Opportunities are everywhere, but think locally.
On World Food Day, October 16th, we recorded forty-five minutes of live radio about the future of farming. During the show the feasibility of business opportunities with cooperatives in developing countries was discussed. Moderation was by journalist Janno Lanjouw. A recap of a discussion between a dairy farmer from Uganda, a policy maker, a business advisor and a dairy analyst.
Farmer from Uganda
Kharm Kamuntu, a dairy farmer from Uganda, owns 68 hectares of land and 63 cows. Most of his time is spend on taking care of the animals – milking them, feeding them and herding them through the paddocks. He is the secretary of a cooperative of 172 shareholders. Only 53 of them are dairy farmers like Kharm. The cooperative works for him, but still he would love more help of machineries, and to have more cows. He wants to expand his farm. ‘There are a lot of opportunities for Dutch entrepreneurs who want to work with us,’ he says. ‘We need machineries so we can grow! Especially in the rainy season our cows produce a lot of milk, which results in very low prices. We need to add value to our milk.’
Aldrik Gierveld, Director European Agriculture and Fisheries Policies and Food Security and Deputy Director General Agriculture and Nature, agrees with Kharm. ‘We as the Dutch government pursue knowledge-transferral, because we think it’s a win-win situation. But you have to balance the Dutch interests with those of the developing markets. Sometimes there is indeed a kind of trade-off, but often it truly is a win-win,’ he says. ‘We try to sell products we developed in the Netherlands, but not all fit the circumstances. We have to adopt and adept to the locally required situation. Glasshouses for flowers for instance are not really necessary and labour is often cheaper than machineries, unlike in the Netherlands. That’s why working closely with local farmers is so important. They have the local knowledge.’
So how does Agriterra help facilitate the collaborations between the cooperatives and the Dutch entrepreneurs? ‘We look at the feasibility of the cooperatives’ business model. Next to that, we bring them together; just like Kharm is here now. In the end we have done our work right if a commercial bank is ready to invest in our businesses,’ Dik van de Koolwijk, business advisor from Agriterra, explains. ‘The Dutch sector is a top sector, mainly because the farmers organize themselves well. I’d like to see farmers from developing countries take the lead in their region. They need to have access to the market, but also take their own responsibility. We can support them, but it’s up to them. Cooperatives can play an important role for these farmers. But a cooperative has a democratic model; members need to be aligned and they need to agree. It’s not always the easiest business model. But if done well you can have a huge impact, especially for small scale farmers.
Matthew Johnson, a dairy analyst from Rabobank, stresses the importance of local knowledge. ‘For dairy in Uganda, we look at levels of population and of income. We look at opportunities and look at building businesses from that. We sit with the farmers and tell them what we think, but you really need to speak to people with local knowledge. It’s really about that: you can not treat Africa as a continent, or as a region. Every place is different from the other one, so one size does not fit all. But there are more and more funds interested in investing in these cooperatives and in building up supply chains.’ Rabobank being a cooperative themselves, Matthew feels it is in their DNA: ‘Commercial bank or not, we want to grow as a cooperative as well. We want to exchange knowledge, because we understand it is a long-term game which needs to be build up over time. We need trust, knowledge and understanding, and tailored solutions for specific markets.’
‘You have to understand that agriculture is a very particular field of business. You need to take into account the given circumstances and the local knowledge from local farmers. Only then you can supply to the wider market. That is why so much knowledge is required before investments can be made,’ says Aldrik. ‘Cooperatives are more than just a businessmodel,’ Dik adds. ‘They are a social model, with corporate social responsibility. Members are members because they want to invest in their future.’ And the direction of the future of farming? ‘Sustainability,’ says Matthew. ‘We will have to feed more people with less land. We’ll have to be smarter about the land we have, and more flexible in the farming systems we use. But I’m positive we’ll make it happen. There’s a lot of smart thinking going on.’
As for Kharm, he can reply with a single word when Janno asks him whether growing the farm is feasible. ‘Yeah!’