By: Nghiinomenwa Erastus
Various medium and bulk buyers of farm produce are refusing to go into committed procurement/supply agreements with upcoming women and youth producers.
They are citing fear of inconsistency and quality of produce. As a result, young and women farmers cannot access capital under the collateral-less credit facility at Agribank.
According to an assessment by the agricultural lender, Agribank- the result was released in a statement this week.
Agribank discovered through their countrywide stakeholder engagement sessions on the Women and Youth Loan Scheme currently being offered.
To enable access to funding to collateral-less women and young agri-preneurs, Agribank innovated a cash flow lending facility based on an offtake agreement between a farmer and the potential buyers.
Despite the cash flow lending financing option offered by Agribank, “the agriculture entrepreneurs are unable to obtain offtake agreements with potential buyers of their produce,” the bank revealed.
During the sessions with the agricultural entrepreneurs, they have highlighted that when they approach potential buyers/off-takers for agreements, buyers are hesitant to enter into such contracts.
The farmers revealed that buyers’ hesitancy is due to uncertainties with delivery consistency and quality of the product.
While some are blaming the supply of unsorted produce in terms of sizes and quality, especially by horticulture producers.
The Namibian economy is faced with access to capital problems, especially for small entrepreneurs- with the main impediment being collateral (an asset to pledge to financiers).
Agribank spokesperson Fillemon Nangonya explained that the cash flow lending facility targets unemployed agriculture entrepreneurs and requires clients to provide a valid offtake/ supply agreement based on the project’s cash flow projections.
This agreement is a commitment between the farmer (who is the producer) and an off-taker (who is the buyer of the produce) whereby the farmer commits to supply the products and the off-taker pledges to buy the produce from the farm.
As a result, the refusal by the small, medium and bulk buyers to go in supply agreement with the upcoming farmers has also blocked their access to funding.
Given the affordability of the highlighted agriculture financing options in terms of requirement, Agribank is urging various potential buyers/off-takers to support the intervention.
“Thus, Agribank is encouraging buyers/off-takers such as retailers to assist farmers with such agreements to fulfil “The Grow at Home Strategy” of the government,” said Nagoya.
To the upcoming and emerging farmers and agri-preneurs, Agribank is urged to work hard and meet the required standards of the buyers/off-takers.
Regarding consistency in supply, the Agribank recommended that the farmers try various arrangements such as joint ventures/production to meet supply. Email: firstname.lastname@example.org