Securing supply in the malt value chain

When one of Europe’s biggest malt producers and Rabobank client, Boortmalt, decided to establish a malting plant in Ethiopia to meet the increasing local demand for malt, Rabo Partnerships was called in to secure the supply of domestically produced barley. This was easier said than done, since the barley production was characterized by low yields and an abundance of fragmented small farms. The question was: how to grow volumes and improve production quality while competing with reliable but expensive imports?

As Ethiopia has a cash economy, Rabo Partnerships came up with an innovative way to expand the infrastructure of electronic vouchers that had already been introduced by the Ethiopian government. Our strength is to look at exisiting local mechanisms and see how they can be used in an alternative fashion. This is how we consolidate existing infrastructures.

The financing scheme allows farmers to receive vouchers in exchange for cash or a loan at their Rusacco (a rural saving and credit cooperative). This voucher can be used to collect farm inputs at the cooperative. When farmers deliver their harvest to the cooperative, they receive a sales voucher that can be exchanged at the Rusacco for cash, used to pay off loans or deposited into a savings account. This scheme allows the cooperative to finance the farmers’ inputs. It also enables it to collect barley for a fair price since this system ensures that the cooperative has sufficient funds available. It’s a solution that could help over 30,000 farmers improve their harvest, realize higher revenues, and improve financial management.

In the past, farmers sold their harvest for low rates to middlemen, who paid in cash. This money burned a hole in their pockets and was often spent unwisely. The cashless voucher system helps farmers to save and encourages financial planning. It means they no longer need to borrow money to pay, for example, school fees, which can now be paid from their savings accounts.