YALI Network – Investing in Agriculture

YALI Network – Investing in Agriculture


[TEXT: Young African Leaders Initiative, Online Training Series] Hello, my name is Anthony Ayebare and I am a
2018 Mandela Washington Fellow. [TEXT:
Anthony Ayebare] [TEXT: 2018 Mandela Washington
Fellow, CEO, Kanara Maize Farmers Ltd., Uganda] I’m the founder and
CEO of Kanara Maize Farmers Ltd., a health food company delivering
nutritious maize flour meals in Uganda. [TEXT: Agripreneurship, A Path to the Future: Investing in
Agriculture] Welcome to Agripreneurship: A Path to the Future. This lesson is entitled “Investing in Agriculture.” [TEXT: Learning Objectives, Investing in Agriculture]
In this lesson, you will learn what opportunities are available [TEXT: What opportunities exist for agriculture financing.] for
accessing financing in agriculture [TEXT: How to access nontraditional financing for agriculture.] and
what the options are beyond traditional financing avenues you can
access for your agricultural idea. Africa’s agricultural growth faces several structural problems that
pose risks for investment. Understanding these problems and unlocking the potential within them
[TEXT: Understanding these problems and unlocking the potential
within them] [TEXT: helps reduce risks for entrepreneurs.] helps reduce risks for
entrepreneurs interested in investing in agriculture. I want to share with you how, as entrepreneurs, you can partner with
farmers, landowners and crop traders to create an ecosystem that
benefits all of us. Let us first understand what you as an entrepreneur bring to the
table in this partnership. The first thing you have is an idea you want to turn into a
business. Your idea could be about acquiring land to grow crops, or acquiring
crops to add value to them, or acquiring added-value crops to
resell to customers. With your idea, you bring to the table the research you have made. [TEXT: Customer discovery is understanding who your real customers
will be.] It could be customer discovery, which is understanding who
your real customers will be. [TEXT: Who are the people who are going to pay for your product
or service?] And with this I mean: Who are the people who are going
to pay for your product or service? You could be bringing to the table technology you know and you want
to
use in agriculture, product research and development for the type of
product you want to put on the market, or it could be new crops and new farming systems you want to
implement. Or even it could be farming as has been practiced, but on a large
scale for profit. With your wonderful idea, maybe you’ve developed a business plan
and gone to banks for financing and been turned down. [TEXT: Banks require a history of positive cash flow, collateral
or insurance.] Most banking institutions and other lenders often
require that your business has a history of positive cash flows for a period longer
than a year, collateral, or even insurance, something you may not
have. And because of the nature of agriculture, most banks shy away from
lending because of the uncertainty in the business. You may have also asked family for funding and they have turned you
down. Now you are feeling disappointed and dejected and you want to give
up. Entrepreneurs everywhere face these challenges. Some give up, but real entrepreneurs find a way around these
challenges. Let us now understand ways you can go around these challenges. [TEXT: Who are the people in your value chain?] The important thing
to understand is: Who are the people in your value chain? If you want to grow crops, these people will be landowners,
[TEXT: People in the Value Chain: Landowners,] [TEXT: Landholders, Laborers, Sellers] landholders
labor providers, seed sellers, [TEXT: Transporters, Buyers] tool and equipment sellers,
transporters and buyers when your crops are ready for harvest. If you are intending to add value, for instance, to grains, you need
to also understand the people in the value chain, from the grain farmers to traders in villages, and big traders
in towns and exporters. All these people in your value chain need to make a profit. Some have settled for low prices because they have difficulty
finding reliable labor to harvest their products or getting their
products to the market and don’t have alternatives. Some don’t know the additional way they can add value and earn more. In most instances, some have created cooperatives that are actually
struggling to get the right visionary leader to steer them to
growth. If you have leadership, business and organizational skills, this
leader could be you. How do you, then, come in this chain, when you have little or no
capital at all? How do you get to find out who these people are when you know
nobody? And how do you earn their trust when you find them? All across Africa there is land and there are farmers.   But you cannot go everywhere. [TEXT: Narrow your idea to the exact business you want to
create.] What you do is narrow your idea to the exact business you
want to create. If you are going to grow coffee or maize or rice or vegetables, ask
your friends, business associates, or research the internet where
your specific crop is grown. Once you’ve found places where your crops are grown, you may need
to further narrow it to land ownership systems and availability of
land, as well as assessing the security situation for those in conflict
areas. The next logical step is: Try and see if in your contacts on
social media you have someone you know who comes from the area. If you don’t, take the bus to that town. When you reach the community, find the local leader and be his or
her guest. Introduce yourself and be prepared to discuss in detail what brings
you to their area. It’s been my experience that most of them will actually ask you to
stay in their homes for the night and introduce you to valuable
contacts. [TEXT: Be open and clear about what you want.] You need to be open
and clear about what you want. If you want land to hire, say so. If you want to find someone with a lot of land that is idle and you
