‘Let it bee’: One farmer’s journey from dream to reality
With support from the World Food Programme Innovation Accelerator, and the WFP Armenia Country Office, small and medium enterprises have an opportunity to develop their businesses through access to finance
By Gohar Sargsyan, Ivory Hackett-Evans and Mariam Avetisyan
“When my son was just 5 years old, I used to tell him a story about a kid who built his ‘dream house’. Thirty years later, my son turned our dream into reality,” says Anahit, an Armenian farmer, and mother with a warm cup of tea in her hands around an old table crafted by her son several years ago.
When asked how it all started, Anahit’s son, Martin replies with a simple yet shy smile, “Nothing is impossible, when there are people who believe in you and there are bees who do the work for you”.
Bees have always been around in Martin’s family. The family has been engaged in bee farming for almost 150 years, producing organic raw honey and selling a variety of products in the local markets. However, with growing competition and inflation in Armenia, many farmers face significant challenges in maintaining a profitable business. Martin’s father struggled for a while to turn the family tradition into a productive and sustainable business that would be later passed on to future generations.
“We try our best not to mess with Mother Nature, to keep our bees in their hives. Of course, it is sometimes hard to create the best environment for them and there were times when we had empty beehives. With time, we learned important lessons — to give the colony enough space and make them feel truly at home, so they won’t search for a better one,” says Martin’s father while scraping the honey from the honeycomb.
“To follow my passion and grow the family business, I had to take out several loans to be able to cover costs of production, labour, and branding. It was not an easy decision considering the current unstable global situation, but there is a popular phrase: ‘He who doesn’t take risks, never drinks champagne.’”
Over the last few years, Martin has taken out a significant amount of loans from local banks in the hope of developing his business into a rural touristic destination that benefits the entire community and promotes ecotourism in the region.
“When I started to think about expanding our small family business, one of the key aspects was our desire to contribute to the development of the community while motivating the villagers and helping them to see the opportunities for living, working, and thriving in our homeland,” says 33-year-old Martin.
Mets Sariar village, where Martin and his family live, is situated in a very high mountainous region, which creates several challenges for the locals. The winter months are harsh and since the roads are mostly blocked because of the rural location, people don’t have access to various services; sometimes even going to school is a challenge. At the same time, the main source of income for villagers is cattle breeding, which is quite expensive and not possible for most of them.
“I was very excited when I saw WFP’s announcement of the new project that helps small entrepreneurs like me to get access to private financing to support business growth,” says Martin.
Since the autumn of 2021, WFP’s “Renewable energy for microenterprises in Armenia” project has provided micro-enterprises working in the food industry with access to a 30 percent subsidy to install a solar station. The remaining 70 percent is paid by the micro-enterprise in installments over five years in installments. “For many small and medium entrepreneurs, this invaluable support was truly important. For me it was more than that — this was the incentive to gain exposure for my brand and create change and give hope to our future generations.”
Reducing high energy costs through solar power
In Armenia, micro-enterprises have low productivity due to high energy costs that in turn make the production costs higher. The WFP Armenia Project is expected to help micro-enterprises overcome these challenges to maintain and run their business efficiently.
WFP focuses on installing solar stations that produce affordable and clean energy for Armenia that can transform food systems in the Armenian communities. Thus, WFP’s vision is to make solar stations available to small businesses through an inclusive finance mechanism that is made possible through private-sector partnerships.
“Sometimes to either start or grow a business, one needs a little push that changes your life in a big way and opens a page to start fresh. WFP’s support was that push for me and my family. With the help of the solar station, I am now starting to produce a unique honey-water product in Armenia. This is a completely new approach that I would like to serve as an alternative for the non-healthy sugary drinks that are common in the local market,” says Martin with excitement in his eyes.
Since receiving support from WFP in 2022, Martin has been able to transform his water bottling machinery to run on solar power. The 20kW solar panels Martin received from the programme provide him with AMD 1.5 million in savings that he is able to further invest in his business.
Installing solar stations can make small medium enterprises (SMEs) , like Martin’s, more competitive by reducing electricity overhead costs. Since 2020, WFP Armenia has supported 11,095 individuals to access solar stations in an effort to promote climate adaptation approaches to programming. Over 30 of these are SME who have reduced their operational costs by 30 percent. The cost of 1 solar station is US$ 10,000. A return-on-investment analysis conducted by WFP showed that by using a solar station for over ten years, one micro-enterprise can save more than US$ 14,000 over a ten year period. That’s a return on investment of over 400 percent over a solar station’s life span of 25 years. A total of 250 micro-enterprises can be reached with an investment of just US$ 750,000 using a 30 percent subsidy model, while also reducing carbon emissions by 5,000 metric tons annually.
Enhancing small business viability through access to finance
WFP’s solution supports SMEs engaged in Food Value Chains through the provision of support to enhance business viability, as early-stage investments or first-time transactions usually receive little interest from commercial finance institutions, with little to no financing available at marketable rates. Incentivizing SMEs to engage in positive business practices that create decent jobs and enhance production capacities through the involvement of development finance can address the factors underlying the investment risks, increase the understanding and comfort with the sector for the investors, and establish a positive track record for both investors and borrowers. This investment contributes to enhancing the food systems and improving access, availability and affordability to nutritious food.
Global economic downturn forecasts an increase of needs, and a reduced capacity to respond, something becoming more evident at this time of global food price crisis. Enhancing access to finance for SMEs is a solution that places entrepreneurs as the architects of their own future. Eventually, less and less development finance may be required to unlock the potential of commercial finance, with the goal of engaging socially and economically disadvantaged populations into the economic sphere.
Closing this gap has the potential to address this market failure in the short term, and catalyze broader market financing in the long term.
The WFP Innovation Accelerator sources, supports and scales high-potential solutions to end hunger worldwide. We provide WFP staff, entrepreneurs, start-ups, companies and non-governmental organizations with access to funding, mentorship, hands-on support and WFP operations.