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TMCNet:  SMS Marketing Saves Kamonyi Coffee Farmers From Middlemen

[July 23, 2014]

SMS Marketing Saves Kamonyi Coffee Farmers From Middlemen

(AllAfrica Via Acquire Media NewsEdge) Uwayezu, a coffee farmer belonging to the Karama Co-operative Sacco in Kamonyi District, counts a bundle of Rwf5,000 notes. The elderly farmer has just been paid for the 50kg of coffee cherries he delivered to the co-operative.


Uwayezu can now afford a smile, confident that he will be able to cater for his family's needs unlike a few years ago when farmers barely got anything from their sweat, thanks to 'unscrupulous' middlemen.

Farmers belonging to Karama Sacco produce about 82 tonnes of coffee per season and market their coffee using an SMS (short message service) system that also helps them in bookkeeping. The farmers say the system has enabled them to deal directly with buyers, instead of going through middlemen who charge hefty commissions. In fact, dealing with middlemen, was one of the major challenges farmers faced before they embraced ICT-based marketing initiative. Established in 2012, the Sacco used to sell between 30-40 tonnes of coffee from member farmers previously.

"Farmers had lost morale as middlemen used to charge them a lot of money to find buyers for their coffee," Alphonsine Nyirabungeri, a farmer and an accountant at the Sacco, says. She added that many farmers were reluctant to join the Sacco as they thought it would operate like the middlemen.

Nyirabungeri says within one year, the co-op membership had grown to 51 from 44, noting that this made co-ordination of farmers and recordkeeping more challenging. "It was in fact this that forced us to adapt to new technologies, introducing the SMS system," Nyirabungeri adds.

How SMS system works: "When an exporter places an order, text messages (SMSes) are sent to the farmers with details. The message includes, the quantity of produce required, current stock standing at the Sacco stores, price for a kilogramme of the coffee beans," Chrystome Mbarubukeye, the president of the Sacco, explains. He adds that the Rwanda Trading Company and Rwanda Coffee are their key partners.

"Using feedback from farmers, all details of their garden stock are forwarded to the exporter through a text message that clearly outlines quantity, quality and grade of produce available." Under the system, farmers access information on their mobile phones and respond to the order. The operational code is known by the Sacco accountant and every time she gets coffee orders from clients (exporters), she uses this automatic update system and she sends text messages daily.

"When we receive coffee from the farmers, we grade the coffee, dry it in the shelters, dehull, weigh and pack for sale," says Mbarubukeye.

He adds that the co-operative observes maximum transparency and provides accurate information to farmers or financial institutions and buyers. "If the farmer wants a better price, we link them to another buyer, which has completely eliminated commission-seeking middlemen," he says.

After selling, some farmers receive their money via mobile money transfer service, which they can withdraw and bank. Other coffee farmers keep their money with the Sacco.

Transactions, orders, sales are automatically filed in a computer-based system that prints out balance sheets whenever required.

"The cost of coffee is not constant and also depends on the season weather and crop yield. We sell each kilogramme at about Rwf200, depending on the market trends. Averagely, we make profits of between Rwf3m and Rwf5m each season," explains Nyirabungeri. This system is also helpful to farmers when they want to access credit facilities.

How the system helps farmers to access credit facilities: A 2012 survey by Finscope showed that about 72 per cent of Rwandans depend on agriculture. All these people, however, require financial services to run their farm work.

Two thirds (66 per cent) of adults who already utilise formal financial services also use informal mechanisms. Although these services, such as Village Saving Associations, create opportunities and an improved economic culture, they mostly generate basic short-term savings and credit facilities that can only meet consumption or limited working capital requirements.

Individuals accessing only informal services are unable to obtain finance for investment in equipment or long gestation enterprises like agriculture because groups providing access to informal savings or credit facilities mostly rely on intermediating members' savings. Opportunities for lending/borrowing are limited both by the number of members and the amount they are able to save. However, there are more opportunities to access credit at this Sacco.

"Since the system is automated, all records concerning the farmers' performance and income can easily be accessed. In case a farmer wants to get a loan, details showing the farmer's yield history and sales are printed out and used to evaluate his creditworthiness," explains Jean Bosco Iyacu, the technical manager at Access Finance Rwanda.

Olivier Ndayisenga, a transparency co-ordinator at TechnoServe, says the firm trains Sacco accountants on how to handle the SMS marketing and bookkeeping system.

Farmers laud system: Marcel Bwanakeye, a farmer, says the initiative has helped them get better markets for their coffee, which he notes has enticed many to grow more coffee "as there is no limitation and I can get market for all my coffee".

"Exporters can extend working capital to our co-operatives, but most importantly, we are paid on time. This enables us to pay health insurance (mutuelle de santé) fees and school fees for our children without delay," Bwanakeye adds.

Copyright The New Times. Distributed by AllAfrica Global Media (allAfrica.com).

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