Financing the production of cheap organic fertiliser: The success of USAID and Farmers Hope

Business News of Monday, 2 October 2017

Source: thebftonline.com

2017-10-02

FertilizerThe use of conventional chemical fertilisers or inorganic fertilizers is very common

Fertilisers are among the most important agricultural inputs, especially in this era of commercial farming. Fertilisers provide one or more of the plant nutrients necessary for the growth and development of crops.

The use of conventional chemical fertilisers or inorganic fertilizers is very common because it is perceived to have greater nutrients-content as compared to organic fertiliser. However, inorganic /synthetic fertilisers gradually reduce soil quality and affects the environment adversely. Comparatively, synthetic fertiliser is very expensive and many farmers, especially smallholder farmers are unable to access the vital inputs to boost crop production.

These reasons make the use of organic fertiliser more appropriate, particularly for smallholder farmers who constitute the majority of farming workforce but do not have the financial muscle to patronise inorganic fertiliser. Besides their affordability, organic fertilisers improve soil structure and hydraulic conductivity, increase field capacity and reduce soil erosion.

Farmers who prefer organic fertilisers resort to poultry droppings and other environmental friendly composts. However, these materials in their raw form are very difficult to handle and sometimes discourage some farmers from patronising them. This and many other reasons informed a Kumasi-based agribusiness entrepreneur, Akawsi Osei Bobie-Ansah, and in 2010 he started production of nicely packaged organic fertiliser to support smallholder farmers. The ingredients for the agro input are basically poultry droppings, neem seeds, and other agricultural waste; they are all easily accessible, and environmental friendly, too.

Mr. Bobie-Ansah started the development of an organic fertiliser christened ‘Asaase Nofosuo’, meaning soil breast-milk, on a small scale; it illustrates how well it nourishes the soil and provides much-needed rich nutrients to increase crop production. It was priced at 40% less than competing products on the market and yielded 60% higher than other fertilisers.

Within a short period, it became of the most sought-after agro-input by smallholder farmers who hitherto were using imported and relatively costly chemical fertilisers that failed to produce high yields and impacted negatively on the soil quality. It became clear that Farmers Hope, producer of Asaase Nofosuo, had to increase production exponentially to meet the growing demand – but it faced financial constraints. At a point in time the small organic fertiliser manufacturing company received an order worth US$1million, but it could not honour that contract because it did not have the required processing equipment for such large-scale production which could have turned around the company’s fortunes.

USAID Intervention

Then came an intervention from the USAID Financing Ghanaian Agriculture Project (USAID FinGAP). The USAID FinGAP is a programme implemented to help companies like Farmers Hope access financing. With supply contracts from two of Ghana’s leading cocoa buying companies to supply organic fertiliser to their farmers and a credit guarantee from Eximguaranty Company Ghana (now part of EXIM Bank Ghana), Farmers Hope obtained an unsecured loan of approximately US$40,000 from the Agricultural Development Bank (ADB), a USAID FinGAP financial institution that is a pay-for-performance grantee. The loan enabled Farmers Hope to purchase two locally manufactured milling machines to add to its existing one and increase production from 600 kg to 1.8 metric tonnes per day. Farmers Hope was able to meet the order and repay the loan to ADB as expected.

Thanks to the support of USAID FinGAP, Farmers Hope subsequently embarked on a campaign to access financing to further expand production capacity and extend market coverage across Ghana. The company was later identified as a worthwhile investment opportunity by Growth Mosaic, a USAID FinGAP Business Advisory Service (BAS) provider. Growth Mosaic helped Farmers Hope to streamline its business and facilitated US$700,000 in financing from Acumen Fund West Africa to scale-up production.

Farmers Hope used US$400,000 of the funds from Acumen to build a new factory, and procured processing machines and raw materials in bulk. The company, which is currently producing at 10 metric tonnes per day and reaching out to over 4,000 smallholder farmers, plans to produce at its full 80 metric tonnes per day capacity in the next two years and eventually distribute fertiliser to over 400,000 smallholder farmers, including maize, rice, and soy farmers in the north of Ghana. The more affordable fertiliser price will leave the farmers with extra resources to purchase certified seeds and other agro inputs to increase production, increase incomes, and break out of the vicious cycle of poverty. Farmers Hope sells to smallholder farmers in Ghana’s Ashanti, Eastern, Brong Ahafo, and Northern regions, of which 75 percent of farmers fall below the US$4 per day poverty line.

“We truly believe in the work that Akwasi Osei Bobie-Ansah and his team are all doing. There is the potential to reach hundreds of thousands of farmers each year with a product that can improve yields two to three times. We are supporting Farmers Hope from a governance position and as a trusted advisor, as well as supporting them as a liaison to our network within the agribusiness ecosystem,” Wayne Miranda, Chief Executive Officer of Growth Mosaic once said.

Growth Mosaic is also supporting Farmers Hope in multiple capacities post-investment. The marketing programme introduces organic fertiliser to new buyers, typically aggregator distribution networks who work directly with farmers to provide inputs on credit. To further increase market share, Farmers Hope produced pelletised and granular versions of its organic fertiliser to enhance application and absorption in the soil. The odour in the product has been eliminated to enable the company to package it in two to five kilogramme bags for sale to gardeners and other small users through supermarkets.

Following requests from customers for an organic pesticide that could be used with the organic fertiliser, Farmers Hope started developing a wide spectrum pesticide in 2014. This organic pesticide gained acceptance in May 2017 when the Fall Army Worm (FAW) infestation broke out in Ghana. Trials were conducted with some farmers in Ejura, Kuntunase, and Aputuogya (major maize production areas in the Ashanti Region) whose farms were infested with the FAW. Feedback from the farmers indicated that the organic pesticide, which is anti-fungal, works on about 200 different pests and was very effective. Farmers Hope will in the coming months register and launch this organic pesticide for commercial production. The remaining funds from Acumen will be disbursed to Farmers Hope as needed.

Conclusion

Farmers’ Hope has impacted 4,000 farmers, with plans to reach 25,200 in the next five years and the potential to reach more than 400,000 smallholder farmers in the long-term. With cash on hand, who knows what Farmers Hope will cook up next to further improve agricultural practices in the country?

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