Agribusiness

 

Growing Yields and Incomes for Rwanda’s Smallholder Farmers

When brewer Heineken’s Rwanda subsidiary placed an annual order for 10,000 tons of locally-grown maize in 2016, it should have been a boon for the country’s farmers.

Instead, it presented them a near-impossible challenge.

Rwanda’s smallholder farmers typically work less than a hectare of land, using on average about half the amount of fertilizer and other essential inputs compared to their more productive Kenyan counterparts.

Rwandan farmers must also contend with the country’s punishing dry season, which cracks the earth and saps incomes from June through much of September. Even when rains and harvests are plentiful, most co-op managers struggle to balance the complex financing, storage, and distribution processes involved with large production volumes.

To solve these various challenges, IFC and Heineken’s subsidiary, Bralirwa, teamed up with the Dutch government and the European Cooperative for Rural Development (EUCORD) to deliver a comprehensive support package to co-op managers and farmers alike.

The program trained co-op managers to run efficient supply chains, with sessions on planning, financing, managing contracts, and the collection, drying, storage, and distribution of crops.

Meanwhile, local farmers who have long relied on traditional methods were introduced to better growing techniques. The program offered them help accessing hybrid seeds, fertilizers, and modern irrigation equipment to compensate for Rwanda’s increasingly erratic rainfall patterns.

The goal was to professionalize the smallholders and co-ops and double farmers’ production from two to four metric tons per hectare—all while improving the quality of their yields, and reducing post-harvest losses through weak supply chains.

Well-Defined Targets

Patricie Mukashema is one of more than 12,000 Rwandan maize farmers benefitting from the IFC/Heineken training and support program.

The 47-year-old mother of seven, who cultivates maize on land a quarter the size of a football field, welcomed the regular income generated by Bralirwa’s large orders, but admitted that early on her skills and resources--and those of her co-op--weren’t up to the task.

“In the past, we used to work without any vision, without any goal or plan, but now the targets to be achieved are well defined,” she says. “An agronomist from Bralirwa has helped us prepare the land on time, plant quality seeds, and use fertilizers efficiently. This support has really improved my production, and that of other farmers, and will help me afford a larger plot of land.”

IFC has also helped train 13 farmers (including six women) to use piped irrigation equipment supplied by Heineken. This group is now training others to use the equipment, which is already watering fields for 325 farmers. Plans for a wider roll-out are being prepared.

“We used to just waste our time in the dry season, unable to produce,” Mukashema says. “But now we can be productive the whole year round, improving our incomes.”

Although Rwanda is fast reshaping itself as a modern economy, about 70 percent of its population still relies on agriculture for a livelihood – and will do for some time.

For Bralirwa, directly supported by IFC with a $25 million loan for expansion, the program helps realize the goal of sourcing high-quality maize from local farmers.

Bralirwa spokesman, Freddy Nyangezi Biniga, says, “Heineken is aiming to source 60 percent of the agricultural raw material it requires for its African operations from African suppliers by 2020, and this partnership with IFC and others is helping us achieve that goal. We are investing in the future of our company, in local farmers, and the Rwandan economy.”

 

 

 

 

 

 

 

By 2030, Africa’s agriculture and agribusiness markets is expected to triple to reach $1 trillion in value. Africa needs more than $10 billion in new investment annually to achieve the aspired expansion of agricultural output in Africa. Today the average African farm performs at just 40 percent of potential.

In Africa, IFC is pursuing investments in agribusiness value chains, recognizing that 60 percent of Africans derive their livelihoods from agriculture. IFC is helping encourage modern retail in the food sector, increase exports, and improve yields, and support commodity exchanges and financial institutions dedicated to serving farmers and agribusiness enterprises.

Learn more about IFC's work in agribusiness.

 

Examples of What We Do:

Patisen

Patisen is a producer of packaged food products in West Africa. IFC provided €2.5 million in equity and €8.5 million in an eight-year subordinated loan. IFC‘s ­ financing supports Patisen’s €23 million project to expand and consolidate its operations in Senegal. IFC’s global expertise will enable Patisen to become a leading regional company using best practices in corporate governance, insurance, ­ financial management, and environmental and social matters.

Warehouse Receipts

IFC’s Warehouse Receipts initiative opens new access to ­ finance for Ethiopian farmers by leveraging their own production. Warehouse ­ financing allows farmers access to ­ finance by pledging receipts issued by the Ethiopia Commodity Exchange. The receipts are issued by the warehouse operator when the commodities are stored, becoming an instrument that can be used as a form of portable collateral to request a loan from a bank.

Bidco

IFC provided $36.5 million in  financing to BIDCO a top-ranking and fast-growing agribusiness player in Africa’s consumer goods sector with operations in 16 countries. BIDCO will leverage IFC’s global experience in consumer goods projects to facilitate access to brand positioning expertise. IFC will support 20,000 smallholder farmers in its supply chain through advice and ­financing

AfricaJUICE

IFC provided $6 million in equity financing to africaJUICE, the ­ first Faitrtrade certi­fied tropical fruit juice producer (passion fruit, mango and papaya) in sub-Saharan Africa and based in the Upper Awash region of Ethiopia. IFC provides technical expertise, global knowledge of industry and markets, and lessons learned from other integrated fresh juice and concentrate producers. IFC will mobilize other funding to reach 1,000 more small scale passion fruit farmers.

Grimas

Groupe Industriel Madiou Simpara SA, known as GRIMAS, produces carbonated soft drinks, plastic packaging, and carbon dioxide for beverages with headquarters in Mali. IFC provided an €8 million, eight-year corporate loan to support the €33 million project to upgrade operations in Mali and expand in Cote d’Ivoire and Senegal. With IFC’s support, GRIMAS is becoming a stronger regional competitor and a leader in corporate governance, insurance, ­financial management, and environmental and social matters.