I fully agree with the dual challenges identified of the lack of local currency financing and inappropriate structure of lending to the smallholder agriculture sector.
On local currency there are some strong approaches (like that of the TCX Fund) which have begun to address the lack of local currency financing in emerging and frontier markets - we should build on and extend these models to support funding to the farmer finance market.
On lending structures, it would be good to see more models which promote lending to agricultural SMEs and emerging commercial smallholders - adopting a more targeted approach to smallholder lending that focuses on farmers that have (or can) step up to meet the demands of commercial markets and accepting that not everyone's financing needs can be sustainably met. These small agriculture businesses play an important role in driving productivity and inclusive growth and recent research has shown that lending to the sector can be commercially sustainable under the right conditions. These models can improve the structure of funding provided through improved data on borrower characteristics, improved borrower collateral (e.g. through geo-mapping and land registration) and greater transparency on the potential commercial returns from investing in this sector.
- Simon Calvert, Senior Commercial Agriculture Adviser at Department for International Development (DFID)
I fully agree with the dual challenges identified of the lack of local currency financing and inappropriate structure of lending to the smallholder agriculture sector.
On local currency there are some strong approaches (like that of the TCX Fund) which have begun to address the lack of local currency financing in emerging and frontier markets - we should build on and extend these models to support funding to the farmer finance market.
On lending structures, it would be good to see more models which promote lending to agricultural SMEs and emerging commercial smallholders - adopting a more targeted approach to smallholder lending that focuses on farmers that have (or can) step up to meet the demands of commercial markets and accepting that not everyone's financing needs can be sustainably met. These small agriculture businesses play an important role in driving productivity and inclusive growth and recent research has shown that lending to the sector can be commercially sustainable under the right conditions. These models can improve the structure of funding provided through improved data on borrower characteristics, improved borrower collateral (e.g. through geo-mapping and land registration) and greater transparency on the potential commercial returns from investing in this sector.
- Simon Calvert, Senior Commercial Agriculture Adviser at Department for International Development (DFID)