Mtenda

Name of the Company : Mtenda Kyela Rice Supply Co. LTD
Project Name: Development of vibrant and competitive smallholder farmer paddy/rice value chain
Funding Window:             Matching Grant, Patient Capital
Amount of funding requested ( USD) : 100,000

 

About Mtenda Kyela Rice Supply Co. LTD

Mtenda Kyela Rice Supply Company Limited (MKRS) is a company limited by share which deals with purchase of paddy and supply of high quality rice produced in the Southern Highland of Tanzania. The company procures paddy from smallholder farmers organized in groups/association under the contract farming arrangement then process, pack and sell branded rice in domestic and external markets. MKRS uses contract farming approach to develop its business value chain which is mainly pre-dominated by smallholder farmers. The company supports and invests in developmental activities such as mobilizing farmers to form groups and associations; training farmers on Good Agronomic Practices (GAP) of paddy production e.g. System of Rice intensification (SRI); post-harvest technologies, input supply in form of credit and market linkages.

Project Purpose

The purpose is to reach 1,500 farmers and develop them into a competitive paddy value chain system through increasing quality and quantity of paddy.

< Expected Outcomes

  • The project focused on 1,500 farmers who will benefit directly it is expected that 11,610 farmers will indirectly benefit from the project.
  • About 69,264 jobs will be created along the value chain from the period of 2016 to 2025.
  • USD 100,000 requested from SAGCOT CTF will catalyze about 903,158 USD of private investment from the company.

Review of the submitted project by the IC
General comments

  • The company have submitted the proposal under business name “Mtenda Kyela rice company LTD which legally do not exist. The legal registration is Mtenda Distributor Company LTD.
  • The company do not own milling machine, outsourcing milling from third party with top up commodity value which may negatively impact the price which is offered to smallholder farmers.
  • The company have multiple donor financing. Therefore there is a need to ring face activities to be financed through SAGCOT CTF.
  • The company is a very well experienced rice trader

 Review of internal aspect of the company

2.2.1. Project context in relation to value addition on SAGCOT Initiative

Paddy is one of the national strategic crop as identified through various national frameworks and SAGCOT initiative. The crops serves as a food security and is the second most widely consumed after maize. The project identified by the applicant is very much in line with SAGCOT and can add value to the initiative. The project is rated 4 out of 5 under this section.

 Applicants Vision and Mission

The company’s mission and vision are strongly focusing on smallholder farmer engagement. The project is rated 4 out of 5 in this section

 Project Objectives

The services offered have a directly impact on contracted smallholder farmers through provision of ready market. Service offered include paddy purchase, milling, branding and selling directly. The project is rated 4 out of 5 in this section.

Markets and Profitability of Applicants and price impacts to producers

The market identified by the applicant is a good market however there is no evidence price benefit is passed to famers.

The financial statements provided indicate that the applicant business is profitable to the company as well as to the contracted farmers. The project is rated 7 out of 10.

Institutional capacity and capability

The project team is very experienced in rice trading and farmer training. The project is rated 4 out of 5 under this section.

Finance and resource management

Reference from the report of credit reference bureau indicate that the company by the name “Mtenda Distributor Company LTD” does not have an outstanding loan from any financial institution. However the company’s submitted audited financial statements “Mtenda Kyela Rice LTD” indicate that the company have an outstanding loan of Tshs. 15,436,786 from DTB as of August 2015 and the business is profitable. The project is rated 4 out of 5 under this section.

Monitoring and evaluation

The M&E section is well articulated. The project is rated 8 out of 10 under this section.

Risk assessment

There is high risk of funding diversion to other use. The company have reached a collateral limit and can no longer get bank loans. The company also is trading under two different names. The legal name of the company is Mtenda Distributors Company LTD, however the audited statement and the company business plan submission is referring to Mtenda Kyela Rice Company LTD. Having the fact that credit reference bureau could not track the existing dept of 15 M Tsh.  There is possibility these former is not a business name rather a company. The project is rated 6 out of 10 under this section.

Review of external aspects of the company
Smallholder farmer engagement

The company had already received grants from NAFAKA and TPSF. CTF can be used to target same farmers with no impact of adding or reaching out to additional farmers. The project is rated 20 out of 30 under this section.

 Link up with ongoing projects

The company is also working with USAID/NAFAKA initiative through a matching grant project to boost farmer’s participation in the value chain. The company have been able to reach 1,290 farmers with this initiative. SAGCOT can build on this initiative and bridge the gaps. The company also collaborates with YARA and TANSEED on quality input provision to smallholder farmer through loans. The project is rated 4 out of 5 under this section

Socio economic impact of the project

The project (as it stands) is already impacting on rice production in Mbarali (NAFAKA grant). The project is rated 8 out of 10 under this section.

Project Costs and Funding requested from SAGCOT CTF

Total project cost is Tshs. 390,422,500 equivalent to USD 181,592. The company is applying for a USD 100,000 grant in support of administrative functions (10%) and smallholder farmer’s capacity building and input support (90%) as summarized below.

 

No. Indicative Category Amount requested (Tshs)
From CTF From Mtenda
1 Project administration monitoring and evaluation 21,812,700 134,510,000
2 Smallholder farmers capacity building and input support 196,314,300 37,785,500
  Total 218,127,000 172,295,500