Day 7- Understanding the Farmers
Today was another incredibly enlightening view. We met with small farmers who are the ones who are really suffering from some of the climate changes. We learned their concerns and what might work in terms of improving their risk management of crops. (And what they told us was something that foreign organizations working with farmers here really need to hear because some of them are doing great and others are actually counterproductive.) We also met with two NGO’s (one local and one from the U.K) who are working with the farmers at this level, and got their perspective too. Finally we met with a young Ghana college grad who is doing just some amazing work in small business development. His organization seems to have it right. We then drove to Tamale. Stopped at the Kimtaba Falls. See photo. As we got farther north we saw more thatched roof structures and mosques.
Meeting at Forikum.
Around 7:30 a.m. we met in a small village where Peace Corps volunteer Greg Yeich lives and works as a an environment worker helping farmers with their crops. We learned that they are dealing with some changes in the when the rainy seasons. I now understand that at this point the issue seems to be, less the change in the amount of rainfall, but the timing of the rain. This is vexing the farmers because if they plant too soon, on their traditional time tables, and the rains come late, their crops fail. (That is an incredibly important variable in designing a rainfall-indexed insurance product). The crops they grow in this area are maize (corn), cassava, yams, and some onions and tomatoes. Most of what these farmers (who own 2-10 acres) grow is eaten by them. Some surplus (when they have a surplus) goes to market. There is a push by government to try to get subsistence farmers to grow crops for sale as well. Greg showed us some recently introduced new alternative agricultural income that had proven to successful. Examples include bee-keeping (wildly successful), cashews, mushrooms, and dry season vegetable gardens, plus some livestock farming (cows, goats,chickens).The gardens where Greg had his crops was one of the few that was fenced in.(To keep the goats out). He used bamboo materials to construct it and you can see that in the photos. This enables him to farm close to his house. Many of the local farmers plant a ways out of town because if they plant close to town the goats eat their crops. The local farmers may actually not be able to afford the nails needed to construct the fences. We found out that the cost for farmers to get loans to buy their inputs (seeds, fertilizers, etc) has around a 30 percent interest rate. That is prime rate here for all loans.
The farmers are concerned about taking out loans from banks because if they have a loss and don’t pay they can be taken to court, and even end up in prison. Some of the banks have flexible time schedules that would allow a farmer to repay later if they have a loss. But according to the group we talk to, one bank, reported run by a well-known American non-profit organization was very inflexible. They took the farmers to court immediately and so the farmers had to leave the area or face criminal prosecution. (Also, another way that some lenders deal with delinquent loans is through local nanas (chiefs) rather than the court system. I was glad to hear that one American organization, Heifer International, was very well-respected and their efforts seem to do a lot for farmers. (They provide a cow, chicken, goat, bee, etc. with the stipulation that the farmer passes along the offspring to another farmer. This seems to work very well according to the group I spoke with.)
The Forikrom Farmers Group
The Forikrom village is about 5 families of 5000 people (Yes, there are about 1000 in each extended family). The Forkikrom Farmers Group I met with was a group of twenty farmers (men and women) and was formed in 1992 as an effort to replant trees near a river. (The local farmers had planted too close to the stream, and lost the shade provided by the trees. The stream dried up. So they mobilized and replanted trees, and the stream once again returned to its regular flow. Since they had formed together they decided that it was a good idea to continue as a group and looked for other activities to do. About this time a retired South African military officer, who everyone just calls Mr. Rankin, was on a church mission trip for his church. He taught the local people how they could grow different crops in the dry season, with different techniques. They just needed to grow them near the river (or do some rain water irrigation) and so he trained this group and they went out and trained others. This is still occurring to this day and his legacy lives on. The only challenge to this is that it is very capital intensive. It costs about $500 for an acre to grow onions, carrots, tomatoes, cabbages. That will pay off in more than $1000 in income, but coming up with the $500 is a real challenge for most farmers at this level.
One of the things that Greg has been working with the group on is alternative crops like cashews trees (which will produce in a couple of years), mushrooms, and bee keeping (which takes very little capital and is really taking off). The beekeeping ended up leading to a form of insurance. The way it works is that each of the twenty farmers will contribute one jar of honey to the group. They then sell this and but the money in a bank. They expect that the following year one or two of the farmers will have crop losses. When that occurs the group gives the money to these farmers who suffered the loss. That works really well. What is interesting is that because this new alternative income is kind of viewed as “surplus” they are willing to make that contribution. However, the other groups who have not yet adopted the new alternative crops seem less willing to voluntarily set aside part of their traditional crops, like maize, for “insurance” purposes. They see the need to hold on to this. They just don’t seem to view it the same way. However, some of the Nanas (chiefs) have this “insurance” system in place and require each member to contribute some maize to the village at harvest, to be saved in the event that there is a crop loss. This practice seems to vary by village, so I am meeting with some local Nanas to find out how common this “traditional” form of risk retention group is. It actually offers a great educational opportunity if it is not that common. And it might be a good time to introduce the concept as they introduce these new alternative incomes (which are still viewed as surplus) and more likely to be directed to a new form of group “insurance”.
