In Kenya, Rwanda and Burundi, a new approach to small-scale farming has spread to more than 100,000 families in just four years. An organization called One Acre Fund brings struggling farmers together to establish a market community and offers them a unique investment package of seeds, fertilizer, training and market access. To provide a hedge against drought or disease, One Acre’s “market bundle” includes crop insurance. Ninety-nine percent of the farmers repay their loans, and many double their income per planted acre. Could this sort of integrated development be a model for the rest of Africa?
Anchor introduction: In East Africa, an effort to bring business services to small-scale farmers – it’s part of our series “Food for 9 Billion,” a partnership with the Center for Investigative Reporting, American Public Media’s Marketplace and Homelands Productions. Special correspondent Fred de Sam Lazaro has our report.
Reporter Fred de Sam Lazaro: Andrew Youn was almost done with business school in 2005 when he took a brief vacation to Kenya. It was the Minnesota native’s first exposure to the irony of life for millions of people in rural Africa.
Andrew Youn: The shocking thing and kind of an amazing paradox is that most of the world’s hungry people are actually farmers, and their profession is to grow food, and the reason they’re not succeeding right now is they’re still using tools and techniques that literally date to the Bronze Age.
Reporter: He decided to apply his new MBA skills to see if he could help. He began with a pilot project to assist 40 families.
Youn: I took $7,000 of my own savings and bought seed and fertilizer and hired some local staff, and we gave it a shot. Families just kind of signed up, and they were also interested, and they had the best harvest of their lives in that first season. … And right when that happened, I knew that there was something there.
Youn (speaking to farmer): Malende! My name is Andrew, and I am with One Acre Fund.
Reporter: His project turned into One Acre Fund – named after the small size of most African subsistence farms. Six years later, a staff of more than 800 serves over 125,000 farm families in Kenya, Rwanda and Burundi.
Youn: If you look at those bales of seed, for example, that stack of bales is enough to change the lives of thousands of farm families, with more than 10,000 children living in those families. The sheer magnitude of what we can accomplish from a humanitarian perspective with very little resources is just staggering.
Reporter: But One Acre Fund isn’t a typical humanitarian service. It offers a business model. One Acre gives the smallest of farms the same services available to the biggest of businesses: credit, seed, insurance and access to markets. It’s called the “market bundle.”
One Acre Fund also offers training: how to space plants, when to apply fertilizer and how much. It’s not rocket science, but the results are impressive.
I’m standing in a spot that illustrates the difference One Acre Fund can make. Over my left shoulder is a pretty typical smallholder farm, where you’ll find a cluster of pretty randomly planted corn stalks. But walk just a few feet to that farmer’s neighbor, and you’ll find a One Acre Fund member. This farmer’s seeds are of better quality, they’re planted in careful rows, and you can tell by the quality of the stalks, sheer density of the plot, that the yield here is going to be much higher.
Better harvests begin with better seeds and fertilizer that the farmers get at a discount.
Youn: The individual smallholder farmer is about the least powerful person on the planet, but when we aggregate 100,000 of them or more together, then we get a lot of purchasing power, and we can get them a good deal.
Reporter: But even with a good deal, cash is hard to come by here, especially at the start of the season. So instead of making the farmers pay up front, One Acre Fund gives them loans for the seeds and fertilizer they need – loans that are insured.
Youn: Poor people are the worst-suited people in the world to have risk in their lives. They’re already living on the margin, and a having a bad harvest, for example, and bad weather basically means … it could be as severe as a child or even two dying. So rain insurance is a standard part of our package, and so if the rain doesn’t fall, they don’t pay. Another risk is death; we have what we call funeral insurance.
Reporter: The loans must be repaid at harvest time, but most farmers begin paying their installments well in advance. The default rate is less than 1 percent.
Youn (speaking to farmers): Mzuri sana, wow. Congratulations.
Youn: So this lady says she was getting a milk cow, and she’s earning about $2 a day from that milk cow.
Reporter: In Rwanda, Agriculture Minister Agnes Kalibata likes the fact that even though One Acre Fund is a nonprofit, it works with farmers as business partners.
Agnes Kalibata: When farmers are working with NGOs and the governments, there's always a sense of dependency. When they’re working in the private sector, there’s a sense of it’s a give and take. So One Acre Fund brings that on the table.
