Acumen Fund's patient capital investment in Western Seed is intended to enhance the food security and economic independence of Kenya's smallholder farmers
Acumen Fund, a nonprofit venture firm addressing poverty in South Asia and East Africa, today announced a US$2.1 million investment in Western Seed Company Limited (Western Seed), a Kenya-based producer of improved hybrid maize seed that increases the productivity of low-income farmers. African Seed Investment Fund, which invests in businesses to improve the delivery of quality certified seed to smallholder farmers in eastern and southern Africa, contributed another US$1.9 million. Western Seed plans to use the capital from both funds to help quadruple over five years its seed output and sales, and to boost the number of farmer households served per year from 200,000 to over 850,000, improving the lives of more than four million people.
"Acumen Fund's patient capital investment in Western Seed is intended to enhance the food security and economic independence of Kenya's smallholder farmers," said Jacqueline Novogratz, CEO, Acumen Fund. "Maize represents the primary source of income and food security for rural Kenyan families, so when we identified the opportunity to boost its local output through an investment in Western Seed, we seized it, and we expect it will have a scalable impact on reducing poverty in Kenya and beyond."
Millions of families in Kenya rely on maize for food and income. The vast majority of these families holds less than 2 hectares of land and uses inefficient technology, which often leads them to suffer from small and irregular maize crop yields. In 2007, the average maize yield in Kenya was less than half the global average and a fifth of the average yield for rain-fed maize in the state of Iowa in the United States.
"Western Seed's hybrid maize varieties more than double yield in Kenya compared to farm-saved seed, and can generate a 25% increase over our competitors' seed," said Saleem Esmail, CEO, Western Seed. "We offer smallholder farmers the choice to purchase superior performing seeds, which can typically provide a return of up to six times the original investment. The potential for Western Seed to scale is tremendous."
While hybrid seed has been around for many years and can provide enormous increases in yield, adoption rates are still low in Kenya due to a lack of supply and of appropriate marketing and distribution strategies. In order to market its seeds to its target geographies, Western Seed has developed an innovative Direct Access Sales program to reach farmers in deep rural communities. This strategy allows the company to clearly demonstrate the benefit of using its seed by preparing local "farmer-trainers" who are nominated by the community and serve as both sales representatives and extension officers to local smallholder farmers. Through this program, Western Seed is extending the reach of its productive input to farmers who previously did not have access due to the high cost of transportation, and is able to deliver valuable agricultural information through its appointed agents. Furthermore, the program is creating greater stability by challenging local retailers who have increasingly sold adulterated, counterfeit, or expensive product.
Acumen Fund has sent one of their 2010 Fellows, Josephat Byaruhanga, to help Western Seed better target its Direct Access Sales and measure its impact. The Acumen Fund Fellows Program cultivates the next generation of global leaders by offering talented young professionals the unique opportunity to provide on-the-ground management support to Acumen investees in East Africa and South Asia.
"Western Seed's mission is to promote sustainability for the smallholder farmer," said Biju Mohandas, East Africa Director, Acumen Fund. "Not only is Acumen Fund supporting farmers in Kenya, but the lessons we learn through our investment in Western Seed will enable us to understand better the economics of providing inputs to smallholder farmers everywhere, especially around effective methods of marketing and distribution. In turn, these lessons will help us as we seek to create global business models to deliver critical goods and services, from healthcare to life-improving seed varieties, to the poor."