August 23, 2010

Performance-Based Compensation for Field Staff

Filed under: CoreProgram, Operations — Tags: — admin @ 6:29 AM

_DSC0292Every year, One Acre Fund strives to improve the core program model that we offer to farmers. This upcoming year, we will be focusing on two goals: increasing client density, and increasing the average transaction size per client. Achieving these goals will bring clear benefits to our farmers. Increased client density means that a higher percentage of each community is benefiting from our program. More farmers will see increases in food production, which raises the overall food security of a community. Larger transaction sizes and new products will provide additional income increases to our farmers.

Increasing client density and average transaction size will also help One Acre Fund move toward financial sustainability (see this blog post for an in-depth discussion of the key factors affecting financial sustainability).

But we will only meet our core program goals if our field staff can execute these changes on the ground. To motivate our staff and align their personal goals with One Acre Fund’s organizational goals, we are rolling out a new compensation structure.

This new structure will compensate field staff based on the total credit amount that they are managing—the overall size of their “loan portfolio.” This will allow us to recognize the additional work that they are doing as well as the positive impact they are having on financial sustainability.

As in any incentive scheme, achievable yet ambitious targets are an important component in our new bonus structure. We have developed a field officer ranking system, from “1 star” to “5 star,” based on the total credit amount managed by that officer. Field officers will be given a “star target” based on the “age” of the site they are working in (i.e. a brand-new site will have different enrollment targets than a third-year site).

Once the enrollment period is complete, field officers will be assigned a field officer rank based on their total credit amount, and their performance-based compensation will kick in. Currently, most of our field officers in Kenya serve roughly 100 clients. We have made next season’s targets aggressive, because we believe that as our program improves, our staff will be able to handle well over 200 clients and much larger credit amounts.

The new system gives performance-based bonuses around two key areas of our operations: total credit under management, and repayment. The bonuses will be divided as follows:

  • Enrollment bonus – Field officers will receive a bonus based on the total credit amount they are managing.
  • Monthly bonus and airtime increment – Each month throughout the season, field officers will receive a bonus on top of their base salary, as well as an increase in their airtime allowance, to provide ongoing recognition of the work they are doing. This bonus is also tied to total credit under management. We are giving monthly bonuses instead of a permanent raise so that compensation is always tied to credit under management, which could fluctuate from season to season.
  • Repayment bonus – Field officers can earn up to 1 percent of their total credit amount as a repayment bonus, assuming they reach 100 percent repayment (which almost all of our field officers do).

Top-performing field officers stand to benefit greatly from this new system. A 2-star field officer – the target we are setting for all returning staff members – can earn 500 to 700 percent of their monthly salary in bonuses throughout the year! This may seem like a lot, but this incentive structure accurately reflects the additional value that field staff will be creating for our farmers and our organization.

One Acre Fund aims to reach over 50,000 farmers in 2011, and over 85,000 farmers in 2012. Our new compensation scheme will help us meet these targets, as well as propel us to serve 1 million farmers by 2020.

August 16, 2010

Rwanda’s Organic Matter Shortage

Filed under: CoreProgram, Research — Tags: — admin @ 12:13 PM

DSC_0236Throughout our history as farmers, we have relied on organic matter in the form of burned ashes, animal manure, seashells, and plant residues to maintain soil fertility. And although farming systems have undergone tremendous change over the past 10,000 years, organic matter is still the key to long-term soil fertility. Decomposing organic matter provides all essential nutrients to plants, creates the basis for the biological food web in the soil, improves the structure of soil and its capacity to retain air and water, and increases the retention of nutrients from mineral fertilizer.

Here in Rwanda, as the population has grown, more and more land has been taken under the hoe, at the expense of forests, fallow land, and grazing land. In such an intensive system of cultivation, organic matter is continually in short supply. This shortage presents a big challenge for One Acre Fund’s Rwandan farmers.

One strategy to address the shortage is integrated soil fertility management (ISFM), which combines the use of mineral fertilizers with organic matter. These two types of inputs build off one another, substantially improving the efficiency of both inputs as compared to applying either alone. The macronutrients in fertilizer are immediately available to plant roots and they are better conserved due to the retention power of organic matter. At the same time, the large quantities of nutrients in mineral fertilizers lessen the dependence on the already overstretched supply of organic matter, meaning that nutrient reserves in soil are not depleted.

