Value Chain Farming Africa provides farmers with bankable Off-Take agreements. By linking farmers to some of the world’s largest produce buyers and distributors, we give them a reason to commit to their agribusinesses on the back of a secure market.
Wether one is using their own personal resources, getting a grant or borrowing. The question of market availability is always important. A strong market means the business is going to make money and be able sustain its life, grow and settle its financial obligations. Our Off-take agreements also help to de-risk the investment for financiers., as they is a guarantee of the business making money. In other words, whilst they may still be risks to the production process, the finance may as well take the same form as Order Financing, which is a favorable instrument for most funders.
Through our Farming AS A Business approach to agriculture, our farmers are able to take on their farming businesses with a corporate or commercial perspective. This involves putting much importance on proper business administration as on production itself. A properly managed business, eventually grows, as it has the ability navigate the challenges posed by both the internal and external business environment. We treat our farmers as big corporate CEOs, with full knowledge that in them lies as much potential to build large agribusiness empires.
Training and Extension Support
Training is a key driver in all our projects as farmers learn how to run a profitable farm. With pressure from a changing climate, new kind of pests and diseases, it calls for farmers learn new methods of farming. An advanced set of knowledge and skills is needed to increase yields and quality of produce. This is even more important to Value Chain Farming Africa’s Business Model as it revolves around moving produce across international borders.
However, we don’t make it a Farmer’s problem alone. We offer a 7 skills extension team to all farmers, the skill set includes quality control, contract management, policy control, markets specifications, input or stock specialists, technological support, and business administration.
With Climate change, it has become difficult for farmers to plan against rain-fed agriculture. We are on a drive to develop 240,000,000 Hectares into irrigated land over the next 1o years. With the global population rapidly rising, especially here in Africa, we are working harder to provide enough food for everyone and in a way that doesn’t destroy the environment. Boreholes and Drip feeding our crops is our primary solution. These systems are not only efficient in their delivery, but are also cost effective on farmer to farmer basis.
By Using Irrigation, we not only safeguard the crops, but we safeguard the farmer’s investment as well. Whether it be personal resources, grants or loan finance, the investment has to grow and never to be lost.
All our above finance drivers are aimed at mitigating what is within the farmers and VCF Africa’s control. For such risks that are outside our control, the farmer’s investment is protected through insurance. We are religious on taking up loan insurance, asset insurance and production insurance. However, we also promote other insurances products like, Medical Aid and Life Cover.
As a form of project insurance, we also advise our farmers to diversify their investments into property, money markets and other forms of businesses
3 Types of Funds We Support
These are the 3 Major sources of finance we promote to our farmers.
Personal Savings & Investments
- You will know exactly how much money is available to start and run your business and you will not have to spend time trying to secure other forms of funding from investors or banks.
- Self-financing your business gives you much more control than other finance options. It also means that you don’t need to pay back or rely on outside investors or lenders, who could decide to withdraw their support at any time.
- You will retain full ownership of the business, which in turn means that you will receive 100 per cent of future profits.
- If you fund a business yourself, you will be forced to live within your means, only investing in business equipment and marketing when you need to. This can help you to prioritise your business expenditure and avoid excessive spending.
A personal loan is a useful tool for financing your farm because of the following advantages.
- It’s easier to qualify for a personal loan. Funders in Africa are still shying away from funding agribusiness start-ups. We recommended you take advantage of our Key Drivers above and shoulder the risk yourself. You’ll likely have trouble finding a business lender willing to work with you. Getting approved for a personal loan can be much easier because the lender looks at your credit history and income, not your business’s finances. Our business plan will only be submitted as courtesy. You don’t need to provide extensive documentation like you would for a business loan. Plus, the terms can be more favorable to you. If you have a strong personal credit score or significant equity in your home, the terms of the personal loan may actually be better than what your business could get on its own. Many personal loan lenders offer low interest rates to borrowers with high credit scores and stable incomes.
- Lenders disburse the funds quickly. In our experience the process of a start-up agribusiness loan in Africa can take weeks or even months. In contrast, lenders often disburse personal loans in a matter of days. So, if you need funds quickly, a personal loan might be the best option to get the capital you need.
