Fariel Salahuddin has over 10 years of experience in energy finance, project development and energy policy, having worked in Pakistan, Indonesia, Egypt, and MENA region. In 2016, she founded a start-up called UpTrade (Goats for Water) of which she is also the current CEO. Goats for Water is a unique barter-based start-up where the company provides solar-powered water, off-grid solar solutions for general electricity usage in exchange of goats to off-grid communities and households.

To find out more about this venture, the company’s plans and Fariel’s views on livestock (goats) sector in Pakistan, BR Research recently had a chat with her over a cup of coffee in Karachi. Below are edited transcripts.

BR Research: Tell us about how you got into this, what are you trying to achieve and who are your customers'

Fariel Salahuddin: I used to work in the power sector as a consultant for the ADB, World Bank and other organizations focusing on energy policy and renewable energy projects. I became interested in off-grid energy and began visiting rural areas to develop a firsthand understanding of the off-grid customers. What I found there that these communities, in addition to not having access to electricity, didn’t have access to water for themselves or for their animals.

Goats for Water was the solution that came about to provide these communities with the most basic of necessities, which is water access through solar water pumps while bartering goats. What we found is that these rural communities, who are called smallholder farming communities, raising livestock to augment their incomes. These rural communities are isolated from mainstream cash-based economy which is one of the issues resulting in poverty. What we are trying to achieve is create alternate cash-less, livestock indexed system, by-passing the cash-based system, enabling them to use their livestock as currency. We are now creating a digital platform to facilitate that exchange.

BRR: But why goats' And why water pumps'

FS: We had looked at BISP data and we found out that the poorest of the poor owned the highest share of goats/sheep, which reaffirmed our view that if we are able to impact small animal farming households, we are effectively impacting the lives of the poorest of the poor. If we can improve their earnings through our model, then we can lift them out of poverty. In Pakistan that would mean the government can redirect cash transfers under BISP to other segments of the society or for other purposes.

Just having water has improved the health of goats, which means they gain the desired amount of weight and in due time which helps them get better price for their farmers. Lack of water on the other hand leads to higher mortality in goats, higher susceptibility to disease, and lower fertility. We did a village-based research and found out that the number of animals they sold in a year was equal to the number of animals they lost to death due to preventable diseases which become more prevalent in water-stressed conditions.

BRR: What’s the business model you started off with'

FS: We started off by putting solar-powered water pumps in a village and bartering it against goats; because these people, for instance those living in Thar, don’t have cash to pay for. But they do have goats, and so we gave them those pumps, bartering against their goats and selling those goats to the abattoirs. Pretty soon we understood the country’s livestock value chain and how inefficient and fragmented it actually is.

That experiment matured into another product called Goats for Solar. We started putting solar home systems in exchange for goats, and we now want to expand that into other inputs as well. So every input that a farmer works with, fertilizer, feed for the animals, water or even anything personal, in addition to off-grid solar solutions or any of its parts, they would be able to purchase it through that platform. The exchange of value would be in terms of goats. For instance, for certain amount of feed they may sell one goat but for a solar-charged TV they may sell five goats.

BRR: Can you walk through the intermediaries in goat market'

FS: There are a number of intermediaries in livestock supply chain from the farmer to the buyer. This is the case in all agri-produce. The primary or the first level of intermediary is a village level man called the ‘beopari’. He is from the village; he knows the farming families on first name basis, and he knows their animals as well. Farmers sell their goats to him periodically every time they have any need for cash; they literally use their goats like ATM machines quite often for pressing needs such as a sick child or arranging dowry for their daughters’ wedding.

Since beopari is the only buyer in that market, the farmer ends up making a distress sale, although of course prices vary on the basis of the weight of the animal, the season of the year, and the extent to which the farmer is distressed.

The beopari will then take the animal to the local mandi, from where onward the animal will be sold to the city mandi. At the city mandi, there are traders who buy goats and sell them to local meat companies or to traditional abattoirs, before their meat reaches our plates. Mind you, these are all cash-based transactions. At the city mandi, traders come with suitcases of cash with armored vehicles to buy animals.

BRR: Does your model help the farmer get better prices' How much does UpTrade pay for goats to the farmer in comparison to the beopari'

FS: Yes. That is exactly why we are doing this. UpTrade started with 40 goats for a solar-powered water pump. But now we exchange much less – about 15-20 goats—since the price of the solar system has come down whereas we have become efficient in our procurement and overall business model.

In the case of e-mandi, which is an electronic market that we have launched, I can’t share the numbers since we have just initiated the project a few weeks before Eid-ul-Azha. That said, one of the key differences is that our agents buy goats from farmers on the basis of weight rather than the traditional method used by the beopari who arrives at the price of the goat by merely getting a feel of the goats’ back, which is a very arbitrary method of pricing.

BRR: How does Goats for Water work in terms of agreement structure'

FS: We make a written agreement with the community, where the community is represented by the local support organizations. The agreement specifies their end of the consideration, which is the size, watts, number and type of solar panels and details of water pump, against our consideration of certain number of goats. It also specifies the warranty and service agreement.

A village has anywhere from 200 to 2000 goats depending on the size of village and nature of their vegetation. From that they exchange some of the goats in exchange of a solar water pump which is a public asset. A solar home system is on the other hand is an individual household asset.

BRR: Who pays for the maintenance of solar powered pumps'

FS: There have been some water pump projects in the past, where the NGO installing those plants leaves after the installation since their funding metrics are met. However, we maintain the pump for two years; it’s part of the agreement. After that, the villagers maintain it themselves, either through us in exchange of goats or through anyone else; it’s their choice since they own that pump. The useful life of the solar powered up pump is up to three to five years depending on how it is used.

BRR: Which districts are you currently working in; and where else do you plan to expand'

FS: We are currently working in Tharparker, Sindh. However, through our partners like the German NGO, Welthungerhilfe, and Pakistan Microfinance Investment Company (PMIC) we are trying to reach other districts.

A significant portion of PMIC’s lending for instance is to livestock farmers and if we can give their loan customers a better access to market, then those borrowers would be in a better position to pay back the loans. We are also talking to Karachi Relief Trust, which is working in a number of districts including Rajanpur that also has a high concentration of goats and sheep.

We are also partnering with a meat exporting firm to improve the quality of goats of farming households in Sindh through artificial insemination. Artificial insemination is being done at breeders’ level but not at the level of household farmers.

BRR: One could imagine that the problem of market access is faced by farmers in several other developing countries. Are you planning to scale up your work to other countries'

FS: Yes, this is not an issue unique to Pakistan; it is endemic to rural communities in most developing countries. Most of the small-holder, rural livestock farmers across the developing world are poor. They don’t have access to markets to sell their animals; nor do they have access to market of farm inputs.

We have already piloted our model in Somalia and Nepal, and we found out that this is transferable to other developing economies. We are in conversation with a few firms to collaborate with us and set up teams in Africa but it’s too early to share details at the moment.

Copyright Business Recorder, 2019