Access to finance is a critical piece of the food security puzzle. Smallholder farmers and entrepreneurs in agricultural value chains often lack the funds they need to invest in their farms and businesses to improve productivity and connect to markets. They often face challenges managing cash flows to meet household needs for food, education and agricultural inputs during the lean season and other critical times of year. On the supply side, financial institutions face challenges developing financial services and products that are profitable yet affordable for smallholders and growing businesses, given the higher transaction costs and risks involved in serving the rural and agricultural finance market.
This month, Agrilinks is focusing on the role of finance in meeting our food security goals. Agrilinks will highlight initiatives and innovations that are both helping bridge the $210 billion gap in global smallholder financing for the world’s 450 million smallholder farmers as well as addressing the financing needs for small and medium-sized enterprises (SMEs) in agricultural market systems.
To kick the month off, we’d like to highlight a few key resources and posts from the Agrilinks archives:
This piece from One Acre Fund highlights exciting collaborations between social impact lenders such as Propagate and the Council on Smallholder Agricultural Finance, which are working to lower barriers to entry to deliver smallholder financing, scale up and expand service provisions, and share knowledge. The piece also highlights that smallholder farmers need much more than capital. They need agricultural extension services and basic business skills among other things to effectively leverage financing.
Finance: Unlocking Capital Flows addresses strategies for catalyzing private capital flows in the context of Feed the Future programming under the U.S. Government’s Global Food Security Strategy (GFSS). This is one of a series of 18 technical guidance documents developed to support GFSS implementation.
This post highlights findings of a CGAP report on Segmentation of Smallholder Households, which differentiates smallholder farmers and their finance needs into three segments according to how they engage with markets and how those markets are organized.
This post on Country Analyses of Agriculture Finance Landscape shares results of a strategic landscaping exercise conducted by the USAID's Bureau for Food Security (BFS), Office of Market and Partnership Innovations in four countries: Honduras, Kenya, Nigeria and Nepal.
Also from the BFS Office of Market and Partnership Innovations, the Case Studies on Agricultural Finance series draws from real-life implementation examples on improving transaction efficiencies, strengthening agricultural enterprises, developing new products, creating strategic partnerships and more.
In the sidebar on the right, you’ll find a few additional downloadable resources from external sites, including:
- A link to the Mastercard Foundation’s Rural and Agricultural Finance Learning Lab, which fosters knowledge creation, sharing and collaboration toward better financial solutions for more smallholder farmers and other rural clients.
- A new toolkit developed by USAID, Using Digital Tools to Expand Agriculture Insurance, shares the latest learning and best practices in this emerging space. Insurance is an important tool for protecting farmers' financial investments and assets, with the advent of mobile-friendly insurance products, this safety net is now in reach of an increasing number of smallholders.
Additional resource links include:
We look forward to receiving your contributions on this month. Stay tuned for more resources on the topic throughout February!