-reliance.
So far in 2021
More and more fintech solutions are becoming available that smallholder farmers can use to improve their harvests or increase their incomes. Plus, data on harvests and repayment ability are increasingly becoming the norm for individual farmers to qualify for loans. We support a growing number of fintechs that offer these digital solutions.