One Acre Fund supplies farmers with mineral fertilizer, and we provide training on composting to produce more organic matter. But even in this context, it is a challenge for many farmers to get their hands on sufficient quantities of plant and animal remains.

One potential solution is cows. Cows are a popular way to produce organic matter in Rwanda, but few of our farmers own cows. There is a common belief, however, that owning a cow is an economical way to create organic matter. Unfortunately, cows are labor- and land-intensive for farmers. They are almost all raised in zero-grazing systems in which farmers must cut and carry grasses directly to their animals. Many farmers cannot grow enough grass for their cows, which makes it necessary for them to collect grass from the small amount of commons that are left, including roadsides and woodlot floors. The cow’s diet is poor in protein and energy, and cows generally underproduce milk.

Another possible solution is agroforestry. Tree roots dig deep into lower soil layers using nutrients that would otherwise be lost, and recycle them back to the soil surface in the form of leaves. One Acre Fund is beginning to trial nitrogen-fixing fodder shrubs, which can be used to produce rich fodder, mulch, and bean poles, while at the same time restoring nitrogen in the soil. Trees can be difficult for many farmers to adopt because of land shortages, but if they plant along field borders and hill contour lines they can work efficiently, especially if maintained at shrub level.

A final potential source of organic matter is human manure. Most waste streams are effectively recycled, except for human manure (humanure), which is deposited in deep pit latrines. While most people prefer to forget about this waste stream, it can be used safely provided proper composting techniques. While on average each Rwandan family does not produce enough humanure to completely cover its organic matter needs, this resource has the potential to save at least a few ares of fertility for per family per year, which is certainly not insignificant.

Integrated soil fertility management, cows, agroforestry, and human manure are imperfect solutions to supply more organic matter to Rwandan soils. One Acre Fund is exploring all four options because even a small increase in organic matter makes a difference for our farmers. In the long term, however, there must be a reduction in the population growth rate and increased opportunities for off-farm income to significantly reduce the strain on organic matter in Rwanda.

July 26, 2010

Protecting Maize After Harvest

Filed under: CoreProgram — Tags: — admin @ 4:18 PM

_DSC0365One Acre Fund field officers deliver training sessions to their farmers throughout the season. In August, when the product of six months of hard labor can be seen in the tall, healthy maize, it’s time for harvest and storage training.

When the maize is on the stalk, it is still filled with water, as with any ripe vegetable. If a farmer does not carefully dry her maize after harvest, fungus can grow and rot the entire crop. If the maize is carefully dried before it is stored, it is still vulnerable to pests, which can chew through storage bags and eat the maize kernels. The drying and storage processes that take place after the maize harvest are essential. Unless a farmer takes the necessary precautions to protect her maize, a grain borer or weevil can destroy the harvest in three short months.

In order to combat post-harvest crop loss, we teach our farmers a five-step harvesting and storage process:

1. Stook maize (let the maize dry while it is still on the stalk).

2. Dry maize on the cob in the sun for a few days.

3. Store maize on the cob in a cool dry place in the house for a few weeks to continue the drying process.

4. Shell the maize, then dry it in the sun again.

5. Sprinkle actellic dust, a chemical that prevents pest infestation, on the kernels and store maize in storage bags until ready to be eaten. Actellic dust protects maize from weevils, and ensures that farmers can keep their harvests safe and pest-free.

Using a substance to protect their maize is not a new concept for our farmers. In the past, some spread ash over their dried maize to prevent pest infestation. This technique only protects maize for around two months, however, and can lead to stomach ulcers when that maize is consumed. There are other commercial chemicals offered, but they are often expensive and ineffective. We have found that actellic dust, when applied correctly, protects maize from pests for up to six months. It is also relatively cheap.

While many of our farmers have used actellic dust in the past, they do not know how to use it effectively. This year, we have modified our harvest and storage trainings to include information on how to properly use and dose actellic dust. Our field officers are also selling packets of actellic dust and storage bags in the field, which allows farmers to save on transportation costs.

