Knowledge is Power: How Trainings Transform Subsistence Farmers to Commercially-Minded Entrepreneurs
This post is written by Eric Taft, Fintrac.
The majority of the more than 500 million smallholder farmers in developing countries live on less than $2 a day and live in remote, rural areas. These widely dispersed and isolated locations make it difficult for smallholders to access new knowledge and technologies, which when applied, increase their yields and incomes. They also form the basis of many food systems in which, as practitioners, we work.
Here at Fintrac, our global teams are experts in supporting farmers to raise their incomes. Through our projects, staff successfully work with farmers to improve their production from subsistence levels to profitable business levels. Such work always includes in-depth training.
The Honduras field team, who I support through project backstopping, doesn’t just train farmers in the knowledge and skills they need to manage better farms, they coach farmers to change their mindsets. Through the training and coaching, smallholder farmers start to think and act like entrepreneurs.
To understand the nuts and bolts of this exciting transformation, I went straight to the source: Fintrac’s business skills specialist in Honduras, Suyapa Sofia Narváez Bertot. I translated our conversation from Spanish and edited it slightly for clarity, which is below. Suyapa highlights that training is only the first step in moving farmers out of poverty, and I personally learned that the tools she uses are designed to be simple, easy-to-use, and effective for helping farmers change their perspectives from subsistence to profit-minded. By fostering an entrepreneurial spirit in her clients, Suyapa helps them build strength through collective action and leverage youth’s familiarity with technology to solve challenges as they arise.
What is your role as the Business Skills Specialist?
I work with smallholder producers to change their perspectives on two things:
- Understanding their farms as profitable businesses. Most smallholders I work with farm because it’s what they’ve always done, and when we tell them “you are business people,” they are surprised. They think of a business person as someone who owns a factory or large company. Our work flips their perspective.
- Organizing and registering their farms as formal businesses. Registration gives smallholders more negotiating power with suppliers and buyers, and helps them track their profit from each harvest.
What is most exciting or interesting about your work?
The most interesting part is establishing relationships with the farmers. Over time, it’s exciting to see their attitudes change, their businesses grow, and watch them become more independent. When I started working on Fintrac projects in 2006, I thought giving technical assistance was good enough. Now I realize you also have to work with people on their attitude to keep them motivated and encourage them to look for opportunities to be proactive. One example that impacted me is when a young man saw a need in his community for seedlings. He therefore built a greenhouse and established a nursery. Now he maintains a growing and profitable business.
The difference for successful businesses comes down to farmer attitudes — for example being less afraid of change — and implementing recommendations given by Fintrac technicians. Even doing this, it is common for a business to need between five and 10 years to reach independence and reliable profits.
What is the most challenging part of your work?
It’s very difficult to teach business administration to farmers with limited education. They are not accustomed to reading and writing, so it’s hard to teach them how to track expenses. We have adapted our teaching tools, such as presentations and financial logbooks, to be as simple as possible so clients can access and understand the material. Another challenge is that farmers are accustomed to working alone, but there are opportunities for them to find more success by working in groups. Groups allow producers to save collectively, obtain financing, and better negotiate prices.
Are farmers facing new challenges as business owners compared to when you started? How are you addressing those challenges?
A new challenge in Honduras that started affecting farmers in 2016 is that they are now required to report sales and profit for tax purposes. The reports can only be filed online, so farmers need computers, access to internet, etc. It can be a headache, but there are ways of submitting sales reports to minimize the effort. Many still see it as an insurmountable challenge when they first learn of the unfamiliar requirements. Producers have found solutions such as electing one farmer to file reports on behalf of others, or having children of farmers file the reports at an internet café on behalf of their parents.
What do you think is the most crucial element of teaching business skills for effective agricultural development?
The most crucial element is showing farmers that agriculture can be a profitable business. They are used to eating what they grow and selling anything that may be left over. Farmers must see their work as a business that generates profit instead of just a subsistence activity. Successful farmers overcome their fear of change — whether it’s trying a new crop or taking out a loan — when it increases production. We use successes of farmers that implement Fintrac recommendations as proof of potential rewards for other smallholders that make the same effort.
What challenges and opportunities await farmers in the next three to five years?
The biggest threats to farmers are inexperience with good agricultural practices and inability to obtain the finance necessary to grow their businesses. To be able to grow, even if they know good practices, they need financing. The biggest opportunity is to work in groups of producers. Groups are more effective at negotiating prices when buying inputs or selling produce to lower the cost of production and increase incomes. Farmers that are part of irrigation groups can establish a strong business partnership with regional buyers that will purchase crops year-round. This relationship will generate enough profit to fund maintenance of the systems and a consistent source of income.
Suyapa provided me with examples of tools she and other Fintrac technicians use for teaching smallholder farmers how to track expenses and income. Please email [email protected] if you’d like to get a copy! As Suyapa explained, the tools are accessible and versatile enough for farmers with varying levels of education, size of land, type of crop, and level of production to use. Each tool also ends with a quote to inspire farmers.