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TM. from. TM. Pearl’s objective is to be a cooperative owned by small-holder farmer groups. Summary: Develop coops for small holder farmers. Increase production with training, quality inputs, and loan guarantees Specialize in market provision. Solving Underlying Problems Changes Lives.
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TM from TM
Pearl’s objective is to be a cooperative owned by small-holder farmer groups. Summary: • Develop coops for small holder farmers. • Increase production with training, quality inputs, and loan guarantees • Specialize in market provision
Solving Underlying Problems Changes Lives Most of the poor are subsistence farmers: in East Africa is 60-90% of the people. The poverty is profound and the needed change needs to be just as deep to last.
4 Halves of Have-Nots AGRICULTURE WITH FOOD CROP FOCUS NEEDED The story of subsistence farming
Dysfunction in the Food Value Chain Pearl must work on both halves because the problems are linked in a Vicious Cycle Markets Solutions are Needed Too
Color code: Greenis workable Yellowindicates difficulties Redis serious problems
Farmers Lack Access to Crop Input Finance • With careful manual application, it costs $200-$1000 per acre for seeds, fertilizer and treatments • There is not enough money in aid to lift farmers out of poverty. BIG LOANS are needed; more than microfinance offers farmers. • Microfinance constrains people to subsistence.
Farmers Lack Access to Markets What is a market? -List of buyers to negotiate terms (a business function) Distribution systems lacking so need market building (rather than ‘market linkages’) Access paradox: market is BIG but farmer is SMALL (too small to connect)
Interlocking Relationships • Interconnecting finance, markets and farmers is needed • Many microfinance and development programs disconnect them • Local commercial banks need to be involved for sustainability
Key Conclusions • Focus on food crops is needed (export crops are only used because markets are easier) • Massive volume is needed to meet local market needs – so big groups required • Farmers should and are able to produce more but can’t without… • Large loans and guaranteed markets, which are lacking
Strategy: Link Many Farmer Groups Create coops/farmer companies that are formed from small farmer teams. Link coops into a large company for strength and market access.
Strategy: Commercialize Farmers Beyond subsistence to sustenance: Maize fields planted on the same day. (Pearl supported farmer on left.)
4 Steps to Leave Subsistence Poverty Farmer Commercialization Pearl prefers to partner with NGOs Partner w/ local banks (metafinance) Pearl’s focus and income
Strategy: Provide Finance Beyond subsistence: Maize fields planted on the same day. (Pearl supported farmer on left.)
Greasing the Wheels Pearl focuses on markets and finance because most lacking in traditional development approaches. Results need to start with markets not ‘link’ later
Cheetah Innovation: Metafinancewith Catalytic First Loss Capital Metafinance reaches groups rather than individuals Paves the way for commercial bank finance – provides collateral farmers lack to get needed loans Metafinance linked to another innovation: catalytic first loss capital Risk tranches allow for wider participation of lender types Cash sits in bank lending to farmers, unlocking finance
Mission Summary Strategies: • New form of old success: strengthen coops with sub-groups (teams) and JV • Commercialize farmers • Include significant finance • Interconnect with guaranteed markets
Thank You! www.CheetahDevelopment.org