Smallholders buying fresians in rent-to-pay programme

Rent-to-pay cows are sweeping the country as a concept that has moved 8,000 smallholders to higher milk production, with a further 35,000 farmers on the waiting list for an instalment plan offering a route to high-yield Fresian cows. Fresian cows, which yield some 35 to 40 litres of milk a day, typically cost from Sh40,000 to as high as Sh120,000, making them far beyond reach for many smallholders.

But a program launched by Swiss foundations Swiss Concept through K-Rep Group in 2005 now trains farmers and insures the cows, so as to deliver cows that farmers then pay for with the earnings from the extra milk.

It’s a programme that has proven so successful that K-rep has now launched an independent subsidiary Juhudi Kilimo to run the business, and expanded its lease agreements to include greenhouses, beehives, goats, rabbits and poultry.

In cow leasing, the growth has been strong. In the 10 months to the end of October this year, the scheme leased out 4,734 cows, up some 60 per cent on the preceding 10 months, and taking the total value of cows leased out through the programme to over Sh400m.

To get the leased cows, farmers must form into a group of 15, with three sub-groups of five, of which one can get a leased cow, and the other four must act as guarantors. The leasing farmer pays a deposit of 15 per cent of the cow’s price, and then pays the balance in 12 monthly instalments.

JK has seven field officers countrywide - in Nyamira, Kisii, Kitale, Eldoret, Nkubu, Muranga and Litein – who visit the smallholders to check they have at least a quarter acre of land to grow fodder for the cow. They also provide training in how to care for the cow and how to maximise milk yields.

This support helps ensure farmers’ ability to meet their repayments, which includes interest at 16 per cent. The scheme also allows for a two month grace period in payments if the cow gives birth meaning the farmer can no longer raise money through selling the milk.

The structure has seen Juhudi Kilimo achieve a repayment rate of 95 per cent. JK also insures the cows with CIC Insurance, for which the farmer pays 4 per cent of the price of the cow.

Fresians normally live for 12 to 14 years.

JK prefers leasing out more valuable cows, to ensure the health and returns that will allow farmers to complete their repayments, says Nat Robinson, the General Manager of JK.

For farmers in Muranga who have already bought 2 or more cows through the programme, the next step has been investing in biogas equipment, to create gas for cooking from the cow manure. “So far, three have installed biogas digesters,” said Albert Onchiri, JK’s Operations Manager.

This initiative was started by Swiss Banker Veronique Su in 2005, when she took over as East African Regional Director of Swiss Contact. Contacts for Juhudi Kilimo can be found at its site www.juhudikilimo.com

Written By Bob Koigi for African Laughter

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