FMS Farms, established in 2009 to pursue commercial agricultural opportunities in West Africa, currently consists of a vegetable farm, a cassava plantation farm with outgrower model and poultry farming located in Ekiti state, Nigeria. The SDM analysis focuses solely on FMS’s cassava plantation business unit through which they operate a cassava block farm, nursery and processing factory. FMS sources from both block and community smallholder farmers and addresses several of their challenges of land and market access, affordable financial services, access to quality inputs and market oriented agricultural extension services through their service delivery model.
To grow their business and address domestic market opportunities for cassava derivatives, FMS intends to develop their block farm model and expand its active block farmer base of 171 in 2019 to 1,237 farmers by 2025. Annual block farm sourcing volumes are expected to grow to 48,400 MT per annum of cassava tuber by year 2023, resulting in 9,680 MT of annual starch product.
By offering additional farm land and a comprehensive bundle of services on credit (incl. training, inputs, improved stems and mechanization) FMS is able to more than double annual production per block farmer, thereby significantly boosting their household incomes to above the poverty line of 912 USD per household per year within 1 year.
This analysis assesses FMS’ strategy and business model and identifies opportunities to establish an efficient sourcing model while mitigating business and farmer-level risks. For FMS to run an efficient, inclusive and sustainable cassava processing business it should strategically design its sourcing and service delivery model, while optimizing its working capital needs and attracting new sources of affordable finance. Few of our key suggestions to FMS are to:
Secure new sources of capital. By unlocking the Anchor Borrowers Program FMS could scale up faster as their cost of capital would decrease to 9% compared to the going market rate of 25%. This would directly increase farmer incomes as they can access credit at a lower cost