Bringing financial services to smallholder farmers

Microfinance in India
Microfinance in India. Photo: Peter Haden (CC BY 2.0)

Financial inclusion has made considerable progress in recent years. There are now a wide range of financial products which can help small farmers: debt financing, short term working capital to finance purchasing of inputs, long term working capital to finance machinery, equity and factoring. Whereas banks used not to want to go the ‘last mile’, ICT innovations have made it possible and profitable to do so. Vision Fund, for example, has over 1.2 million customers.

There is nonetheless still a large financing gap for smallholders: $50billion is being offered, but over $200 billion is needed. This means that smallholders often have to resort to loan sharks. In India for example 37% of loans are still from the informal sector with interest rates of 20-40%.

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Good growth relies on good seeds

Anethum graveolens (dill); dried seeds.Seeds are the unsung heroes of agriculture, and modern varieties provide beneficial traits such as drought tolerance and cooking quality. Some varieties are even designed to provide a platform with which to provide other products, such as seed treatments conferring additional insect and disease protection.

The lack of modern varieties, particularly in developing countries, is a major constraint on smallholder productivity. A commonly quoted figure of 35% penetration of modern varieties in Africa is probably an overestimate and the real figure is closer to 20-25%. As an example there are no modern varieties used on 6 million hectares of sorghum in Mali and the situation is similar for groundnuts.

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Ending hunger will require increased agricultural investment, urges UK Parliament

ImageIn order to end global hunger and malnutrition in this lifetime, the UK government needs to increase investment in agriculture, urges members of the UK parliament in a new report released today. Home Grown Nutrition, produced by the All-Party Parliamentary Group on Agriculture and Food for Development, outlines the key challenges facing food security, and recommendations for overcoming these challenges based on the series of Westminster- held debates. At the heart of these recommendations is increased support for the smallholder farmer, the source of food and path to nutrition for approximately one-third of the global population. Smallholder farmers, numbering an estimated 500 million worldwide, are already a focus of support from UK’s Department of International Development (DFID) through initiatives like Plantwise and other agricultural development programmes. Yet to defeat hunger, public and private investment must play a greater role to enable the smallholder to produce more, and more effectively, while boosting nutritional content and sustainability. The Group also notes in the report that food security is a highly complex issue for which agricultural investment alone is not the solution.  This investment must be accompanied by action in other critical areas, including provision of nutritional supplements, wider-economy approaches (cash-transfers), the empowerment of women, access to healthcare as well as to clean water and sanitation.

The APPG’s recommendations are launched in the run-up to the G8 summit next month in London, during which world leaders will be called upon to make commitments towards improved global nutrition. Days before, on June 8th, a Nutrition for Growth summit led by the DFID will be held in the capital to focus public and media awareness on this issue, further encouraging timely action to end hunger.  As part of the UK’s commitment to nutrition, DFID will be supporting CABI’s work on an initiative aimed at spreading nutritional advice amongst developing communities via mobile phones.