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Kenya Seed, banks enter deal to finance farmers

Posted on November, 14, 2017 at 10:57 am

The Kenya Seed Company (KSC) and financial institutions have signed an agreement that will see contracted farmers get access to credit from lenders in a move aimed at boosting yields.

The deal, which will ease farmers struggle with accessing finance for their enterprise is expected to boost quality of seed in the country as growers will have cash in time to buy all the required inputs.

Barclays Bank, National Bank, KCB and Agriculture Finance Corporation (AFC) have signed a memorandum of understanding (MoU) with the seed firm, committing to finance the KSC’s contracted seed growers.

“Accessing finance has been a major challenge to farmers and this has always compromised the yields,” said Azirai Soy, the managing director Kenya Seed Company.

Mr Soy said seed planting is a timely activity that has to be done within a specific time frame and that some farmers have been doing it late due to financial challenges.

“Seed farming need to be implemented in time and farmers are required to have the g implements on time, failure to secure them within the required time leads to delay in planting hence low yields,’ he said.

The financing enables contracted growers in Trans-Nzoia, Uasin Gishu and Narok regions meet the seed production costs and grow them within the scheduled planting season.

Loans advanced is repaid within 13 months from the sale proceeds by Kenya Seed. In the programme, Kenya Seeds commits to offtake the seed and make payment to designated accounts of participating banks.

To access the facility, contracted farmers can apply at a bank that they have signed a contract with and this only applies to growers who are contracted by KSC for seed multiplication of maize or wheat.

For Barclays Bank, the minimum amount that a farmer can apply for is Sh500 000. The maximum amount is Sh7.8 million. The farmers must have also been contracted before by the seed firm and they should have at least 20 acres that they intend to put under maize cover.

“The financing arrangement is structured with the planting seasons in mind, to allow farmers service the facilities during the harvesting seasons,” said Simon Kinuthia, the head of agribusiness at Barclays Bank.

“The partnership will support farmers expand their production capacity and consequently achieve financial wellbeing. Achieving sustainable food security remains an important priority for Kenya and indeed the entire African continent.”

Kenya seed is a government parastatal mandated to research, produce and avail certified high yielding agricultural seeds of various varieties within Kenya, the Eastern African region and beyond.

The company produces certified seeds through own farms and contracted growers. The certified seed is then sold to farmers for grain production.

Source: Business Daily