Give The Farmer some 'Credit'

ACCESS to affordable financial credit still remains a leading factor in enabling small scale farmers grow their agricultural activities into thriving businesses. However, a significant number of lending institutions view the agricultural sector as a high risk sector and therefore “…seek to avoid or contain the risk by increasing their interest rates, [reduce] the loan term and [move] to foreclosure in the event of repayment problems.” (Zambia’s Agricultural Finance Market.2009:pg6)

As a result, small scale farmers with very little collateral are marginalized in the sense that they are incapable of accessing such financial credit.

Mpima Dairy Cooperative is a cooperative of dairy farmers based in Kabwe, Central Province, who have grown from milk suppliers to dairy product processors and retailers, thanks to a financial loan that they accessed from the Citizens’ Economic Empowerment Commission (CEEC).

Mpima Dairy Cooperative Board Secretary, Trevor Moono, explained that the Cooperative started in 2004 in an attempt to establish a milk collection centre for dairy farmers in the town.

With a boost from ZATAK, an agro company run by the Zambian Government, and; USAID, Mpima Cooperative were assisted to acquire some processing assets to enable grow from mere milk-supplier Cooperative a dairy processing one. However, their progress was eventually stalled. This is because for any business to survive, a guaranteed market is necessary.

“We saw that we were having challenges in the distribution and marketing of our products and…our chiller truck broke down. So we were having problems with the storage of our milk,” Mr. Moono explained.

It is at this point that the Cooperative submitted a business proposal to CEEC, to source finances to acquire a new chiller and a refrigerated truck. A loan amount of K500,000 was received by the Cooperative in 2015,at a payback term of 5 years.

This loan was the beginning of Mpima’s success story. The then 20-member Cooperative has evolved into a dairy processing organization and now comprises of 70 committed members.

“This loan has enhanced our production and we are able to provide employment to sales agents who collect our milk and milk products,” Mr. Mpima said.

Mpima Dairy Cooperative are currently producers and distributors of fresh milk, fresh cream and various flavoured yoghurt.

This fortunate testimony is a sign that credit is the driving factor to assist small scale farmers transform their agriculture into a business.