Access to credit for smallholder producers and SMEs in agriculture is one of the major constraints that limit the productivity and competitiveness of small actors in the cassava sector, as well as their participation in markets.
The limited access to credit and other opportunities by such groups can be attributed to inadequate knowledge of financial service providers in agricultural value chain financing, lack of strategic information, as well as the perceived risky nature of agricultural financing.
To address this gap, an initiative funded by the European Union and implemented by the Ministry of Food and Agriculture (MoFA) with technical support from the United Nations Food and Agriculture Organisation (FAO) called ‘Strengthening Linkages between Small Actors and Buyers in the Roots and Tuber Sectors in Africa’ has been in existence since 2015.
George Prah, Deputy Director, Directorate of Crop Services, MoFA – who spoke on behalf of the acting Director of Crop Services, said in Ghana the project is being implemented in selected districts of the Central, Northern and Volta Regions – designed to transition smallholder cassava farmers from subsistence farming to business-oriented enterprises and contribute to the country’s cassava commercialisation strategy.
Speaking at a workshop in Winneba last week, themed ‘Value chain financing and access to finance by smallholder cassava producers and processors’, Prah observed that the project aims to enhance small actors’ (cassava producers and processors) access to financial information and services while improving the knowledge of financial service providers in agricultural value chain financing.
A facilitator of the workshop, Mr. Kwame Ninson (MoFA), in an interview observed that cassava has traditionally been a food security crop in the country but has gone beyond that and is now a viable commercial product with diversified uses. This has attracted interest from a lot of industries are now using cassava based products for their product lines like the breweries for beer, and for starch among other uses, hence a key objective of the workshop is to enable small producers to see the economic benefits of tapping into these markets, earn a decent wage, and expand their business opportunities.
To this end, part of the workshop’s objective, he said, is to link these small producers and processors with financial service providers so as to explore business opportunities along the cassava value chain and take advantage of it, rather than just viewing cassava as a food security crop meant to fill a hunger gap.
Adding to the discussion in an interview, the Agribusiness Officer and Regional Project Coordinator for the FAO Regional Office for Africa, Moussa Djagoudi, observed that most cassava buyers are going for processed cassava or cassava chips because of its ability to be stored for longer periods – but the machine used is costly to purchase. However, through the project they are able to engage with financial service providers to enable them buy these machines.
Mr. Djagoudi went on to empahasise that the idea of the project is to build the capacity of these producers and processors through business opportunities along the cassava value chain, so that they seize upon them and thereby transform their farming activities from mere subsistence to a business that earns them more revenue and bigger profits.
B&FT also interviewed a cassava processor called Alhaji Musah Ali, whose company – Tropical Starch – is based at Aburu Dunkwa in the Central Region. He said his company deals with farmer-based organisations (FBOs) and individual cassava farmers, but the constraint is that the high-yielding cassava sticks provided by MoFA are being sidelined by the farmers in favour of local ones which are not high yielding.
This poses a problem, because cassava is now a commercial product demanded by industries like Accra Brewery Limited which needs cassava starch in high demand; and since he is not able to meet demand, they have to resort to importing starch.
This causes the country to lose vital foreign exchange and is an employment opportunity that is not being tapped into. Therefore, Alhaji Ali appealed for MoFA to intensify distribution of high-yielding cassava sticks to farmers so that the country can have enough raw material to feed the industries’ demand.
The farmer-based organisations from the five selected districts were West Gonja in the Northern Region with two representatives; Kpando Municipal in the Volta Region with four representatives; Nkwanta South in the Volta Region with one representative; Gomoa East in the Central Region with four representatives; and Awutu Senya in the Central Region with two representatives, totalling 13.
The processors were Tropical Starch, Agrico, and Vakharis Enterprises, while the financial service providers were Stanbic, Opportunity International, Venture Capital Trust Fund and Frerol Rural Bank.
Massimo Pera, Project Coordinator-FAO Headquarters, Rome, told participants that financial market assessment helps financial institutions design products with a value proposition that is better than the current scenario; and to build a strong value proposition, one must understand individual clients’ needs as well as their relationships with key value chain stakeholders.