In the last installment of this series, we talked about how complex the problem of hunger is – and that source of hunger is not the lack of production. The source is a broken value chain. In this installment we will present straightforward concrete steps that can address many of these problems. Is it easy to accomplish? No, and it’s definitely harder than just giving away food. But it can make a lasting change.
(Pictured: a village farm.)
Cheetah uses an innovative model of micro-venture capital. This model combines micro-finance and venture capitalism by way of university partnership. As a result, the cost of investing is lowered and we are able to provide investments in small businesses in the developing world. (To learn more about this approach and its many benefits, please visit our website at http://www.cheetahdevelopment.com/ )
We are now working on applying this model to the food value chain.
As we have previously said, business is the only successful model for economic development in the history of the world. The vast majority of the problems of hunger in Africa do not stem from lack of production, they stem from lack of an effective food value chain: purchasing, transportation, storage, processing, preservation, etc. These are all businesses! The solutions do not lie in giving away food. They lie in creating businesses. How do you do that? You invest and mentor and you do it strategically. You invest in agribusiness.
What does strategic investment look like?
Well let me first say what it doesn’t look like because I think there are some myths that have been created by western perceptions:
- It’s not bringing western farming methods with big tractors, plows, etc. Remember, the core problem is not production; it’s value chain. African countries are 70-90% subsistence farmers; they cannot proceed in one fell swoop to the western model of 3%. No one would have a job and dependency would be worse than ever.
- It’s not rushing to build gigantic western style food factories. The local value chain is too fractured for that. Neither enough commodity inputs nor the effective distribution to receive and sell all of the production is currently unavailable. No, the economy must grow from the ground up just like economies always have. And just like Brazil, Russia, India and China, it can happen quickly. But that means economic investment not drowning in donations.
(Pictured: rice waiting to be milled.)
- I think a desire for western style production has caused too much emphasis on exportable commodities like coffee, tea, sugar, chocolate, and vanilla. How much coffee, tea and sugar can the world really use? (Though in my opinion, it can always use more chocolate – ha!) And notice two other things: with this approach local people are not fed and local value chains are not fixed. One good thing: some local people have a successful business and income though they are very interlocked with western economic swings.
- Finally, to the disappointment of many locals, it does not involve investing in any individual farmers. That’s picking winners and losers and the value chain is still broken. Rather it is finding businesses that can benefit many, many farmers and many, many consumers and demonstrating that the value chain can work.
On the positive side of the coin, what is Cheetah’s agribusiness investment strategy? It’s deceptively simple. It’s finding agribusinesses to invest in that primarily fall in the following three categories:
1. Unite Farmers: Bring farm production from many farmers together to increase value and provide reliable, consistent food processing inputs
2. Preserve Food: including in large volumes and not just flavoring sauces and jams, which are common.
3. Add Value: move from food commodities to products through improved quality, unique characteristics, processing, etc.
Don’t jump over this list. It is the heart of our discussion. This is how Cheetah will work to address hunger through small businesses.
(Pictured: brooms made from maize stalks and sunflower oil.)
In the previous blog on this subject, I listed at least 14 ways the food value chain is broken in Africa. It is a complex and interwoven subject.
However, the three investment strategies laid out directly address all of these problems but a few: drought, government disincentives like inappropriate taxes, and corruption. But even these three are partly solved by our strategies and our micro-venture capital model of investment:
1. Drought: widespread drought and famine are one type of problem and relatively rare. The more common problem is localized droughts. Here the solution is to have a working food value chain so one region’s production can serve another. However at this time, production in the rural area is not even effectively reaching the nearby town.
(Pictured: food coming to market.)
I emphasize ‘business’ because without this approach it will fail. For example, a farmer’s cooperative for its own sake is a club. A cooperative for business will be a holistic solution that makes sure that production is hooked successfully to the market.
In this context ‘business’ can mean sustainable, transparent, and results oriented: the way to change people’s lives. People really can move from subsistence to substance.
There is a way to end hunger.
We will start by making a dent:
Though small, it will be sustainable.
Though small, it will bring lasting change to the people involved.
Though small, it will be replicable.
Though small, it is designed to grow.
We will emulate the mustard seed and spread like a weed.
This is an innovative but difficult project. We need the help of thousands to succeed. Won’t you join us? Go here to learn how: http://www.cheetahdevelopment.org/How_to_help.htm
Next: the Model Village Project. To continue this series, go here: (Not yet posted).