The Nanas are really the ones to start with. They need to approve the idea and in talking with people they are the front line defacto "underwriters" as they will help direct rurual banks to the best farmers groups to give loans to, and quite possible the best groups to insure (as that becomes a possibility).
We then drove about an hour to meet with Nana Adams executive Director of local NGO and Greg’s supervisor and Julliette Lampo Director of Concern International. They both said that there is a huge need for some type of insurance to help farmers. They concurred with some of the suggestions made by the crop experts at our brainstorming session at KNUST about how to roll out such a product and who should be target market.
Understanding Small Business Development in Ghana
After that meeting we met with an amazingly impressive young man Kwaw Adams, (son of Nana Adams) who had just graduated from college and was working with helping small businesses develop. He walked us through an extensive process of how they chose business sectors to concentrate on in a particular location (i.e Poultry-egg production, ceramics, and hospitality) and how they went about selecting those sectors. Very well thought out. Then they advertise for businesses to help get started. They then go through an extensive process of screening, doing a SWOT analysis, doing business development plan, arranging capital with local banks (and they have a way of even choosing the banks to work with), and then providing educational training to make sure the entrepreneurs thrive. In their first pilot group of 2007 they chose 28 businesses. 25 are still operating, and because they do working capital analysis, he knows that those are doing well. This is supported by the foundation for an American company doing mining in Ghana, and they focus on communities where there are mines, but this model could work anywhere.I took about 10 pages of notes on that. I will tell you one major lesson for development. It all hinges on good record and bookkeeping with the small businesses. Without that foundation. It is not sustainable. Can't get bank loans, can't diagnose business problems etc. without good records. We asked if he saw a need for insurance. He said absolutely. First pension and health insurance. This is offered through the government. Cost is about $10 a year. The businesses need to develop a bit more, but that is something he plans to talk with them about and would like to meet insurers willing to work with his businesses. He started a second group of 28 this year.Interestingly, he noted that there was a credit default risk product that was started by some church called Economica Church Loan Fund. They require farmers to put up some additional money for default risk insurance. But if they pay their loan off on time, they get the money back. That seemed to work according to Kwaw. Will be interested in hearing if any other institutions do this.
Well,we pulled into Tamale at night. It was really HOT as everyone had warned. HOT Tamale. It is actually pronounced Tom-ah-Lay. Funny, when we pulled into the hotel their was a group of students (11 of them) from Michigan doing study abroad. Health Education. The lobby of the Mariam was full of Americans. Not what I expected to see when I pulled into a hotel in northern Ghana. Will try to post some photos later today.
Faithfully submitted,
Jim
Today was another incredibly enlightening view. We met with small farmers who are the ones who are really suffering from some of the climate changes. We learned their concerns and what might work in terms of improving their risk management of crops. (And what they told us was something that foreign organizations working with farmers here really need to hear because some of them are doing great and others are actually counterproductive.) We also met with two NGO’s (one local and one from the U.K) who are working with the farmers at this level, and got their perspective too. Finally we met with a young Ghana college grad who is doing just some amazing work in small business development. His organization seems to have it right. We then drove to Tamale. Stopped at the Kimtaba Falls. See photo. As we got farther north we saw more thatched roof structures and mosques.
Meeting at Forikum.
Around 7:30 a.m. we met in a small village where Peace Corps volunteer Greg Yeich lives and works as a an environment worker helping farmers with their crops. We learned that they are dealing with some changes in the when the rainy seasons. I now understand that at this point the issue seems to be, less the change in the amount of rainfall, but the timing of the rain. This is vexing the farmers because if they plant too soon, on their traditional time tables, and the rains come late, their crops fail. (That is an incredibly important variable in designing a rainfall-indexed insurance product). The crops they grow in this area are maize (corn), cassava, yams, and some onions and tomatoes. Most of what these farmers (who own 2-10 acres) grow is eaten by them. Some surplus (when they have a surplus) goes to market. There is a push by government to try to get subsistence farmers to grow crops for sale as well. Greg showed us some recently introduced new alternative agricultural income that had proven to successful. Examples include bee-keeping (wildly successful), cashews, mushrooms, and dry season vegetable gardens, plus some livestock farming (cows, goats,chickens).The gardens where Greg had his crops was one of the few that was fenced in.(To keep the goats out). He used bamboo materials to construct it and you can see that in the photos. This enables him to farm close to his house. Many of the local farmers plant a ways out of town because if they plant close to town the goats eat their crops. The local farmers may actually not be able to afford the nails needed to construct the fences. We found out that the cost for farmers to get loans to buy their inputs (seeds, fertilizers, etc) has around a 30 percent interest rate. That is prime rate here for all loans.
The farmers are concerned about taking out loans from banks because if they have a loss and don’t pay they can be taken to court, and even end up in prison. Some of the banks have flexible time schedules that would allow a farmer to repay later if they have a loss. But according to the group we talk to, one bank, reported run by a well-known American non-profit organization was very inflexible. They took the farmers to court immediately and so the farmers had to leave the area or face criminal prosecution. (Also, another way that some lenders deal with delinquent loans is through local nanas (chiefs) rather than the court system. I was glad to hear that one American organization, Heifer International, was very well-respected and their efforts seem to do a lot for farmers. (They provide a cow, chicken, goat, bee, etc. with the stipulation that the farmer passes along the offspring to another farmer. This seems to work very well according to the group I spoke with.)
