Agriculture Input Loans for Rural Livelihood Development

During all of December and January, Nuru Agriculture is distributing loans of agriculture inputs (fertilizer and seed) for maize production to approximately 3,000 smallholder farmers in Kuria, Kenya.  Nuru Agriculture provides agricultural loans as one critical element of its complete farmer package, which includes technical trainings, organization of farmers into small work groups, and agriculture extension support.

The loan concept hinges on three elements: 1) the extreme poor have no or very little access to credit, 2) much less at reasonable interest rates, and 3) have a difficult time finding reasonable supplies and prices of inputs at local markets.

1) Nuru’s target audience consists of those subsistence farmers that do not have enough food to eat during certain months of the year (the hunger season).  They have no savings and few assets besides land, making access to traditional loan products prohibitive.  Nuru Agriculture offers an innovative loan product that specifically targets the extreme poor with a small loan of roughly USD$70.  This provides the capitol to spur income generating activities amongst smallholder Kenyan agriculturalists.

2) Moreover, many traditional loan products to farmers are designed for time periods and at interest rates – often more than 30% – that have the farmer losing money over a field season.  Various reasons compel high interest rates, including the high risk of loan clients (few assets, savings, and limited income potential), volatile price fluctuations, and in some cases simply motivated by the desire to generate profit.  Nuru Agriculture counters the high risk of first time loan clients by training the farmers on loan and farming concepts, employing group loan repayment, and working closely with farmers to establish a strong relationship that ensures their success in the field which helps repay the loan.  Nuru counters price fluctuations by purchasing and storing inputs when prices are low at wholesale.  Nuru Agriculture considers profit generation as an essential activity for economic sustainability, but balances this with concerns of social welfare and accessibility to loan products.

3) Shortfalls in seed and fertilizer supply, paired with consequent elevated prices due to scarcity of commodities, are yearly occurrences in much of Kenya during the December-January planting season.  Nuru Agriculture counters this by buying fertilizers and seeds when prices are low and supplies are high, and then passes on the savings and benefits of a secure supply of inputs to the farmer.

Nuru Agriculture ensures that the main components of its loan program meet the needs of smallholder farmers in financial terms.  Considering the agricultural aspects in the input loan package, however, is essential to meet farmer needs for improved seed and fertilizer.

This year Nuru Agriculture is distributing roughly 36 metric tons of improved maize seed and some 360 metric tons of fertilizers.

The maize seed we offer are those cultivars most demanded by farmers in the area, consisting of different drought and disease resistant hybrid varieties developed and certified for use in Kenya.  We stock particular varieties as they meet the needs of farmers in each area: water-tolerant, fast-growing varieties to give farmers in flood prone areas a quick turnaround; drought-tolerant, longer-season, higher yielding varieties to benefit those areas with a longer period of consistent rains; and everything else in between.  At this time we do not offer genetically modified (GM) seeds, have not developed our own certified seeds, nor do we provide options for open pollinated variety (OPV) seed.  We are currently in research and development of other seed sources and types.

Nuru Agriculture provides two types of fertilizers, one appropriate for use at the time of planting and the other used during early crop establishment as a top-dressing.  Fertilizer use provides the boost in nutrients that crops need to grow optimally.  We are currently researching organic fertilizers to evaluate their feasibility to substantially increase maize output.

Agriculture input loans are one part of the equation proposed by Nuru Agriculture to significantly increase crop yields.  Nuru Agriculture recognizes and respects the hard work and perseverance demonstrated by Nuru staff and farmers to work the land together in a sustainable way for rural livelihoods and the environment.