In August 2018, MCE Social Capital made a new US$450,000 investment in Good Nature Agro, a for-profit social enterprise in Zambia. Founded in 2014, Good Nature Agro (GNA) invests in Zambian small-scale farmers to generate lasting income by providing technical assistance, inputs and access to a readymade market. The result has been a two-fold increase in productivity for over 4,800 farmers in Zambia’s Eastern Province.
According to Zambia’s Central Statistics Office, among all the farmers in Zambia, nearly 800,000 (97%) are smallholder or “small-scale” farmers, meaning they have less than five hectares of land, with 70% having less than two hectares and 40% with one hectare or less. Zambia’s Eastern Province — where Good Nature Agro is located —is one of the poorest in the country, with poverty levels at 79%.
A country report produced by USAID in 2016 details four key constraints that are preventing Zambian small-scale farmers from increasing their productivity:
- Low input adoption — less than 40% of farmers utilize high quality seeds and other inputs;
- Low adoption of intercropping methods — intercropping of legumes with maize improves soil fertility, limits erosion and cuts labor time;
- Insufficient storage facilities — leading to high levels of crop loss; and
- Lack of commodity pricing visibility — limited access to market systems cause farm gate prices to maintain low and volatile.
In response to these key issues, GNA has built a new and improved legume seed ecosystem:
- First, GNA multiplies newly released legume seed varieties that have been developed by breeders. These varieties are higher quality but are typically not accessible to the small-scale farmers who need them most.
- The company then provides these high-quality seed inputs to small-scale farmers, with superior training and customer service. Farmers utilize the seed inputs to grow and harvest higher quality legume seeds for sale, which GNA purchases from them.
- Finally, GNA sells these high-quality seeds to private companies producing for the food and oil industry, NGOs, seed companies and government agencies that have an ongoing large demand for seeds.
GNA’s impact is evident across a number of dimensions:
- Increased incomes for smallholder farmers: GNA has been able to raise farmer income by ~200% per hectare.
- Increased employment: GNA currently employs 30 staff and 113 Private Extension Agents (PEAs), who are responsible for managing the relationships with farmers.
- Improved soil health: Legumes (soybeans, cowpeas, groundnuts) as seed varieties improve soil nutrition and fertility by fixing nitrogen in the soil. This is in contrast to maize and other cash crops which can deplete soil health.
MCE Social Capital’s $450,000 investment in GNA is primarily for working capital to help the organization serve a larger number of farmers. With strong demand from both ends of its value chain, GNA is poised to scale – the company began working with just 40 small-scale farmers in 2014. Today, GNA is reaching over 4,800, with the goal of enabling 100,000 farmers to achieve US$600 per hectare in terms of income by 2023.
This investment marks MCE’s entry into Zambia. We are also proud to be collaborating on the loan with Ceniarth, a single-family office focused on funding market-based solutions that benefit underserved communities. Ceniarth will be disbursing US$300,000 alongside our investment, for a total of US$750,000 in debt financing to Good Nature Agro.
Photos courtesy of Good Nature Agro