40 Chances

by Howard G. Buffett

  Jake learned that the Iraqi army had been trying to force the man, a farmer, to take up arms and fight. “I saw the consequences of extreme poverty on his face—he had no choices,” Jake says. During his tour of duty he realized many combatants were not trained soldiers. They were simply poor farmers whose families were starving; the military would convince them to come fight (or do suicide missions) in exchange for food. Jake, who grew up on a farm, said he realized that to defeat terrorism he had to put down his weapon and work on extreme poverty. Within two years he had left the military and enrolled in Stanford University’s MBA program. He then started Nuru International. (Nuru is the Swahili word for “light.”)

  Nuru’s approach—ongoing in Kenya and now expanding to Ethiopia—is not based on aid. Nuru is a nonprofit and works on several aspects of community development designed to broaden the choices available to people and empower them to make their own decisions. In terms of agriculture, I’m interested in three particular elements of Nuru’s model. First, it makes loans of seed and fertilizers to farmers and then teaches them the skills to maximize yields so they can pay back the loans—nothing is given away. In four years of working in Kenya, some farmers have seen 300 percent increases in crop yields.

  Second, Nuru launches a for-profit company run by local entrepreneurs and a management team it helps to train. The company develops several business units, such as a transportation service to help farmers get surplus crops to market. In many regions of Africa, for example, poor farmers are exploited because they can only sell to traders who have vehicles and come to their village. Many farmers can get better prices if they take their surplus directly to a market, but they can’t get it there. In this instance, Nuru helps develop a local business by purchasing a vehicle to bring fertilizer and seed to the village and transport local farmers’ crops to market for a reasonable fee. Farmers get better prices and, as a result, can afford to pay the fee, so the model is sustainable. Nuru’s ongoing involvement makes sure newly created companies keep reinvesting profits into the community.

  Third—and this is in line with our conviction that development should be about putting yourself out of business—Jake says he’s giving Nuru a seven-year exit strategy anywhere it initiates a program. This helps focus the community’s attention on what it must learn to do to sustain the successes without outside assistance. “In the traditional NGO world I think we’ve created a glass ceiling where we can’t break through and solve extreme poverty,” Jake says. “The existing organizations don’t believe they can do it and we’ve created so much dependency for aid, but they won’t admit their mistakes.

  “In Silicon Valley, entrepreneurs succeed because they realize when they’re wrong they have to react to the marketplace and change. I want us to be transparent about our mistakes and keep changing.” For example, there was a point when Jake, like us, thought drilling wells was a way to make a big impact and he started doing that. But also like us, he realized that was actually a short-term fix. “You have to do an entire value chain intervention. You can’t just come in and build infrastructure, especially in areas of rural poverty. You have to find local entrepreneurs with good ideas and help them develop the ability to grow their business and access markets.”

  Poverty is not about how much money people earn or live on per day, says Jake, it’s about living without choices that represent basic human rights. “Just because of the GPS coordinates of where someone is born, they may have no choices,” he says (that sounds a lot like the Marine version of the ovarian lottery). But with comprehensive development plans that emphasize local solutions, market access, and leadership training, he says, “we think we can break the glass ceiling on extreme poverty.”

  Another interesting angle on social enterprise is a nonprofit organization called CITA (Centro Independiente de Trabajadores Agricolas), based in Yuma, Arizona, with offices in Mexico as well. Started by an innovator named Janine Duron, the company has a goal to improve livelihoods by supplying hardworking legally certified labor to for-profit farmers in the United States. In that sense, it competes with for-profit placement agencies. We made our first grant to CITA in 2007, just as it was getting started as a farmworkers-led organization that would serve the interests of farmworkers while simultaneously meeting US farmers’ demands for access to a legal labor pool. We partnered with Catholic Relief Services to support CITA, but it is not a traditional NGO. CITA serves as a sort of labor broker, a matchmaker between farms and seasonal agricultural workers. CITA helps Mexican laborers obtain visas and legally raise their earnings by roughly 1,000 percent. (In Mexico, they can make about US$10 per day; on US farms, they earn US$10 per hour.) These workers are not taking American jobs. They are filling critical seasonal positions that large farmers can’t otherwise fill legally. According to CITA, the 1,434 manual farm jobs they placed in 2012 paid workers about $3 more per hour than the minimum wage, while those employers received five or fewer applications from Americans. That is why farms sponsor them through the H-2A visa certification process, pay well above minimum wage, and cover other costs such as housing and transportation. (Our foundation partnered with Arizona State University to research why low-income Americans in the area are not applying for these jobs; one reason could be that a combination of welfare benefits can be comparable to what Americans can earn working in the fields.)1

  On several occasions I visited CITA in San Luis, Mexico. On this trip, Eva Longoria accompanied me to learn more about the challenges facing migrant workers. Photo: Howard W. Buffett

  It takes guts to try these new ideas, and I hope projects such as these will eventually replace short-term aid programs that ultimately change little in the long term. We need value chains and dynamic local economies that can carry on in a fair, sustainable way after NGOs and philanthropists have moved on. Joe and his partners and management at Theo, for example, are determined to bring the dynamics of markets and financial leverage into communities battling poverty. Theo is committed to fair trade, transparent farming and environmental practices, and good treatment of farmers. “I wanted to create a company with heart and soul, and that could create commerce in a way where everybody won,” says Joe.

