A $220 million facility to assist small, rural farmer groups to improve their farming systems and processing activities was unveiled yesterday by the Ministry of Agriculture.
The Enterprise Development Fund (EDF) falls under the Rural Enterprise and Agricultural Development Project (READ), which is a six-year, US$6.9 million project being funded by the International Fund for Agricultural Development (IFAD) and the government. READ is aimed at reducing rural poverty by improving the livelihoods of households engaged in non-traditional agricultural production and agro-processing.
The EDF will be administered by the Institute of Private Enterprise Development (IPED). Access to finance is a challenge to farmers who operate on a small and micro scale even with the development of the micro-finance sector, Chief Executive Officer of IPED Ramesh Persaud noted as the project was unveiled to farmers at the Regency Hotel yesterday. He pointed out that financial institutions are usually scared to back these small agricultural enterprises due to challenges with their management, their marketing efforts, disease outbreak and natural disasters, unpredictable weather, and in some cases inadequate infrastructure, lack of adequate labour, outdated production system and poor business ethics.
Of the $220 million, $180 million will be available as grants for investments on assets that are going to be used for productive purposes and earn revenue in future while $40 million will be available for working capital financing. “To benefit from the facility you must be part of a recognized group or cluster identified and accepted by the Ministry of Agriculture. These groups will benefit from technical assistance to facilitate the preparation of the business plan. It is important to note that financing will not be provided in the absence of a business plan,” Persaud said. He stressed that that financing is not going to be provided to individuals but to the groups. Groups must be located in the rural areas of Regions Two, Three, Four, Five, Six or Ten. A group can obtain up to a maximum of $4 million either as a grant, a loan or as a combination of both facilities.
Persaud said the Ministry of Agriculture will be providing the assistance and funding to prepare the business plan. “Once the business plan with sound marketing research has been completed, the application for grants and loans will then be provided by IPED. Grants will be provided on the viability and sustainability of the proposal,” he explained. “In assessing your viability a lot of attention will be placed on marketing and your ability to sell your products, your production and production processes, the management of your enterprise… and the overall financial feasibility of the project,” he told farmers.
Persaud said that there will be a cost attached to accessing the funding: for grants it will be 6% of the amount requested of which 2% has to be paid for by the beneficiary and 4% will be paid by the fund. For the loans, the standard conditions of loan will apply but at subsidized interest rate of 6%. Repayment of the loans will range from six months to two years and if needed, extended to three years when READ ends, Persaud said. READ was launched in January 2009 and runs to the end of 2014.
Enterprise Development Specialist at READ Khemraj Tulsie noted that market access is the biggest problem facing farmers. He said that by the end of the project, they hope to have worked with 75 to 80 farmers groups. He said that they want to increase market access and there are ongoing studies about how to access the markets and sustain these.
Meantime, Agriculture Minster Robert Persaud said that within the region there has been some progress in recent times with regard to agriculture. “But within the …Caribbean region, notwithstanding the efforts of the Jagdeo Initiative whereby the nine binding constraints are identified and yes access to financing has been identified as one of those, there seems to be little progress in terms of moving the region forward in an aggressive mode as it ought to be in taking care of the food needs,” he said.
The minister told the farmers that Guyana remains focused and dedicated with regard to agriculture development and food security and continues to hold itself out as a country that can offer some solution to the food security dilemma of the region. He pointed out that last year the region imported more than US$4 billion in food which is alarming “but yet at the same time countries such as Guyana, we face tremendous difficulties of even exporting food within the Caricom region and we have to cross through many hurdles.” He said the region as a collective must be supportive of the regional agricultural drive and because Guyana is a lead player “for us market access, the removal of non-tariff barriers must be a must in 2011.”
The minster said financing is a major impediment and the facility offers an opportunity for farmers to lift themselves. But they cannot farm as in the past, he said. “Small farmers must and will have to adjust and adapt to the farming of the 21st century and that is what we are putting the emphasis on.” He pledged that the facility will be managed in a transparent and businesslike manner and the ministry will work with farmers to develop their business plans. He mentioned too that a special facility for medium to large farmers will be launched soon.
Meantime, the minister also pointed out that more than 300,000 acres of ‘Type 1’ land that can be cultivated without encroaching on the forest are available on the coastland. If the Intermediate and Rupununi savannahs are included there would be 2 million acres of land, he noted. “We cannot forever talk about potential and opportunities. We have to make it happen,” he said, adding that this is what government is seeking to do.
In brief remarks, representatives of various farmers groups spoke of their work and some of facilities they hoped to make a reality under the project. One spoke of the need to extend their solar drying facility, another of the need for a processing facility for pepper and another, a cassava mill.
