Sustainable farming through innovative public-private financing structures

Milly Monkhei

This is according to Milly Monkhei, senior lecturer and head of the department of Agricultural Economics, Education and Extension (AEE) at the Botswana University of Agriculture and Natural Resources - BUAN the former Botswana College of Agriculture –BCA.)

Monkhei says there are numerous challenges in the sector. Most importantly is that agriculture is capital-intensive and capital is not readily available to invest in agriculture. Serviced land for agricultural production is another challenge, as well as difficulty in market penetration by smallholders. Weather conditions are also a challenge but Monkhei says that with capital, the impact of weather can be significantly reduced.

A capital intensive venture

“Firstly farming is a capital intensive venture. Hence an undisputable fact that financial resources are critical to the success of every farming operation. But although farmers need finance for their operations (either through equity financing or financial assistance on credit terms or grant,) their operations/farms are different in many aspects:

• The size of operation
• Experience in their farming operations
• Purpose/ objective of farming (subsistence/commercial)
• Degree of technical expertise
• Value of investment in farming operation
• Relationship with financiers – commercial banks, financing institutions, donors, NGOs, etc.

On the other hand, Monkhei says farmers should consider and ask the following about the financing party:

• The understanding of the farming subsector/industry experience - Do you know what farming entails? How do you finance farming or even agriculture in general?)
• Adequacy or ability to (sustainably) finance farming
• Attitude (associated with the level of commitment and risk involved in farming) - What is the attitude of the financier in financing farming?
• Risk (inevitably, farming is a risky venture) - Are you aware of this? What is your risk response?
• It is a fact that an unfavourable economic environment creates uncertainty for the financier to want to distribute finance to the farmer (the convergence of risky routes) - How do you as a financier cautiously tread the terrain?

SuSanA Secretariat via Wikimedia Commons

“When we have realised there exist public-private financing structures which are mindful of the attributes of the farmer and the financier as discussed above and we can identify and name a few such structures, then we can recommend scaling up of the adoption of the best practices these structures display and monitor, as well as evaluate the adoption process to ensure safe and sustainable farming,” Monkhei adds.

Agripreneur

As a university, BUAN’s key areas of focus is aligned with the national strategy, particularly singling out two pillars of the seven pillars of the national strategy: “An educated and informed nation” and “A Prosperous, Productive and Innovative nation.”

“There are positive developments showing up in our area of focus. The youth has shown interest in agriculture by starting and running their agricultural enterprises, having discussion forums in agriculture, and implementing workshops to learn from each other.”

“Since our mandate is to train, we have started the student enterprise program – Agripreneur – to train students in agribusiness management. The University is intending to acquire land, service it and lease it to graduates who want to go into agribusiness. The plan is to acquire land extensively throughout the country to reach graduates across the nation if resources allow and with strategic partnerships.”