If a farmer uses actellic dust correctly, there is an immediate economic impact on his household. One Acre Fund farmers will harvest an average of 15 bags of maize in the main growing season, which is just enough to feed the average family of eight (each person will eat about two bags of maize a year). But if a farmer does not use actellic dust when he stores his maize, pests will typically ruin the whole stock in three months, after the farmer’s family has eaten only 4 bags. That farmer would then need to spend roughly 29,700 Kenya shillings ($370 USD) to feed his family for nine months, until the next harvest.

All of this money can be saved by spending 1,300 Kenya shillings ($16 USD) on materials for maize storage. That is a savings of 28,400 Kenya shillings ($354 USD) a year! If a farmer harvested more maize harvest than necessary to feed his family, he can store his maize until market prices are higher. For instance, in March, the market price for maize is double the price at harvest.

One Acre Fund is dedicated to spreading best practices at all stages of the growing season. Educating our farmers about proper storage practices increases One Acre Fund’s impact on its clients, but it also ensures that the hard work and financial investment our farmers have made is protected.

July 5, 2010

The Benefits of Planting More Maize

Filed under: CoreProgram — Tags: — admin @ 8:47 AM

Here in Kenya, our field directors are working on a short training for farmers about the benefits of planting more maize with One Acre Fund. When farmers first enroll with One Acre Fund, they take a loan for seed and fertilizer for 1/2 acre of maize. In their next maize planting season, they will often take another loan for 1/2 acre of inputs, even if they have more land that could be planted. Anecdotally, farmers told us that they were so pleased with their harvest from ½ acre–why would they need to plant more? But most of them do plant more on the rest of their field (usually an additional 1 acre), but they often do not use fertilizer, and might use low-quality seed. This means their profit margin and harvest are a lot lower than what it could be. We wanted to create a training that would encourage farmers to take out a larger loan, while explaining the benefits of doing so in a convincing way.

Our new training will have several components. First, we’re putting together a simple, straightforward cost-benefit analysis that shows the benefits of spending a bit more on inputs (through a One Acre Fund loan). One reason farmers might hesitate to take on a larger loan is time. The One Acre Fund planting method is more time consuming that the local method, and time spent planting means that farmers can’t earn money working on a richer farmer’s land. For farmers with intermittent and unreliable incomes, it’s hard to give up money today for the potential of more money at harvest. Our field officers will discuss this issue with groups one-on-one.

The more interesting part of the training, however, will be the story of two farmers. Hungry Humphrey planted ½ acre and barely grew enough food to feed his family. He did not have any additional income to invest in his goat-rearing business, or to pay for health care for his family.

Happy Henrietta planted 1 acre of maize and 1/4 acre of beans with One Acre Fund and saved more than enough food for her family. She will sell some extra food to invest in a brick-making business. She is also saving money to invest in a dairy cow after next season’s harvest. By planning ahead, Happy Henrietta’s family was able to skip the hunger season for the first time in a long while. Her four children are enrolled in school and Henrietta was able to pay school fees comfortably.

We hope that this story will encourage farmers to make the leap and take on a loan for planting more maize next season. Growing more maize will help our farmers make investments in income-generating businesses. From One Acre Fund’s perspective, helping farmers increase their acreage under cultivation with high-quality inputs will help us reach sustainability faster. By increasing average transaction size, we increase the total loan portfolio of each field officer. Because our office cost remains constant, our overall level of sustainability goes up.

June 17, 2010

Developing Kenyan Managers

Filed under: CoreProgram, Operations — Tags: — admin @ 10:45 AM

DSC_0050One Acre Fund wants to reach as many needy farmers as we can, as quickly as possible. Our current districts in Western Kenya are each serving between 3,000 and 4,000 clients this season. At the top of each district, we have one extremely dedicated, highly competent leader – the field director. Field directors are the engines of growth within One Acre Fund, pushing the organization to reach even the most ambitious goals season after season.

Our field directors have set aggressive growth targets for the coming season. Our biggest district will aim to reach more than 7,000 clients. Yet field directors already manage on average thirty-three field officers and six field managers. Growing a district staff to fifty field officers and eight field managers necessitates some additional management support to maintain the quality of our services.

In preparation for rapid growth, this season we have developed a new role with our field operations – the assistant field director. In Kakamega, our largest district, we promoted one of our top field managers – Joan Lihru – to the assistant field director position in January.  She has thus far done an amazing job helping to define this important role. Joan joins the Kakamega field director and fellow Egerton University alum Daniel Okongo as a leader of Kakamega District.

