Komati Fresh Produce Farmers (KFPF), is a produce coordination organization (PCO) located in the Lowveld region of Swaziland. KFPF was formed in 2003 to provide the local community a well organized formal market for fruit and vegetables. The organization is comprised of 14 farming groups who are shareholders in the PCO. In total, KFPF includes more than 596 small holder farmers each with at least 0.25 hectares of land. In addition, the organization has infrastructure in place to collect, pack and export gooseberries to South Africa.
KFPF’s primary activity is the production of Cape Gooseberries, a perennial crop, which thrives on marginal soils. The Company exports Gooseberries to South Africa via its primary customer Well-Pict SA, a producer and marketer of various berries. At the time of our investment the business was largely unsophisticated but represented a great opportunity to support a business in a very rural area of the country. SDC representatives have since begun working with TechnoServe to develop the necessary business and financial skills within KFPF.
» Opportunity to provide valuable growth capital: KFPF farmers had begun production of Gooseberries but lacked the necessary infrastructure to maintain the ‘cold chain’ required to export to South Africa. SDC had an opportunity to provide the business with growth capital which has been used to buy an industrial refrigeration unit and to provide the business with the working capital required to expand production.
» Strong market demand: Well-Pict SA, KFPF’s primary client, has been searching for a viable Gooseberries supply for a many years. Supply is incredibly short and Well-Pict has agreed to purchase the full volume of Gooseberries produced by KFPF farmers.
» Gooseberries are ideally suited to be grown in Swaziland: The Cape Gooseberry is an ideal crop to be grown in Swaziland for two main reasons. First, the crop can grow in marginal soil and requires little to no water or fertilizer, which means the crop can be grown by relatively unskilled farmers. Second, the crop is labor-intensive as each Gooseberry must be carefully handpicked, which is ideal in a low-labor rate country such as Swaziland.
» Innovative investment structure: KFPF has a low degree of financial sophistication and at the time of our investment lacked the reporting infrastructure required to adequately track loan payments. In order to facilitate an easy repayment option for the farmers, SDC arranged repayment to be part of a revenue sharing agreement whereby a small percent of all sales go directly from the customer to SDC (until the loan is repaid) and the remaining revenue goes directly to KFPF. In the meantime, the SDC team, along with TechnoServe, is helping the business develop the necessary financial accounting skills required to run their business.
» External support: KFPF will be receiving operational support from TechnoServe, an international NGO which facilitates private sector development in emerging economies. The TechnoServe Swaziland office is fully committed to helping commercialize the business. Additionally, SDC will continue to be deeply involved in strategic decision-making and data analysis.