Reporter: The approach is showing results. On average, farmers enrolled in One Acre have seen their crop yields triple. Joyce and Maurice Soita have done much better than average.
Joyce Soita: For now, we harvested 18, but before, two or three bags.
Reporter: So before, you got just two or three bags of maize from your land, and now you get 18?
Joyce Soita: Yes.
Reporter: The Soitas took me to see the investments they’ve made with their profits: school for their four daughters – about $160 per year.
Joyce Soita: My first kid, she says that she wants to be a doctor. I say to her, “Keep up!”
Youn: Our farmers go from subsistence to finally getting enough food for their entire families, but then also selling surplus for the first times in their lives.
Reporter: And Youn says this is opening up new opportunities for farmers.
Richard Sitati has been a One Acre Fund farmer for three years. He not only has surplus food staples, like maize, but also grows crops for cash – peanuts and bananas.
In the old days, Sitati had to rely on middlemen in his local market here in Chwele for everything: buying seeds, selling the occasional surplus, with little bargaining power. Now, he visits a new kind of stall in the market. It sells information.
Bananas, he learned, were fetching much higher prices in Eldoret, a town 100 miles away.
Richard Sitati: So here, I found when you look at bananas, in Chwele, it’s 280, but when you go to Eldoret, it’s 400 shillings.
Reporter (to Sitati): So you can look at this board here and determine where the best place is to sell?
Reporter: A new for-profit company called KACE has set up outlets like this one in markets across Kenya. The Internet and cell phone connections inform the trading boards and link producers like Sitati with distant buyers. KACE was started by Adrian Mukhebi, an economist trained at the University of Kansas. … Mukhebi says the centers faced resistance when they first opened.
Adrian Mukhebi: Middlemen and traders did not like that; they opposed them. Why? Because we were providing information to the farmers; we were empowering the farmers to know the market prices and increase the farmers’ bargaining power.
Reporter: Now, he says, even though middlemen get a smaller slice of the pie, the pie has gotten much larger.
For farmers, getting the best price is also a question of timing. Soon after a harvest, there’s plenty of maize, so the price plummets. One Acre staffers – most of them out of college – are working on a pilot project that would offer loans for farmers to store some of their grain.
One Acre staffer: A farmer is normally selling their maize in January. We want to just basically, instead of them selling their maize, have it put right back in their house and then pay that school fee.
Youn: The farmer would be very tempted to sell their harvest almost immediately, so they could pay for school fees, but really, they ought to be holding on to that harvest for about six months, when it's much more valuable and scarce during the hunger season.
Reporter: So they'd get a better price for it.
One Acre staffer: If we can help our farmers store their maize for longer, then we can help them make a lot more money.
Reporter: One Acre Fund took in $5 million in farmer loan revenue last year, but still needed a million dollars in grants and donation to cover their expenses.
They say their Kenya and Rwanda operations should break even in a few years. But sustainability also depends on the investments that governments will make, from building new roads to improving storage facilities and seed and fertilizer supply.
At the Alliance for a Green Revolution in Africa, Margaret Kroma says this government support is critical for groups like One Acre Fund to succeed.
Margaret Kroma: Otherwise, we can have beautiful, wonderful islands of excellent work that just fades away over time. How do you make that ultimate connection between the technology that works in small, rural systems and the larger policy environment, the institutions that will enable, that will ensure that these innovations continue to be scaled up and scaled out?
Reporter: Andrew Youn agrees. But for now, the program’s success is built on the farmers’ success – one acre at a time.
Youn: It’s really wonderful to see. People really do invest every dollar they finally gain and start building like a staircase to a better life.
Reporter: Youn predicts One Acre Fund will exceed its goal to serve 1.5 million farm families by 2020 – a 15-fold increase from today, but still a fraction of the 40 million families that he says could use help across Africa.
Reporter: Fred de Sam Lazaro
Producer: Cassandra Herrman
Camera: Cassandra Herrman
Editors: Cassandra Herrman and David Ritsher
Consulting producer: Stephen Talbot
Series producer: Cassandra Herrman
Executive producer, Food for 9 Billion: Sharon Tiller