Business

Income-generating projects

How have you invested your premium in an income generating project? Do you now have a more stable income?

CASE STUDY 1 – ARTIFICIAL INSEMINATION

Profile:
Rukuriri Tea Factory Company Ltd

Product focus: Tea
Location: Embu, Kenya

Type: Small producer – 9,000 farmers
Fairtrade certified since: 2008

Contact: Patrick Otieno –
potieno@rukuriri.ktdateas.com

Challenge:
Due to unpredictable climatic conditions and ongoing fluctuations of market prices, tea farmers at the Rukuriri Tea Factory became aware of the risks associated with over-dependence on their tea harvest. Management encouraged farmers to expand their revenue base by engaging in other income-generating projects. One of the most successful schemes has been the Artificial Insemination Project.

Solution:
The AI Project came about when community members from nine buying centres were called for a meeting to discuss how to spend the Fairtrade Premium. With Kenya being the largest consumer of milk on the continent, they decided to improve their dairy animals, hence increasing milk production. After the farmers endorsed the proposal, the Kenyan Ministry of Livestock was consulted to find out the necessary requirements to kick-start the project. The setup process proved to be simple and the right equipment was bought, which included:

-          liquid nitrogen and a container for semen storage
-          semen for fertilisation
-          a pistolet, for inserting the semen into the cervix of the cow
-          plastic socks as gloves, to avoid contamination by the animal
-          scissors, to cut straws which contain semen
-          a thermometer, for measuring the temperature of the semen
-          a haversack, to carry all the required materials for insemination
-          a motorbike for the inseminator

With assistance from the Ministry of Livestock, they identified a professional inseminator, who is on stand-by 24 hours a day. The farmers are continually being trained to detect when an animal is in heat — as timing is essential for a successful insemination process. Farmers at Rukuriri have an advantage, since they buy quality seeds at subsidized rates.

Cost:
Breakdown of equipment costs:

Item – Cost
Liquid nitrogen container – 318 USD
Pistolet – 35 USD
Thermometer – 10 USD
Haversack – 42 USD
Motorbike – 1260 USD
Semen – 720 USD
Liquid nitrogen (20 litres) – 47 USD (2.35 USD per litre)
Salary (inseminator) – 110 USD (per month)

Result:
The AI Project has so far been fruitful. 60% of Rukuriri’s farmers declare that their livelihood has improved through higher sales, generated from increased milk production. Some of the farmers even make more money in dairy than in tea farming. In the future, farmers at Rukuriri plan to further invest in animal treatment and to buy a milk cooler to store milk surpluses.


CASE STUDY 2 – FAIR TOURISM

Profile:
Kilimanjaro Native Cooperative Union (KNCU)
Product focus: Coffee
Location: Moshi, Tanzania

Type: Smallholder – 64,000 farmers
Fairtrade certified since: 1993
Contact: Athanasio Masenha –
athanasiom@yahoo.com

Challenge:
Price volatility makes it hard for coffee farmers to predict their income for the coming season. Like Rukuriri, KNCU identified potential projects to diversify the income of their farmers. After discussions with the farmers, the organisation decided to invest in a tourism project. Situated on the slopes of the Kilimanjaro, Moshi attracts, every year, thousands of tourists who might also be interested in learning more about the world of coffee.

Solution:
Project Kahawa Shamba, meaning Coffee Farm, was set up in 2004. In total, 67 farmers were trained in how to manage a campsite, set up tours, and host tourists from around the world. To oversee the project, the organization decided to hire a Tourism Manager.

Today, a fully equipped campsite has room for 20 tourists. Apart from enjoying the beauty of the surroundings, tourists can book different tours for which they have to pay extra. During the coffee tour, they can learn more about the coffee process — from berry to bean — and how coffee farming impacts the lives of local villagers. Visitors can also hike to waterfalls, or visit local tribes.

The farmers are in charge of guided tours, tent camps, and cooking for their guests. The Tourism Manager oversees the project, and helps with marketing and promotion. Flyers and a website are created, and KNCU collaborates with local tourism operators in Moshi, selling the tours to visitors.

Cost:
Kahawa Shamba was initially funded by the British Government’s Department for International Development (through its Business Linkages Challenge Fund), by Twin Trading, Tribes Travel, Cafedirect and the Fairtrade Premium Fund.

A summary of the income and expenditure of the project can be found here.

Result:

Over the past seven years, the project has attracted over 6,000 tourists from 39 countries, mostly from Europe and the US. On average, tourists stay two to five days, making the most of the different excursions offered. Revenue from tourism during the same period gradually increased from 1,875,000 TZS (over 1,100 USD) in 2004 to 227,038,100 TZS (over 40,000 USD) in 2010. The extra revenue has stabilized the income of KNCU farmers. The project even generated funds for community development, paying for new facilities in the area — including the construction of a school.


CASE STUDY 3 – THE PALM OIL EXTRACTOR

Profile:
Kuapa Kokoo

Product focus: Cocoa
Location: Kumasi, Ghana

Type: Smallholder – 74,000 farmers

Fairtrade certified since: 1996

Contact: Maybel Addy – admin@kuapakokoo.com

Challenge:
A majority of Kuapa Kokoo’s members own only small areas of land. As the cocoa harvest varies throughout the year — with main and light crops — these farmers cannot depend on a stable income. Over the past few years, Kuapa Kokoo has invested part of its Fairtrade Premium in several income-generating activities. One of these is the palm oil extractor. Although when harvested on large-scale plantations palm oil has a negative impact on the environment, when produced on a small scale — as done by the Kuapa Kokoo farmers — the outcome has only positive effects.

Solution:
Traditionally, women farmers pound palm nuts in big wooden mortars. In some areas, even children have to help out. The palm oil business is time-consuming, labour-intensive and the output is small. Kuapa Kokoo, therefore, decided to invest its Fairtrade Premium in palm oil machines, which facilitate oil extraction.

The machines crush the palm fruits and squash out the oil from the husks. Every village selects a machine operator who is trained on how to use the extractor correctly.

Due to the investment, the palm oil process is now not only less labour-intensive, Kuapa Kokoo farmers also produce sufficient palm oil to set up different income-generating activities. In Ghana palm is an important ingredient for several popular local dishes. In addition, the farmers make soap out of the oil. As the families are producing larger quantities of palm oil, buyers approach the farmers; while before, Kuapa Kokoo members had to invest time and money into the process of identifying potential traders.

Cost:
In Ghana, a palm oil extractor costs 3,000 GHC (or 1,750 USD).  In addition, the machine needs to be operated with an engine, which can be bought for another 1,500 GHC (or 800 USD). The machines are manufactured locally. In 2010-2011, Kuapa Kokoo invested in three new movable palm oil extractors, all covered by the Fairtrade Premium. Communities do not need to pay a fee but they are in charge of running costs. They also need to sign a Memorandum of Understanding to take ownership of the project. If breached, Kuapa Kokoo can transfer the machine to another community.

Result:
As palm oil production is traditionally done by women, the introduction of the machines has empowered women farmers especially — and more particularly widows and single. Although no figures are available, farmers confirmed that their income has increased and that women were able to further support their families, even during the months when cocoa volumes are low.

For further information, please visit Emilie Persson’s website; she wrote a thesis on the topic: http://fairghana.com/Fair_Ghana%20eng/Masters_Thesis.html