Case Study – Sarura Commodities
When we first visited RIU Rwanda, we were impressed by a DfID-backed "warrantage" programme being piloted in the main maize growing area of the country. By working closely with small-holder farmer co-operatives the programme is able to: consolidate the harvest into warehouses and store to international standards; secure bank financing against the consolidated inventory enabling an upfront payment to farmers at the time of harvest; trade the stored commodities when prices had risen significantly post-harvest; and use the profits from the sale to repay the bank and provide a second payment to farmers. In this way, the warrantage system allowed poor farmers to share more equitably in the value of their crop and so increase their household income level.
Despite the warrantage pilot being highly successful over several harvests, it was fully reliant on donor funding and so had no future beyond the planned end of RIU programme. H2O therefore set to work to develop a business model in which the warrantage system could be offered as a commercially viable service while also being financial beneficial to the farmers.
The result of this is Sarura, which is delivering these first-in-class commercial services to small-holder staple crop farmers, initially in eastern Rwanda. H2O continues to work closely with the senior Sarura management team to raise new financing to scale the warrantage offering nationally, and across multiple crops, while also partnering with Government and private sector players to develop new products and services (including more formal warehouse receipt systems) that are profitable and beneficial to the Sarura customer base: poor small-holder farmers.