Fall is the busiest time of year for most Kiva-funded farmers. And it's also the most lucrative, with the bulk of their annual profits coming in all at once. This sounds good, but it also makes the economics of being a smallholder farmer pretty tricky.
Not only do you have to make harvest profits last, but you also have to sink a huge portion of them into buying inputs -- like seeds, fertilizers, tools and more -- when planting season rolls around in February.
Taking out loans has long been a tactic used by farmers to afford these inputs, but not all loans are created equal. Typically, loans for farmers have been structured like any other loan -- with regular repayments coming due at the end of every week or month. But how do you keep repaying on time when no money's coming in until the harvest?
This has become a very difficult, stressful situation for farmers around the world -- many who scrimp and save and barely get by for most of the year, and countless others who have to turn to informal money lenders who charge sky-high interest rates.
Enter One Acre Fund.
One Acre Fund is a Kiva Field Partner that supports smallholder farmers in Kenya, Rwanda and Burundi by providing agricultural inputs (like seeds and fertilizers), training, credit and insurance.
The organization enrolls farmers in its program between July and October. It then purchases inputs during these months when prices are at their lowest, allowing it to pass on savings to the farmers it serves. In February, One Acre Fund delivers the seeds, fertilizers and other supplies it purchased to farmers to kick off the growing season.
Throughout the growing season, One Acre Fund provides its farmers with training and support, and allows them to make repayments for the supplies as frequently or infrequently as they want. Basically, they don't have to worry about hitting monthly and weekly deadlines without income coming in.
Instead, full repayment is only due at harvest time in October when farmers have more cash on hand. Altogether, the program helps these farmers maximize their profits, save money and stabilize their finances. Given that farmers make up the bulk of the world's working poor, One Acre Fund's efforts are perfectly aligned with Kiva's mission to alleviate poverty.
So where does Kiva come in?
Kiva loans give One Acre Fund the capital it needs to purchase agricultural packages for the farmers in its program upfront during the summer. The organization will use lenders' funds to buy seeds, fertilizers and other inputs to distribute to farmers in February.
Most farmers in the program borrow in groups, allowing each borrower to guarantee the loans for every other borrower in his or her group. This is a key strategy for providing credit to individuals who are too poor to put down collateral. This may increase the risk associated with each One Acre Fund loan on Kiva, but it also helps us reach many more smallholder farmers than we could otherwise.
So why are we telling you about this now?
It's One Acre Fund season! Every year at about this time, One Acre Fund raises loans to for its farmers to make their work possible. This is the only time of year that the organization posts loans to Kiva, so get lending before they're all gone!
LEND TO ONE ACRE FUND FARMERS TODAY!
Have questions? Send them our way at blog@kiva.org. You can learn more about One Acre Fund's partnership with Kiva here.
Photos by Rory Winn, Kiva fellow stationed with One Acre fund in Kenya.
