- Problem: Millions of smallholder farmers around the world don't produce enough food to feed their families.
- Barrier to Progress: The majority of smallholder farmers lack the capital to invest in improved seed, fertilizer, and training.
- Solution: One Acre Fund's operating model provides farmers with farm inputs, financing, training, and market facilitation, enabling them to double their income per planted acre.
Last week marked World Food Day, an annual celebration of the strides we have made toward hunger eradication, and a reminder of the lengths we still have to go to achieve global food security. For many rural smallholder farmers in Africa, the journey toward hunger eradication is not something to think about once a year, but every day.
Four years ago Peter Wamalwa and his wife, Stella, grew only five bags of maize on their acre of land in rural Kenya. It wasn’t nearly enough to feed their three children. Despite spending hours preparing the land, planting, weeding, and harvesting, Peter and Stella struggled to provide for their children.
Millions of rural smallholder farmers around the world face a similar struggle. Although the agriculture sector is continually developing new technologies and strategies to help farmers grow more food, smallholder farm families lack the capital to invest in improved seed, fertilizer, and training. They re-use low-quality seeds and rarely use fertilizer because they can’t afford it.
Financing is essential to help farmers access farm inputs and training to grow more food. One Acre Fund uses a simple four-part operating model to serve smallholder farmers. We provide farmers with improved seed and fertilizer for staple crop production, financing through in-kind loans, on-farm agriculture trainings, and post-harvest assistance through improved storage and market facilitation.
One Acre Fund currently serves 135,000 farmers in East Africa, but the need for greater farm financing is vast. The global demand for smallholder farmer finance is $300 billion, and the current global supply is between $20 and $30 billion, according to research done by the Initiative for Smallholder Finance.
To help address this need, The MasterCard Foundation and One Acre Fund recently launched a $10 million partnership designed to help smallholder farmers in Kenya, Rwanda, and Burundi access financial services and training. Importantly, the partnership will support our efforts to build a farm microfinance movement. We aim to spark the interest of microfinance institutions to expand successfully into rural areas, and we plan to help them develop the tools they need to do so.
Our new partnership with The MasterCard Foundation will also catalyze growth in our field operations. The partnership will allow us to expand to 181,000 additional farm families, who will ultimately double their farm profits on every planted acre. And it will enable us to strengthen our core MIS and M&E systems, to enable continued improvement to our program design and greater cost efficiency, and to capture the most accurate and compelling evidence of impact.
Peter and Stella have already seen enough evidence of One Acre Fund’s impact. Throughout their first year with One Acre Fund, their field officer provided intensive trainings on planting, weeding, and harvesting maize. Stella and Peter harvested 12 bags of maize from a half-acre of land. After their first year, “it was easy to bring food to the table for my family,” Peter recalls. The following year they increased the amount of land they planted with One Acre Fund to a full acre. They grew 18 bags of maize in 2010, 17 in 2011, and 22 in 2012.
But growing more maize was just the beginning. Stella and Peter began to wonder what they would do with the extra income from selling their harvest – and how they could continue to increase their income. In 2010, they kept 8 bags of maize for food and sold the remaining 10 to buy a cow, which has since given birth to a calf. The following season they sold 15 bags of maize and purchased a motorbike for Peter.
Now, Peter uses the motorbike as a taxi service, and the family is reaping the benefits of their One Acre Fund investment many times over. Peter makes 500 KSh ($6 USD) a day shuttling customers around the village and beyond. As an additional benefit, Peter uses the bike to take his children to school.
“One Acre Fund has done a lot in my life. I used to struggle a lot but now that I have my motorbike life has changed,” Peter explains.
For millions of farmers like Peter and Stella to increase their incomes, we need to close the enormous financing gap for smallholder farmers, and we can’t do it alone. The Initiative for Smallholder Finance, which is supported by both The MasterCard Foundation and the Skoll Foundation, is doing groundbreaking research to analyze the barriers to unlocking the supply of farm finance. Its first report, Catalyzing Smallholder Agriculture Finance, was an important contribution to the sector. As we begin our work to spark interest among microfinance organizations to develop farm finance products, we’ll build on the foundational research of the Initiative for Smallholder Finance.
The largest population of poor people in the world are smallholder farmers. They present our greatest challenge—and our greatest opportunity. We look forward to collaborating with The MasterCard Foundation to build a definitive “proof of concept” for farm microfinance, and to galvanize commitment among microfinance institutions to serve a new population: smallholder farmers.