The Forikrom Farmers Group
The Forikrom village is about 5 families of 5000 people (Yes, there are about 1000 in each extended family). The Forkikrom Farmers Group I met with was a group of twenty farmers (men and women) and was formed in 1992 as an effort to replant trees near a river. (The local farmers had planted too close to the stream, and lost the shade provided by the trees. The stream dried up. So they mobilized and replanted trees, and the stream once again returned to its regular flow. Since they had formed together they decided that it was a good idea to continue as a group and looked for other activities to do. About this time a retired South African military officer, who everyone just calls Mr. Rankin, was on a church mission trip for his church. He taught the local people how they could grow different crops in the dry season, with different techniques. They just needed to grow them near the river (or do some rain water irrigation) and so he trained this group and they went out and trained others. This is still occurring to this day and his legacy lives on. The only challenge to this is that it is very capital intensive. It costs about $500 for an acre to grow onions, carrots, tomatoes, cabbages. That will pay off in more than $1000 in income, but coming up with the $500 is a real challenge for most farmers at this level.
One of the things that Greg has been working with the group on is alternative crops like cashews trees (which will produce in a couple of years), mushrooms, and bee keeping (which takes very little capital and is really taking off). The beekeeping ended up leading to a form of insurance. The way it works is that each of the twenty farmers will contribute one jar of honey to the group. They then sell this and but the money in a bank. They expect that the following year one or two of the farmers will have crop losses. When that occurs the group gives the money to these farmers who suffered the loss. That works really well. What is interesting is that because this new alternative income is kind of viewed as “surplus” they are willing to make that contribution. However, the other groups who have not yet adopted the new alternative crops seem less willing to voluntarily set aside part of their traditional crops, like maize, for “insurance” purposes. They see the need to hold on to this. They just don’t seem to view it the same way. However, some of the Nanas (chiefs) have this “insurance” system in place and require each member to contribute some maize to the village at harvest, to be saved in the event that there is a crop loss. This practice seems to vary by village, so I am meeting with some local Nanas to find out how common this “traditional” form of risk retention group is. It actually offers a great educational opportunity if it is not that common. And it might be a good time to introduce the concept as they introduce these new alternative incomes (which are still viewed as surplus) and more likely to be directed to a new form of group “insurance”.
The Nanas are really the ones to start with. They need to approve the idea and in talking with people they are the front line defacto "underwriters" as they will help direct rurual banks to the best farmers groups to give loans to, and quite possible the best groups to insure (as that becomes a possibility).
We then drove about an hour to meet with Nana Adams executive Director of local NGO and Greg’s supervisor and Julliette Lampo Director of Concern International. They both said that there is a huge need for some type of insurance to help farmers. They concurred with some of the suggestions made by the crop experts at our brainstorming session at KNUST about how to roll out such a product and who should be target market.
Understanding Small Business Development in Ghana
After that meeting we met with an amazingly impressive young man Kwaw Adams, (son of Nana Adams) who had just graduated from college and was working with helping small businesses develop. He walked us through an extensive process of how they chose business sectors to concentrate on in a particular location (i.e Poultry-egg production, ceramics, and hospitality) and how they went about selecting those sectors. Very well thought out. Then they advertise for businesses to help get started. They then go through an extensive process of screening, doing a SWOT analysis, doing business development plan, arranging capital with local banks (and they have a way of even choosing the banks to work with), and then providing educational training to make sure the entrepreneurs thrive. In their first pilot group of 2007 they chose 28 businesses. 25 are still operating, and because they do working capital analysis, he knows that those are doing well. This is supported by the foundation for an American company doing mining in Ghana, and they focus on communities where there are mines, but this model could work anywhere.I took about 10 pages of notes on that. I will tell you one major lesson for development. It all hinges on good record and bookkeeping with the small businesses. Without that foundation. It is not sustainable. Can't get bank loans, can't diagnose business problems etc. without good records. We asked if he saw a need for insurance. He said absolutely. First pension and health insurance. This is offered through the government. Cost is about $10 a year. The businesses need to develop a bit more, but that is something he plans to talk with them about and would like to meet insurers willing to work with his businesses. He started a second group of 28 this year.Interestingly, he noted that there was a credit default risk product that was started by some church called Economica Church Loan Fund. They require farmers to put up some additional money for default risk insurance. But if they pay their loan off on time, they get the money back. That seemed to work according to Kwaw. Will be interested in hearing if any other institutions do this.
Well,we pulled into Tamale at night. It was really HOT as everyone had warned. HOT Tamale. It is actually pronounced Tom-ah-Lay. Funny, when we pulled into the hotel their was a group of students (11 of them) from Michigan doing study abroad. Health Education. The lobby of the Mariam was full of Americans. Not what I expected to see when I pulled into a hotel in northern Ghana. Will try to post some photos later today.
Faithfully submitted,
Jim
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