would love to partner with them, say so. In most cases, you will find that most people that have idle land
will want you to partner with them. Now that you’ve found land, what comes next? You will need labor. Remember being introduced to residents by the local leader gives
you a lot of credibility. So, where do you find the labor when you have little or no capital? You go back to the people who were asking you to use their land. Tell them you can’t use all their land, but you can work with all of
them and provide them an opportunity and an income. Ask them to partner with you, grow crops, weed and harvest, and you
all will share in the profits. Some will be excited; some will pull out. Find those excited and draw them a three-year picture and show them
what they will have earned when working with you. Show them how their lives will have improved. You now have labor. If you have some capital, you can give them wages to feed their
families. If you don’t have capital or money to pay wages, rotate the days
each comes to work, like twice a week at your farm and give them
time to work on their individual businesses. By now you’ve cultivated a relationship. You’ve interacted with the village and have figured out who has
livestock in case you need manure, and who has seeds in case you
need seeds. Normally, partners and investors will need assurances and
guarantees, which you can put down in an agreement. Crafting terms of an agreement is very important. You need to be clear about what the take for each party will be,
including what will be the take for the business. [TEXT: Agreement should specify the objectives of the partnership,
profit-sharing, reinvestment and termination.] This agreement
should specify the objectives of the partnership, profit-sharing, reinvestment and what happens when a party pulls
out. And it is important that you draw terms that will not make it easy
for the landowner to terminate the agreement without cause or
notice. I would encourage you to buy things locally, be involved in their
lives, listen to their stories and offer solutions. Be part of them. Keep your agreements. Better you don’t share on the profits than betray them. Agribusiness is a profitable and rewarding venture. Two years is basically four harvest seasons, and during this period
you
could have saved some money, enough to aid you in buying land if
that’s your mission. Potentially, you could help them start a cooperative and find
investors that have interest in cooperatives to support them. A cooperative is a group of farmers or ranchers that have come
together to pool their resources [TEXT: A cooperative is a group of
people that have come together to pool their resources to gain economic advantage.] in an effort to gain economic benefits that they could not achieve
alone. In a cooperative, the members are able to jointly purchase supplies,
negotiate sales agreements, and market their products. Being in a cooperative can also make an enterprise more attractive
to lenders, as risk is spread over several farms instead of just
one. And what if you don’t want to grow crops but you need to add value
to coffee or maize or rice? Where do you start? Go to the people with the crops you are
interested in. If you are interested in maize, you will find there are cooperatives
selling grains. Talk to them. Sometimes you can position yourself to be their
representative on the initiative and, once started, you will learn the system and
before the day ends, you have created solid contacts to supply you
on credit. The most important thing again?
Keep and honor your word. [TEXT: Keep and honor your word.] The opportunity of creating market access for farmer products is
enormous. You could agree with producers to connect them to markets for a fee. Finding markets involves looking for people who will pay for the
farmers’ products. In finding a market, the key is determining who is able to pay and
for what product. You will need to locate those who use certain products and why they
use them. Be sure to write down names, affiliations, contact information
and their needs. Reach out to them and connect them to goods and products. Farming, like any other business, requires tools and equipment and
sometimes heavy machinery, which are capital-intensive. This is where partnering with farmers becomes more important.
[TEXT: Partner with others to acquire tools and equipment to ease
the cost burden.] Organized groups of farmers have more chances of acquiring equipment
on lease than a lone, sole farmer. If you need, for instance, to start a milling business for maize
and you don’t have the money and machinery, you could talk to the mill owner, to focus on milling for you. You could invest some money in expanding his mill capacity. Almost every village or community has a small mill. Look around for who has equipment and machinery you are interested
in, which they may be using on a small scale, and discuss how you
could use their facility. Some may be willing to expand the machine capacity at their own cost
if they see you as a reliable customer. Lastly, there are many people with money in your community, but they
don’t have the time to go and farm. You could interest them in financing your farms for a share of the
profit. Draw the picture of farming, for instance, 200 acres, or rearing
20,000 goats or chicken and the joy of them bringing family and
friends over the weekend and holidays to visit the project. There are many ways that entrepreneurs can find success in
agriculture. We can all help modernize and expand the agricultural sectors in our
respective countries. Perseverance, creativity, and being a reliable and ethical partner
is key. [TEXT: Test your knowledge, yali.state.gov, YALINetwork] After
you’ve completed
all the lessons in this course at yali.state.gov, you can test your knowledge and earn a YALI Network
certificate. [TEXT: Produced by the U.S. Department of State]

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