Based on this first experiment, we have so far identified three critical roles filled by the assistant field director:

  • Field presence and supervision: With 35 field officers per district and more on the way, there is a lot of ground to cover in the field. The assistant field director gives the district another set of highly trained eyes to observe key field activities, to monitor staff, and to capture best practices to improve our program.
  • Mentorship of Field Managers: A growing management team needs additional mentorship, and the assistant field director helps fill this role by taking primary ownership over mentorship of half of field managers.
  • Planning and logistics: As the district grows, planning and logistics become even more critical to a smooth operation. The field director and assistant field director meet twice weekly to discuss field progress, and to make plans for upcoming field activities.

Within a few short weeks under Daniel’s guidance, Joan was able to independently manage her new mentorship and training responsibilities. Not only has Joan benefited from Daniel’s experience and perspective, but the process of training a high-level manager at the district level has also helped to develop Daniel’s leadership skills.

Aside from helping a district to handle the challenges of rapid scale-up, the assistant field director position serves another very critical strategic purpose. In the next few years, we will grow our service territory in Kenya by opening up new districts and even new regions. These districts will need strong leaders like Daniel and Joan to build a new team, to start a new operation, and to instill their nuanced understanding of the One Acre Fund model and organizational culture. The assistant field director role is a valuable opportunity to rapidly develop future leaders of One Acre Fund. If the experience thus far with Joan is any indication, we can look forward to a fast-growing team of excellent leaders, helping to expand the reach of One Acre Fund to smallholder farmers across East Africa.

June 3, 2010

Measuring Farmer Impact

Filed under: CoreProgram, Research — Tags: — admin @ 5:44 PM

One Acre Fund believes that we must rigorously measure our client impact. But in order to measure impact, we need to understand the lives of our farmers before they join One Acre Fund.

Every May, our monitoring and evaluation department sends its agents out to the field to administer the One Acre Fund Baseline Survey. The survey consists of forty-two questions that range from “How many chickens do you have?” to “What are the 2-3 areas that you plan to spend your savings on in the future?” The answers to these questions are gathered from over one thousand first-time One Acre Fund clients and repeat clients. The data becomes part of a Baseline Survey database, intended to track the demographic and agricultural profile of One Acre Fund clients.

One of the first-time clients our agents surveyed recently was a mother of three named Helen. She lives in a mud house with a pit latrine. She owns one goat, thirteen chickens, and a cell phone. She does not have a formal bank account. Last year, she only harvested 10 bags of maize on ¾ acre of land, not enough to feed her family for the year. Before she harvests this year, she will purchase at least 1 bag (180 pounds) of maize for home consumption. Helen completed primary school, but did not go to secondary school. All three of her children are currently in school.

Gathering data from thousands of farmers like Helen allows One Acre Fund to measure its client impact, but it also adds to the cost of our field operations. Days gathering baseline data are long. Agents begin their day by traveling to village areas, where One Acre Fund field staff help direct them (usually via cell phones) to specific farmer homesteads. There can be plenty of legwork in between interviews—from office to fields, between fields, and between communities. Agents will find themselves motorbikes, bicycles, and matatus (passenger vans) to get from farmer to farmer.

In preparation for executing the surveys, agents practice techniques for efficiently asking questions, and ensuring data integrity. Agents are clued into how to avoid biasing answers (ie, not asking leading farmers to specific answers), and how to recognize honest responses. On average, an agent is able to complete one survey in twelve minutes. This season, more than one thousand surveys were completed over a six-week period, and agents aim to complete five hundred more before the upcoming harvest season.

This season, One Acre Fund’s monitoring and evaluation team integrated new questions into the baseline survey. Embedded within the survey are eleven questions that, once complied, will allow One Acre Fund to measure poverty level using a popular microfinance industry tool called the Progress Out of Poverty Index (PPI). Using this tool helps us measure our income impact, but it also allows us to provide data that can be compared with other financial services institutions.

But our survey allows us to collect a much richer level of data than the PPI. We are collecting information on rates of livestock ownership, access to arable land, and expenditure on agricultural inputs, among other household economic information. Knowing clients’ assets, hunger experience, home expenditures, and income-generating activities will help One Acre Fund continue to offer products and services that provide maximum impact to our farmers. Though measuring our impact with this level of rigor is costly, we believe it is a worthwhile investment in the long-term future of our organization.