  Helping the DRC is a special mission for me. Its people have suffered, and its extraordinary ecosystems have been under siege for decades. Roughly 70 percent of the population have suffered chronic undernourishment over the past decade, but hunger is only the beginning. It ranks last in the 2011 United Nations Human Development Index, which measures life expectancy, education, and income. More than five million people have perished since 1998 due to conflict, disease, and poverty, many of them in the eastern part of the country, where we focus a lot of our attention. By some estimates, as many as forty different identified armed groups have battled for control of different areas, which is complicated by the rich resources in the country, including oil, copper, cobalt, diamonds, and coffee.

  The DRC is one of those places where the situation is so unstable and unpredictable that many organizations just won’t risk going in. For a long time, we were one of the few American private foundations willing to try to work there. Fortunately, that is beginning to change. The trip where we met was organized by an organization that the actor-director Ben Affleck created (and for which our foundation provided start-up funding) called the Eastern Congo Initiative; it is working to raise awareness of the area and bring in philanthropists and other potential investors.

  COCOA BUYERS ARE LOOKING FOR NEW SOURCES, BUT QUALITY IS KEY

  The Congo has significant agricultural potential. And there are some interesting dynamics in the cocoa market today that favor DRC as a source, as I learned by traveling with Joe. Cocoa beans grow on cacao trees, which typically grow in the shade of taller forest foliage in hot, moist climates. Today much of the world’s supply of premium cocoa comes from West Africa, where the climate has been getting steadily hotter and drier and where widespread deforestation has limited the growth potential for cocoa. Many chocolate companies a
re expanding their sourcing of cocoa. At the same time, premium chocolates are a fast-growing market, while traditional sources are experiencing lower yields.

  Because they benefit from the shade of taller trees, cacao trees grow well in a forest; the destruction of forest for charcoal jeopardizes the DRC’s ability to develop or sustain a cocoa crop. Photo: Howard G. Buffett

  Green House identified cocoa as a crop that offered a lot of potential to raise the standard of living in the DRC for several reasons. First, the initial harvest is within three years of planting, and it does not require annual replanting. Second, it commands good prices on the global market. Finally, cocoa is not as susceptible to theft by militia that roam the region, as its true value cannot be realized until it is processed.

  That’s the tricky part: the postharvest handling of cocoa is essential for ensuring high quality. After being harvested by hand, the leathery pods are cut open and the seeds scooped out and piled so that the sugary pulp can ferment. This process liquefies the outside of the pulp and seeds and reduces the seeds’ bitter taste. Then the material must be spread out and dried. It’s at this stage that the beans typically are shipped, but mistakes in fermentation or drying can render a shipment worthless—most commonly from mold that forms if the beans are shipped before proper drying. Farmers learning to grow cocoa have to follow these procedures carefully. Initially, Joe was skeptical, but he talked with the farmers during our visit. “What impressed me about DRC was the commitment of the farmers,” he says. “They were so engaged and aggressive and thirsty for opportunity.” Joe bought 250 tons of cocoa from them. “It’s a challenging place to work,” he reflects, but “the genetics of the trees there are really good.”

  A cocoa farmer involved in the project we are funding told us, “They tell me I was living on $1 a day and that now I am living on $6 a day. I don’t know about that. What I know is my family is no longer hungry and I can send my children to school.” Photo: Howard G. Buffett

  In the spring of 2012, the first container ship carrying DRC cocoa arrived in Seattle. Within a week, Joe’s R & D team determined that the quality was good enough to use in chocolate. By late September, Theo introduced the first two chocolate bars: Pili Pili Chili, which features not just cocoa but also organic vanilla and spicy peppers from the Congo; and Vanilla Nib, a mix of cocoa, creamy vanilla, and crunchy cocoa nibs. Theo sells them through a number of US grocery chains such as Whole Foods. Joe has since increased his commitment by another ninety tons.

  Theo has made sure that a portion of the proceeds from the chocolate sales go back to Green House to keep helping develop resources on the ground. The way Green House figures it, the first shipment of cocoa alone will help twenty thousand people living in the region, increasing household incomes and improving access to vital services. But more importantly, this effort to supply Theo is putting in place the training and value chain connections that have a chance to pull many people out of extreme poverty for some time, with a mechanism they control. “Unless you create a path to market, you’re pushing on string,” Joe says, adding that Theo could end up sourcing the bulk of its cocoa in the future from the DRC if the quality and transparency of the project remain high.

  It’s exciting that smart, tough entrepreneurs such as Joe and some of these other innovators appreciate how crucial markets and jobs are to sustainable livelihood development. I hope these social entrepreneurs do what all good entrepreneurs do: learn from one another’s experiences and help everybody do well by doing good. For my next trip to a cocoa operation in fer-de-lance country, I will not only watch for this dangerous snake; thanks to Joe’s insights, I will keep an eye out for its hunting partner too.

