By Mario Mendes, owner, Frutos da Lagoa
About five years ago, I started a small catfish farm on a piece of rural land [in Angola] owned by my parents. I did not know much about the business as up to that point I had a career in infrastructure and oil and gas. Yet, I thought it could be a fun adventure to diversify into agribusiness.
In the beginning, I must admit, I did not care much about the community. I was there to run a business following the best practices I had learned through my international education and professional experience. I devised an elaborate marketing plan with established profit margins for every participant in the supply chain, especially the distributors.
The results of my “best practices plan” were very different from what I was expecting.
In the process of selling my final product (live fish), I had to interact with a group of women that bought the fish from my farm to sell at the local informal market. I had predicted that a 20% margin would be very generous on my part, given that I was one of the few fish farms around and was able to consistently provide the fish every week. But the women thought my price was too high and would not buy the fish.
I set out to find out why. Just on the 60-kilometre stretch the women had to travel from my fish farm to their place of work, there was the risk of being robbed because they deal in cash as many banks do not cater to the working class. At the same time, conserving the fish in case it doesn’t sell in the first few days was also a challenge.
Adjusting the plan
I needed to change my approach, and I knew I had to build trust first.
I already had a group of women that I consulted. Since we had developed a relationship, I could supply the fish on credit, and they only pay after they make a sale. This way, I lower their risk and I could maintain a sustainable retail margin.
Through these numerous exchanges, I realised that I had to work harder to convince the women because I was an ‘outsider’, in their eyes. They refused to use my scales to weigh the fish I was providing them and they wanted to determine the price. They only trusted what they could see and touch.
At the end of the day, I realised that my sophisticated marketing plan was only good for textbook scenarios. Here in the rural set-up, I was dealing with people’s attitudes, past disappointments and grief of losses.
By creating an innovative value chain, I learned a few important lessons about development.
First, earn people’s trust. We must be able to level with the people we are working with or trying to help. Learn from them. Only then should we try to implement our programmes.
Investing in the community
The Covid-19 shutdown gave me the opportunity to rethink our mission and make new alliances. The social and economic devastation caused by the pandemic made us realise that our mission was not only to maximise our profits but also to grow with our community.
After devising solutions to work with people in the community in terms of distribution, we focused on integrating them into our production cycle. We have created the outreach grower programme where small-scale farmers are trained to grow fingerlings into adult fish in their own ponds, which they then sell back to my processing facility.
In our partnership with a credit cooperative, small farmers are given a loan of $1,000 to build a pond and then are supplied a rotating credit facility of about $1,500 for the fingerlings and feed. They have two harvests per year and my company guarantees purchase of the fish at a pre-approved price.
After paying off the rotating loan and other costs at the end of each cycle, farmers earn about $450, which puts their monthly income at above 200% of the current official minimum wage.
This programme empowers young farmers to became independent fish producers, fully integrated into the supply chain of a product that increases Angola’s food security.
After completing the training and experiencing two or three successful production cycles, these farmers can either increase the number of ponds or became supervisors for other farmers that enter the programme.
At the same time, because all the financial transactions will be done within the cooperative, we are providing these once excluded young men with financial history, which is important to apply for loans from formal commercial banks.
We are proponents of inclusive agricultural development not only because it makes business sense, but also because it creates dialogue. As we grow our programme of including small scale farmers in our supply chain, we will be able to engage many more young people and give them an avenue to express themselves.
This article was originally published by Africa Renewal.