A cornerstone of Nuru Kenya’s model is generating income to drive the organization towards financial sustainability. The engine behind this income generation is the Nuru Kenya Social Enterprises (SE) program. The Nuru Kenya Agriculture program already collaborates with SE on many ventures including input distribution, loan packaging and market provision. For the 2013 short rains season (September-December), the two programs have teamed up again to pilot a new cash crop program aimed at generating revenue for the organization while also increasing farm income for Nuru’s farmers.
The cash crop Nuru is piloting is the African Bird’s Eye (ABE) chili. This pungent chili pepper is a relative of the Tabasco pepper used in many products including dried seasonings, sauces and medicines. The ABE chili was chosen for the pilot after SE analyzed the agronomy and marketability of various cash crops.
Nuru Kenya SE & Agriculture are leveraging their program’s strengths and sharing responsibilities to ensure the success of the pilot project. SE is using their expertise in procurement to purchase and distribute high quality inputs to the inaugural group of ABE chili farmers. Later on, during the harvest, SE will use their market knowledge and experience to buy the farmer’s produce and market the chilies.
The Agriculture program has abundant experience working directly with farmers and has accrued expertise. As a result, the Agriculture program is responsible for farmer mobilization, training and field support. The Agriculture team has recruited 371 of Nuru Kenya’s best farmers and has begun giving them training on how to successfully grow the ABE chili. Similar to the trainings the Ag team conducts on maize cultivation, the chili training series will impart knowledge about a new crop, ensure farmers understand how to meet quality standards and aim to maximize yields. The Field Officers of the Agriculture Program will also make regular field visits to assess the progress of the ABE chilies and advise farmers about how to overcome field challenges.
Each farmer enrolled in the pilot project will grow a half-acre of ABE chili. Limiting the land put to ABE chili cultivation helps manage the risk associated with growing a new crop and ensures the farmer also has land and labor to dedicate to food crops. To get started, farmers take an input loan from Nuru that includes everything they need to grow the ABE chili including seeds, fertilizer, foliar feeds and sacks for drying, among other inputs. The loan costs each farmer between 51-57 USD, depending on the loan option they select.
The terms of the loan differ slightly from the maize loan due to the nature of the crop and the goal of the program. With the maize loan, Nuru Kenya’s Agriculture program seeks to provide farmers with an adequate harvest for consumption so as to eliminate household hunger. However, unlike maize, ABE chili is not a crop that can be consumed by a household in large quantities. Therefore, the farmers do not make cash payments towards their loan to Nuru Kenya as they do with the maize loan. Rather, farmers’ loan balances will be reduced as they bring their ABE chili harvest to sell to Nuru Kenya.
Once the loan has been cleared, the farmers will receive cash from Nuru for their produce. Small-scale farmers often have trouble selling cash crops because they produce very small quantities. Nuru Kenya SE will help farmers overcome this challenge by buying their produce at a fair price and aggregating it. After purchase and aggregation from farmers, Nuru Kenya SE will market the ABE chili to generate income for the organization. To do this, the SE program has secured a futures contract for selling the ABE chili to a reputable exporter. This contract insulates the farmer from the market risks of producing a high-value cash crop. The assurance of a market also means SE is able to contract farmers, which helps guarantee a reliable and adequate supply of ABE chili will be produced.
There are many challenges in developing a new enterprise. Both SE & Agriculture are learning how to streamline and improve the ABE chili project as the pilot progresses. However, having experienced early success in farmer recruitment and input distribution, both programs are optimistic about the potential outcomes. Success of the pilot will result in income increases that are good for everyone. More importantly, success means that Nuru Kenya can begin to scale up an impactful and income-generating project that will support farmers and the organization simultaneously.