  Story 35

  Fired Up in Ghana

  I can’t think of one good thing to say about slash-and-burn agriculture. It depletes the soil. It wears out farmers. It destroys animal habitats and pollutes the air. It releases carbon better left in the soil. But there is another problem that I haven’t mentioned: out-of-control fires.

  In Ghana’s Ashanti country lives a brilliant, humble man who knows a lot about those fires. Kofi Boa was born in 1955, the youngest of four children. He grew up in the village of Amanchia, southwest of Kumasi, Ghana. He has one of fourteen common first names in Ghana because, like many Ghanaians, he is named for the day of the week he was born. (Kofi means “boy born on Friday.”) His father died when he was six years old, but his mother continued to farm the family’s cocoa plantation.

  When he was about twelve, he came home from school one afternoon and could not find his mother. He asked around, and the neighbors gave him vague answers. They seemed uncomfortable talking to him. Finally, one of the men told him that his mother was still at the farm, where a fire was raging. Some of the local men had gone to help her.

  Cocoa fields during the dry season are especially flammable because cacao trees drop their leaves, creating a carpet of dry kindling. What’s more, this kind of fire is economically disastrous to a farmer because newly planted cacao trees take at least three to five years to produce a crop. Kofi begged to go help fight the blaze, but the adults refused. That night his mother returned home devastated. “She was crying. The entire cocoa farm was destroyed. All of it burned,” Kofi recalled.

  To make ends meet, his mother hired herself out as a caretaker farmer for other landowners, and slowly she made enough money to replant and restore the family’s income. But Kofi never forgot the damage or the pain that the fire caused his mother. “I developed a hatred for fire on the farm. I wanted to understand how to farm without fire.”

  That quest ultimately brought Kofi and me together in a concrete block shed in Fufuo, Ghana, in 2007.

  Ghana, a former British colony once called the Gold Coast, sits on Africa’s Atlantic coastline between Ivory Coast and Togo. Although it still has considerable poverty, Ghana is a rising star and has a stable democracy; its economy has been growing because of an oil boom and it’s one of the world’s leading exporters of cocoa and gold. Mining its reddish soil—which the Chinese are doing aggressively these days—yields not only gold but also bauxite, manganese, natural gas, and some diamonds.

  During Kofi Boa’s childhood, slash and burn had become the norm around the Ashanti region (and in much of Africa), but he learned that there was an alternative. “There were then very old people in the village who told me when they started farming they would cut the maize down after harvest but leave it on the ground for a year, and then come back and plant again. That technique was called proka.”

  MEET MR. MULCH

  Many farmers use slash and burn to claim new farmland from forest when soil wears out and stops producing healthy yields of crops. Farmers chop back vegetation and then burn it to open up the land. In Ghana, many farmers also go through fields and burn what they consider “trash”: postharvest stalks and dried weeds or plant stubble. They sometimes use burning to drive out poisonous snakes and mice. But that practice leaves soil vulnerable to rain and wind, diminishing its ability to hold moisture, and reducing the organic material in the soil. The gist of traditional proka style, however, was mulch: plant residues and other organic matter left on or even carried to the rows in between the planted crops. The mulch helps the soil retain moisture, which is crucial in a rain-fed agricultural system such as Ghana’s. As it decomposes, the mulch also raises the biomass and organic matter in the soil. The other element of this farming style is to plant crops—ideally, legumes such as cowpeas, which fix nitrogen—between rows of maize, for example. That stabilizes the soil and keeps it from washing away.

  It is not hard for me to imagine Kofi as a determined young man, going around to farmers in the area to talk about what happened to his mother’s cocoa farm and trying to learn how he might prevent a fire from ever hurting his family again. He has a deep, serious voice and also a sly, dry sense of humor. As he finished the story of the fire and his research into proka, he said, “And from then on I became Mr. Mulch.”

  When I visited Fufu
o in 2007, I had not heard about Mr. Mulch yet, but I had heard about the strides that farmers in Ghana were making in conservation agriculture. By 2000, one hundred thousand farmers in Ghana were using no-till agriculture on forty-five thousand hectares. Kofi was working for Ghana’s Crops Research Institute, and he and two colleagues—one from Ghana and the other from the International Maize and Wheat Improvement Center (CIMMYT)—had coauthored and published a study on no-till technologies in Ghana. It revealed that, in normal rainfall years, no-till farmers obtained maize yields 45 percent higher than those of farmers who did not use no-till. After adopting no-till, average family labor was reduced by 31 percent; land preparation and planting, by 22 percent; and labor for weed control (with glyphosate herbicide), by 51 percent: from an average of 8.8 man-days per hectare to 4.3 man-days per hectare.

  I was impressed watching Kofi discuss with farmers in Fufuo how reduced tillage systems could create better yields with less work. Photo: Howard W. Buffett

  No-till agriculture, Kofi found, provided three distinct benefits: It increased water available to the plant in dry years, because the mulch kept more moisture around the plant and roots and kept the soil temperatures cooler. It permitted the planting of a second edible crop as the cover crop. And the mulch helped keep in the field a larger number of beneficial insects that fed on destructive pests. Among other benefits, no-till brought increased food security to families from the larger yields and created more time for other income-generating farming or trading activities.