Access to equipment financing boosts mechanization for crop production in northern Ghana

Access to financing is crucial for agribusinesses seeking to acquire advanced technology, equipment, and inputs to increase production, cash flow and grow their businesses.

Patience Kpiniong is the Managing Director of Karamel Farms, operating in Tamale, the capital of Ghana’s Northern Region. For five years, the company depended on manual processes to produce and aggregate soybean and maize from smallholder farmers for sale to processors in the south. Although demand for the company’s produce increased over the years, reliance on manual production processes adversely affected its delivery time and profit margins.

From an initial production of 10 acres of maize and five acres of soybean in 2018, Karamel Farms sought to increase production to 100 acres but was unable to do so due to a lack of equipment. “We wanted to produce more to meet market demand, but we were constrained by the high cost of hiring manual labor for land preparation, planting, and harvesting,” said Kpiniong.

“The use of manual labor for planting makes it difficult for us to complete the target planting area within a short rainfall period in the rain-fed production season of northern Ghana. Manual planting is slow and expensive. Besides, plant population after germination is low, thereby reducing yields,” she added.

Karamel Farms sought financing to acquire mechanized equipment – a tractor and planters - to expand production and support smallholder farmers with mechanized plowing, planting, threshing, shelling, and transportation services but was unable to raise the capital required to do so.

The company’s fortunes changed in the 2023 production season when Kpiniong met a USAID-supported Feed the Future Ghana Mobilizing Finance in Agriculture (MFA) - supported transaction advisor, Tradeline Consult, at an event in Tamale. As part of the event, participants were introduced to transaction advisory service providers including Tradeline Consult, one of 24 advisory firms supported by MFA to facilitate financing for agribusinesses.

Tradeline Consult engaged Karamel Farms and assisted the company to prepare a loan application to secure financing for a $10,000 mechanized multi-seed planter through a lease financing agreement with Leasafric Ghana Plc, a leasing company that helps agribusinesses to increase productivity, save cost and improve the quality of work for higher yields and income.

Under the lease financing agreement, Karamel Farms will repay the cost of the mechanical seed planter over an 18- month period. With the acquisition of the equipment in July 2023, four months after meeting Tradeline Consult, Karamel Farm was able to plant 120 acres of maize and 100 acres of soybeans in the 2023 production season, before the end of the short rainfall period.

The multi-crop seed planter enabled Karamel Farms and its smallholder farmers to plant seeds on six to seven acres of land per day, with optimal plant population. Before the arrival of the planter, Karamel Farms hired farm hands to plant seeds on an acre of land for approximately $9.00 in addition to their cost of transportation, feeding, and accommodation.

Tradeline Consult also secured an additional loan of $43,156 from Bonzali Rural Bank Limited, one of MFA’s 18 partner financial institutions, to increase Karamel Farm’s maize and soybean production. The loan enabled Karamel Farms to purchase inputs including seeds, fertilizer, and weedicides to cultivate the 120 and 100 acres of maize and soybean, respectively.

Kpiniong describes Tradeline Consult’s assistance as a game- changer. “We did not believe we could access a loan and equipment from a leasing company and a bank within such a short time. This loan facility has set our business on the path of growth. The repayment schedule is suitable and is tied to our seasonal activities.”

Forster Gomashie, Managing Partner of Tradeline Consult said, “Tradeline believes in the potential of women agribusinesses and is supporting them to achieve their goals.

“The multiple levels of impact associated with financing Karamel Farms encouraged us to explore affordable and timely lease financing to help them upgrade production assets, accelerate the production process, and provide mechanized services to smallholder farmers.”