April 18, 2010

In Kenya, Maize is Approaching Knee Height

Filed under: CoreProgram, FieldPhotos — Tags: — admin @ 4:05 PM

_DSC0097

April 6, 2010

Driving Toward Sustainability

Filed under: CoreProgram, Operations — admin @ 9:15 AM

At One Acre Fund, we have set an ambitious (but achievable) goal of reaching 1 million farm families in the next ten years with minimal donor support. Each season, our team is innovating and improving upon our core program with this goal in mind. To reach this growth target, we will have to expand to many new districts, regions, and countries before 2020. Launching these new operations will only be possible if we can free up financial resources for expansion. The more sustainable our existing districts are, the more funding we’ll have to expand and reach more farm families.

We are already taking big steps to reach operational sustainability. Between 2008 and 2009, we made an impressive jump from 30 percent to 50 percent sustainability, mainly by increasing our repayment rate from 85 percent to 98 percent. A high repayment rate is a critical step towards sustainability for a number of reasons. Obviously, 98 percent repayment helps cover our costs, but it also allows us to easily reenroll the majority of our old clients. Easily reenrollment allows our field officers to focus on finding new clients, which leads to an increase in the number of clients served by each field officer (another key driver of sustainability).

This season we are targeting another big jump in sustainability, from 50 percent to 70 percent. The initiatives we are implementing to get there include:

  • Serving more clients with each field officer

-       By hiring the best field staff and constantly improving our services, our team is able to cover a wider area and increase client density at the same time. Our best staff members are up for the challenge, and they truly enjoy the opportunity to impact the lives of more farm families in their communities.

  • Offering new products and services

-       We are constantly developing new products and services that we can roll into our “market bundle.” For example, this season every client in Kenya is planting over 500 tree seeds as part of our program. By including trees in our package, our program becomes more sustainable while also generating more impact for every client.

  • Encouraging our clients to increase their acreage

-       If our clients can increase the size of their loans after their first season, it makes our operation more sustainable and generates more impact for our clients – a win-win situation.

  • Trimming the fat from our district administrative costs and overhead

-       We’re getting better at what we do every season. Part of this process is learning what works well, where we need to spend money, and where we can find significant savings. Major budgeting and cost-saving initiatives are now in place and are pushing us toward our sustainability goals.

Of course, all these initiatives come with significant challenges. Our focus on sustainability does not always align with our other goals of generating client impact and scaling rapidly – both of which can cost money. Some of the challenges we currently face include:

  • Continuing to increase our impact

-       The risk of serving many clients with one field officer is that we compromise our per-client impact (and repayment) in our core services. We are aware of this risk and are mitigating it by getting the best staff, constantly improving and innovating on our program, and limiting ourselves to reasonable growth targets.

  • Motivating our field staff

-       It is not easy to convince all field officers to take on a larger workload (150 clients instead of 100). Our field directors and managers are faced with the task of constantly building and motivating their teams, a true test of leadership skills.

  • Growing our average loan size

-       Many of our clients have never borrowed before, so some have hesitations about increasing their acreage; others are constrained by their land size and struggle to find even ½ acre of arable land.

Reaching our eventual target of serving 1 million farm families is only possible with a long-term commitment to operational sustainability. Achieving financial sustainability has its challenges, but we are always finding new ways to increase our impact, scale quickly, and become more sustainable at the same time. Seventy-five percent sustainability may be a reasonable target for this season, but we have our eyes on a much bigger prize next season.

March 25, 2010

The Importance of Crop Insurance

Filed under: CoreProgram, Policy — Tags: — admin @ 3:59 PM

Here in western Kenya, now that farmers have planted their maize for the long rains season, many conversations focus on the weather. Has it rained yet this week? Will it rain tomorrow? Did you plant before the heavy rains of early March, or after? Is your maize germinating, or are you waiting for two days of rain to facilitate germination? Farmers worry, and think, and talk about rain because it is critical to the success of their harvest, yet completely out of their control.

