Financing the Goat Business
Most farmers lack knowledge of how much they need for their goat businesses. Farmers should have an estimate of how much they require for start up costs and operating expenses.
They must produce a financial plan/budget. This will help the farmer to source for funding. The plan should state how much money is needed for the following items:
? Breeding stock
? Veterinary supplies
It should also estimate income from the business.
Sources of finance are:
? Own savings: which is normally cheap but not easy to raise.
? Loans from commercial banks: These are very expensive and not readily available to most rural goat farmers. The requirements for these loans are normally stringent and rigorous.
The requirements include among other things:
? Track record
? Formal registration of entity or enterprise.
? Financial information
Institutions that provide short term facilities include commercial banks like Agribank, ZABG, Premier Banking Corporation, Commercial Bank of Zimbabwe, development Goat farming as a Business MRS, SNV, DLPD institutions like the SEDCO and the Infrastructural Development Bank and a range of lower level financial institutions such as microfinance institutions and village banks or savings and credit cooperatives. Issues financed through short term facilities are of a working capital nature such as feeds, veterinary medicine, breeding stock etc.
? Group lending: A scheme whereby groups comprising approximately five to fifteen smallholder farmers or rural entrepreneurs come together to borrow money from the bank. These should be staying within the same locality. They are bound by a group constitution and operate a group savings account. They should have similar project interests for them to qualify for the loan. The group will have joint liability on the group loan granted
? Credit schemes: There are traditional schemes where communities loan each other animals. These are rare. There are schemes that are government driven on agricultural inputs. However most of them concentrate on crop farming.
? Donors: available only for poor farmers for restocking exercises. These are cheap funds. They are available for group projects. However, these funds are not usually enough to run viable enterprises.
? Contract farming or out grower schemes: are relationships in which buyers of agricultural products lend funds (either in-kind or in cash) to producers. The loan is generally tied to a purchasing agreement. This scheme is not yet available in the goat sub sector. The out grower scheme is operational in the cattle, pigs, poultry and ostrich sub sectors. The processors provide farmers with inputs and deduct the equivalent amount plus interest from the farmer on delivering the products.
Contract farming and out grower schemes allow producers to gain access to high-value markets, as well as to increase their productivity by offering them credit with embedded services such as technical and marketing assistance.
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