Loan scheme for beehives, repayment with honey - does it work?
Thu, 16/02/2012 - 18:29
Comments
payment of bee hives from proceeds of honey
From my 15 years of experience in bee keeping in East Africa, working with out growers (bee keepers, community groups) payment of bee keeping equipment from proceeds of honey can never work, if there is a model that works I will be very happy to know.
The only way that it can work is the loan to be managed by a financial institution, were the repayment is not pegged on the proceeds of honey, the farmer must payback the loan in the given period of time.
I am always insisting that there is hobby bee keeping and commercial bee keeping, if one decides to get a loan to purchase bee hives, he or she has decided to go into business and the loan must be paid back, also the issue of cost of equipment does not come in, because I don't believe someone can be forced to take a loan, it is a dissension that one takes. Further more if I want to venture into bee keeping as a business I need to make the best profits possible and that means I will want the best technology available to get the best yields of honey, of course that comes at a cost.
It is a dissension I will make and so I cannot blame the cost of equipment as the reason for not repaying the loan. I also have the option to buy a few cheap hives to do some bee keeping as a hobby. I WOULD NEVER TAKE A LOAN FOR THIS.
Profit analysis
Dear Mr. Simeoni
Thank you for your reply and interesting comments. However, I note that you suggest that more expensive equipment leads to greater profits. This is by no means certain. The cheapest hives are those made from logs, hollow trunks, grass and woven twine and these often yield more profits – because the costs are so low the majority of income is straight profit. This is supported by research in Ethiopia, Uganda and Zambia. You make a distinction between hobby beekeeping and commercial beekeeping. You are right beekeepers vary greatly in their circumstances and scale of operation. Some operate on a small-scale, some on a subsistence level and some are more business-like. However, it would be wrong to suggest that small-scale or subsistence beekeepers are hobby beekeepers. Beekeeping makes an important contribution to their livelihoods – they are not harvesting honey as entertainment (as many beekeepers in Europe do) – it is a matter of survival. And if it did not yield profit they would not waste their time.
You are right that taking out a loan should only occur by choice and be a decision based on a sound business plan. A business plan requires, above all, a sound profitability analysis based on accurate field-derived data. This is where many of these schemes go wrong – as I mentioned in my original post. Data is so often derived from best-case scenarios – rooted in theory and not practice.
Janet Lowore
Bees for Development
Payment of beehives from proceeds of honey
This is a great conversaion that comes at a great time. We are currently setting up a buying system for hives in Liberia. I would love to have anyones input as now is the time to make changes. Her is how we are presently setting it up.
We sell the hives to two different groups. The first group is made up of farmers who already have hives and a knowlege of beekeeping, the second group is made up of new beekeepers. In both of these cases the farmer pays $15usd for a hive and one gallon of honey on the first harvest. This promotes buy in by the farmers and hopefuly payment on the first harvest. On average a hive here will get 1.5 gallons of honey which means the farmer could profit on the first harvest. We also ask the farmers that when harvest time comes we will be there to assist them and upon assisting them will buy the honey on the spot. This guarantees quality control upon harvest and also bennefits the farmer with cash in their hand.
All of this being said we will also have a full time beekeeper traveling aroung working on colonization. We have about a 50% colonization rate and therefore will expect about a 50% payback in the first year. We are working on 2 options here, one is to wait for the following year in hopes of colonization and the other is to take the hive back, repay the farmer a percentage of the cost based on depreciation/damage done to the hive and pass it onto a different beekeeper for a discounted price. Thanks for starting a very interesting conversation and I hope to get comments.
Kent
Payment of beehives from proceeds of honey
Dear Kent,
To start with, let me congratulate you for your initiative and motivation in beekeeping industry.
However, with your plan I may have the following comments/ advice;
1. As the case of many African countries, contract farming on agricultural crops have in several cases failed due to the fact that, most of our people lack what I can call it; adequate knowledge on contract farming/ beekeeping hence poor commitments to the contracts and are not honesty. Here in Tanzania, I have several examples of some what resembles that of yours, and they failed as the farmer/ beekeepers were harvesting and selling honey to other middlemen not in the contract as they are promised to receive better prices, even if the differences is just a peanut. It is very clear that, It is very difficult to monitor productivity of honey especially if the type of beekeeping is the traditional one where most hives are hung-high -up on trees, very difficult to undertake regular inspection, and see the colony status, second- most beekeeping activities are carried out very far away in the remote, very difficult to access it through out the year; hence regular visitation to these beekeeper can be challenging. So you can end up, receiving words rather than products, words like bad weather, low flora blooming this year, colony absconding and so on.
2. To me, I think, If you have a reasonable capital, to reduce costs, let us think of the other modality where you can work together with the community, there by working together with your staff/ Beekeeping experts from your office, installing your own apiaries as far as you can construct just few hives to give them at low prices at least to let them feel it is their properties, and promise to buy their products at market prices and install your own apiaries in the same land. These community members will help you in terms of security matters, and land. Still you can help them in terms of knowledge and skills (give them training) on appropriate techniques to have high quality and good quantity of products.
3. But, your idea is good if at all they are commited with this type of cooperation you stated "I dont know if we can call it Contract Beekeeping" or what? But I can see some sort of having an agreement beetween you and producers/beekeepers!