- You don’t need collateral. Most business loan lenders require you to put down assets, such as your house, cars and inventory, as collateral. If you fall behind on your payments, the lender can seize those assets. Unlike business loans, most personal loans are unsecured and don’t require collateral. If you become delinquent on your loan, your credit can be damaged, but the lender in most cases can’t or will take longer to seize your assets giving you time to find your feet again..
Retained Profits and Revenue
Re-Investing your earning into the business is the best way to grow your farm business and even to start other ventures. If you have other businesses, its equally great to invest your earnings from there to start your farm enterprise.It has the following advantages
- Increase the value of your business portfolio.
- Demonstrates your corporate stability, and will actually find you being chased by banks to finance you.
- Provides funds for research and expansion without increasing your debt.
Ecc 11:1 & 2 – Invest your money in foreign trade, and one of these days you will make a profit. 2 Put your investments in several places—many places even—because you never know what kind of bad luck you are going to have in this world.
Using your other businesses to start up your farm business is a strategic decision, when running under Value Chain Farming Africa. Your farm venture will very well hedge your other businesses from their own volatility. Be sure the same will happen on your farms rainy day.
Also use your farm earnings to start other types of ventures in other industries to diversify your farm’s business portfolio.
Borrowing to Start Your Farm Business under Value Chain Farming Africa’s Model is also practical. Our Key drivers will help you hedge the risks of borrowing, notwithstanding anomalies. They are also some advantages to taking this option.
- Repayments of business loans can flexible depending on the financiers products.
- Interest paid on business loans is an expense hence it lowers your corporate tax.
We all wish Non-Recourse funds or Grants were as available for African farmers. and where we have access we are always supporting our farmers to get assistance. However, the challenge with Grants, is the demand pressure on them and sometimes the process may take ages. For this reason, we encourage our farmers to treat their farms as business corporations and always look for progressive ways to promote their business within their control. Waiting is what the continent has been doing, and we can’t afford it anymore.
Please note that when you choose this type of Finance, neither Value Chain Farming Africa nor any of its Strategic Business Units has the power to influence the way your application will be handled. Hence the approval of the loan and the eventual turn around time are outside our control. .
Commercial Bank Loans
They are a number of banks offering commercial agribusiness loans. We advise this option on back of the bankers efficiency in processing your application. sooner rather than later you will know whether you personal or business loan application has been successful.
Although charging higher interest rates, these institutions are well known for processing loans faster. sometimes it can even take you minutes to get assisted and begin your journey in farming. We recommend our farmers to take up smaller loans against personal income so as to allow the farm business to grow the money without the repayments pressure usually associated with micro-finances.
Government Related Funds
These funds or institutions usually have products sovereign tailored specific to the needs of the people and to the strategic plan of the nation. Most African countries are relatively champions in the world in structuring such funds. The challenges with these funds are normally the bureaucracy and inefficiency around the implementation. Funds are usually disbursed out of time, However as Value Chain Farming Africa we are doing our best to forge relationships and understanding around the inefficiencies to ensure successful implementation of such. We are also promising these funds, how will hold the farmers’ hands and ensure meaningful impact is achieved beyond even the strategic expectations.
Credit Suppliers, Buyers, Private Companies
As Private companies, their sole purpose is to maximize their profits. Value Chain Farming Africa and its farmers respect this quest by ensuring the funds are not only efficiently utilized but also grown as much as possible. By doing this we continue to make inroads into the rich land of private capital.
Usually given by the governments or nonprofit organizations, to fund certain projects. We assist our farmers in accessing any grant finance that may be available to them. We assist in compiling the necessary documentation and rationale as required by the fund. However, we also wary of the delays that is associated with these type of funds. We believe with continued relationship building and maximizing impact, together we will soon overcome most of the bottlenecks associated with grants.
International Funds are usually strict with their goals, whether it be growing their investment or impact. Value Chain Farming Africa and its farmers work together day and night to ensure every form of finance that comes their way is efficiently utilized.