In October 2018, the Netherlands- based Rabobank Foundation has announced a $260,000 loan to the Tsehay farmer union in Gondar, northern Ethiopia, facilitated by the 2SCALE program. The loan, will allow the union to bulk-purchase oilseed stocks for its cooking oil factory. Around 3000 smallholder farmers will benefit from this loan, and the newly established factory creates 45 new employment opportunities.
Smallholder farmers, and traders and processors who buy from them, are often hamstrung by lack of cash. Farmers are unable to purchase seeds and other farm inputs, so yields suffer. Buyers are unable to buy sufficient quantities, or to pay on time. The collaboration between Rabobank and 2SCALE will help address some of these challenges. The loan to Tsehay, for example, will enable bulk purchases, giving producers farmers a guaranteed market and fair prices.
This collaboration is part of a broader set of 2SCALE program activities that aim to substantially expand the oilseeds sector in the Amhara region. The activities, launched in March 2018, involve 20 smallholder cooperatives and two farmer unions (Tsehay and the neighboring Debark union). Components include farmer training, extension support, supply chain linkages, market studies and branding and distribution strategies. At least half the cooking oil produced will be sold to low-income (BoP) consumers.
Support from the Rabobank Foundation will be a powerful catalyst for change – not only because of the size and favorable terms of the loan but also because of the Foundation’s ethos; its primary objective is to help small rural cooperatives to grow. The Foundation is part of the century-old Rabobank Group, which serves 10 million customers in 40 countries. This kind of financial muscle, combined with its emphasis on financial inclusion, makes it an ideal development partner.
Rabobank Foundation and 2SCALE are currently exploring the opportunity to provide additional loans to two other farmer unions in Ethiopia before the end of this year, making this loan potentially the first of a series of targeted interventions to strengthen the position of smallholder farmers.
Rabobank Foundation is the social fund of Rabobank which, since 1974, has been investing in the self-sufficiency of disadvantaged groups. Rabobank Foundation uses its cooperative roots to promote and support agricultural cooperatives. It provides these cooperatives and their smallholder farmers access to finance, knowledge and networks. The Foundation is active in 22 countries in Africa, Asia and Latin America.
In 2017, they supported 288 projects abroad and reached 4,886,869 small farmers. Rabobank Foundation is also active in the Netherlands to increase the self-sufficiency of vulnerable people.
2SCALE is an incubator program that manages a portfolio of public-private partnerships (PPPs) for inclusive business in agri-food sectors and industries, currently in 6 different countries in Sub-Sahara Africa. 2SCALE offers a range of support services to its business champions (SMEs and farmer groups) and partners, enabling them to produce, transform and supply quality food products. These products go to local and regional markets, including to base of the pyramid consumers.
2SCALE is implemented by a consortium of two organizations, the International Fertilizer Development Center (IFDC) and the Base of the Pyramid Innovation Center (BoPInc), and is (co-)financed by the Dutch Ministry of Foreign Affairs.
For further information contact: Ajay Varadachary, avaradachary@ifdc.org