4. In Tanzaina, most contracts relies on supply of harvesting containers to beekeepers so that they sell honey and other products to thos who supply those containers. But, in several ocassions, thinks go the other way arround, especially to the buyers. To me I see, your idea can work only if people are abided to the national legislations and members are aware of that. This will help you reduce loss, and hence sustainability of the project as far as your intergration starts well at grassroot deeming more capital/energy to be spent as compared to here in Tanzainia wher buyers only supply containers and never at production stage. But yet, some get a lot of problems with this type of contracts.
I will be happy, in future to hear from you on the "cons and pro" and the associated constraints if it is.
Issa
Beekeeping Training Institute, Tabora
Tanzania.
off topic
I see that we change the subject from GMO implications to managment/development schemes at Africa, a very interest theme, indeed.
Are we talking the same type of bees here? The average production quoted 1.5 gallons isn't a bit short for an average per hive per year? 1.5 gall x 3.78541178 (which gallon are we talking about? US gallon in my example) = 5.6781 into density of honey (1.4?) = 4 kg of honey per colony per year ...
If that the case, difficult to finance anything.
Payment of beehives from proceeds of honey
We have come up with a system that I would like to have anyones input on. We are starting to look at the farmers from a risk stand point. Depending on the risk depends on what you can borrow. Any feedback would be appreciated.
Beehive sales options
1. Existing farmers with 3 colonized hive or more:
a. This farmer has 4 options:
i. Pay 2 gallons of honey and receive one hive box complete
ii. Pay 1 gallon of honey this year and one gallon next year
iii. Pay $30 USD for 1 hive box complete
iv. Pay $15 USD this year and 1 gallon of honey next year
2. Existing farmer with beekeeping experience but no hives:
a. This farmer has 1 options:
i. Pay $15 for 1 hive and one gallon of hone on the first harvest.
• This farmer will only be allowed to purchase one hive in the first year and depending on the quantity of the first harvest it will be determined how may they can purchase in the second year.
3. A beekeeper that is part of an existing group that already have colonized hives:
a. This farmer has 3 options:
i. Pay 2 gallons of honey and receive on hive box complete
ii. Pay 1 gallon of honey this year and one gallon next year
iii. Pay $30 USD for 1 hive box complete
iv. Pay $15 USD this year and 1 gallon of honey next year
• It is very important that we do not give out more hives than what the group can pay for in the next year. For example:
If the group has 5 colonized hives then we can assume that they will produce 5 gallons of honey the following year. This would mean that they can not receive any more than 5 hives if they use option 2 or 4 above.
4. A beekeeper that is part of an existing group that has no hives and has just been trained:
a. This farmer has 2 options:
i. Pay $30 USD for 1 hive box complete
ii. Pay $15 USD this year and 1 gallon of honey next year
• In this case it will be very difficult for the farmers or group to pay back all the hives in the first year. Here is why:
o If the group receives 10 hives and pays $15 per hive and 15 gallons of honey back in the first year then this is a false expectation. We know that a hive will produce about 1 gallon per year but we also know that the colonization rate is 50% therefore at the end of the first year we can only expect to receive 7.5 gallons of honey. The payback for this scenario is actually 2 years.
Kind Regards
Kent
Payment of beehives in Liberia
Dear Kent
Your first scenario refers to 'existing farmers with 3 colonised hives or more' - so I would like to ask. What type of hives do these farmers have and where did they get them from and how?
Thanks
Janet Lowore
Bees for Development
Payment of beehives in Liberia
Hi Janet
We are using Kenyan top bar hives and the first hives for the farmer can come from a variety of different places.
We have a training program that the farmer can take and at the end they receive one hive for $15 usd and we find a donor for the other $15. This allows the farmer to get involved but also lowers the risk for the training organization.
After the first year if the farmer is not serious then we can take the hive and reallocate it to someone else who will pay that farmer the $15 minus a depreciation that they will agree on. Once the first hive is colonized and producing honey then they can enter into the loan program.
Basically the colonized hive is the collateral that the farmer can use to borrow for more hives. No bees, no honey, no borrowing.
I hope this answers your questions.
Thanks Kent.
Successful loan schemes - recommendations ?
Dear Janet,
Based on the extensive experience of BfD with beekeeping projects worldwide, what are your recommendations for a successful loan scheme that would allow small-scale beekeepers to upscale their business / increase their honey production ?
Thanks,
Charlotte
Loan schemes based on giving beehives and seeking re-payment in honey – are there success stories out there?
Some apiculture development programmes involve giving farmers beehives on loan and requiring the beekeepers to pay back the loan out of the proceeds from honey sales. A honey-buying company takes responsibility for recouping the loan repayments by receiving honey and subtracting the value from the beekeepers loan book – there are other variations on this arrangement. We have noted the following pitfalls:
The business model is over-optimistic and based on high annual honey yields which are rarely achieved. This means that the forecasts of full re-payment within three years (for example) are not met. This in turn encourages beekeepers to sell their more moderate honey yields on the open market – further undermining the scheme. The reasons for failure that we have noted are:
Forecasts are usually based on full hive occupancy which is rarely achieved in the tropics.
Forecasts rarely take into account that honey yields vary from year to year and the average annual yield over four years (for example) is usually lower than the maximum annual yield times four.
The package of beehives and equipment given to beekeepers at the outset is often more expensive than it need be. This in turn stems from equipment suppliers over-inflating the cost of inputs knowing that the financing scheme can afford them.
We have heard of many examples where the above type of scheme ends in failure and do not advocate it ourselves. There is a real risk that the farmers end up worse off – especially if the loan is secured against other assets. However, we would be really keen to hear the success stories.
Janet Lowore
Bees for Development