One of the few ways of mitigating the risk of extreme weather events is crop insurance. Until recently, there were no crop insurance products on the market that would cover our farmers in Kenya. This year, the Syngenta Foundation for Sustainable Agriculture has introduced a weather-indexed insurance product called kilimo salama (safe farming in Swahili). It covers losses due to extreme drought and excess rain. The Syngenta Foundation has placed thirty solar-powered weather stations in Kenya, and experts can determine whether a particular area should receive insurance payouts without having to visit individual farms to check conditions. These weather stations are often sited at local schools–which means that teachers can use them as a learning tool with their students.

One Acre Fund purchased crop insurance from the Syngenta Foundation this year, and we look forward to seeing the kilimo salama program grow alongside our organization. The “market bundle” we offer our farmers becomes even more effective when we are able to work with other innovative agriculture organizations like the Syngenta Foundation.

As the microinsurance market for farmers grows, it will face many challenges, as documented in a recent publication from the International Food Policy Research Institute that examines innovations in insuring the poor. For instance, index insurance for smallholder farmers will only work if there is sustained demand for it, which depends on farmers understanding the true value of insurance. If they overestimate the value, they will be disappointed; if they underestimate, they are unlikely to adopt it. “Without training for buyers in financial literary, it is unlikely that agricultural insurance products will solve the problem of agricultural risk,” Michael R. Carter of the University of California–Davis writes. We agree, which is why One Acre Fund is training its farmers to understand not just the importance of credit, but the importance of insurance as well.

without
training for potential buyers in financial literacy, it is unlikely that
index insurance contracts will solve the problem of agricultural riskA. g. mude, d. osgood, J. r. Skees, c. g. turvey, and m. n.
Ward, Poverty Traps and Climate and Weather Risk: Limitations

March 18, 2010

The Secret to Great Harvests

Filed under: CoreProgram — Tags: — admin @ 3:06 PM

_DSC0403The past two weeks have been very busy for One Acre Fund. In every district in Kenya our farmers have started planting. After delivering 300 tons of fertilizer to over 10,000 farmers, and after training each and every farmer how best to plant using this fertilizer, the moment of truth has arrived. If our trainings have been communicated effectively and farmers plant as we taught them, they can hope to yield 15 bags of maize from one acre of land. If our trainings were done poorly and farmers keep to their old methods of planting, they will not yield more than 5 bags. That is how big a difference our planting methods can make—10 bags of maize, or $150 USD!

What makes our planting methods so special? The truthful answer is very little. We do not use expensive equipment nor do we use advanced technologies. Everything we use is readily available to farmers—they just don’t know it.

The traditional method of planting is to walk behind a team of oxen as it ploughs a field, throwing seeds and fertilizer haphazardly in its wake. This method is known as broadcasting, and it is the standard planting practice for 98 percent of small-scale farmers. You are almost guaranteed to get bad harvests from this method.

_DSC0131The One Acre Fund planting method is more labor intensive that the traditional method, but it is easy to follow. The first thing we teach our farmers is even spacing of seeds. If seeds are too close, they will compete for sunlight and nutrients, resulting in malnourished plants. If seeds are too far apart, land is wasted.  The tool we use for spacing of seeds is a planting string—a long string with a mark every 25cm showing where a seed should be placed. The mark can be created using old bottle caps, or colored pieces of plastic bags. The planting string is cheap and easy to make, and we ask every farmer group we work with to make one.

The next thing we teach farmers is to dig individual holes by each mark on the planting string. Each hole is filled with one small scoop of fertilizer (our farmers use microdosing). The fertilizer is then covered with enough dirt so that it will not touch the seed (direct contact between seed and fertilizer can burn the seed). One seed is placed into each hole, and then all the holes are loosely covered with dirt. This process is more labor intensive than throwing fertilizer randomly into furrows created by oxen (in one acre a group will need to dig 20,000 holes), but it is the only way to ensure that the seed benefits from the fertilizer. We tell farmers that when they scatter the inputs randomly, they are preparing a meal for one (the seed) but four come to eat (the weeds).

These planting practices are so simple, and yield such great results, it’s a shame that many farmers don’t know how to use them. Governments can subsidize the price of fertilizer, and organizations can give away fertilizer, but without the knowledge and tools to use that fertilizer, farmers will never pull themselves out of the poverty trap of poor harvests. One Acre Fund’s service model works because it provides a complete package—credit, inputs, education on how to use those inputs correctly, and market access.

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