Agribusiness development and trade

Finance

Agribusiness development and trade - Finance
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In this topic, the focus is on the development and application of financial practices and services that could support farmers and agribusinesses in developing countries and emerging economies to develop their business and contribute to food and nutrition security. Tailored micro-finance for smallholder finance is important, but finance for the overall Value Chain, including processors and (semi)commercial farmers, is also crucial for a stronger agro-food sector. In addition, risk management is a priority issue for financiers in agro finance.

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Inclusive finance and inclusive rural transformation
Published by IFAD,
This paper (PDF) in the IFAD Research Series provides an overview of concepts, issues and research on the relationship between financial inclusion and inclusive rural transformation. Liberalization of financial markets may not have had the desired spillover effects into rural credit, stressing the need for public intervention. Evidence shows that agricultural credit provides positive returns. »
Agricultural leasing market scoping study for sub-Saharan Africa
Published by FSDA, Nathan Associates,
This report applies a market systems approach to agricultural equipment leasing in sub-Saharan Africa in order to capture a holistic view of how the leasing market currently works. The study has analysed core market functions (supply and demand), as well as supporting market functions and the policy environment. Constraints throughout the market system for leasing currently create an environment where effective demand to lease equipment is limited and the incentives for financial service providers to offer agricultural leasing products are low. »
Webinar on agriculture, banking, and the digital economy merge to improve South African agriculture
Published by AgriFin,
This webinar by Agriculture Finance Support Facility’s (AgriFin) looks at the role of digital infrastructures in driving efficiency and sustainability in the agricultural value chain. It dives into issues that surround emerging innovations, capacity strengthening, and the enabling environment of mobile service banking. »
Prioritising climate-smart agricultural interventions: the financial aspects
Published by Agricultural Systems,
This special of Agricultural Systems focuses on prioritising climate-smart agricultural (CSA) interventions at different scales. Currently, there are few tools that can comprehensively evaluate the range of potential technologies and practices and their possible impacts on food production, environmental sustainability, and mitigation in any context. This special issue brings together nine papers describing a wide range of approaches and tools, of which some focus on the financial considerations for prioritization. »
Small-scale soya farming can outperform large-scale agricultural investments
Published by IIED,
This briefing by the International Institute for Environment and Development (IIED) highlights how small- and mediumscale farm models can outperform large-scale operations in terms of monetary return, food security, employment generation, local prosperity and avoiding land conflicts. With the right support, poorer households can develop market-oriented farming that contributes to local value chains at many levels. »
Large-scale agricultural investments and smallholder welfare: A comparison of wage labor and outgrower channels in Tanzania
Published by World Development Journal ,
This article in the World Development Journal evaluates household welfare effects of large-scale agricultural investments in Tanzania, one of the main recipients of such investments in Africa. Specifically, the article compares households participating in sugar and rice investments through outgrower schemes or as agro-industry workers with non-participants in terms of household income and income poverty. »
Addressing the gender differentiated investment risks to climate-smart agriculture
Published by AIMS Agriculture and Food,
This article argues that closing the gender gap in land and other productive resources can provide a “triple dividend” of gender equality, food security and climate management. It can thus offer a cost-effective approach to the pursuit of the Sustainable Development Goals. Since the growing literature on the gender gap aims to better quantify its implications for agricultural productivity but does not provide a framework to prioritize policy responses, this article focuses on the latter aspect of the problem. »
Investments in irrigation for global food security
Published by IFPRI,
This project paper by IFPRI describes what it will take to achieve a level of irrigation investment that supports sustainable agriculture for improved food security and nutrition. Climate change and all the resulting uncertainties are sparking new interest in raising investments in irrigation to enable more stable food production. The authors conclude that irrigation has an important role to play in enhancing future food security and the time for targeted investments is now. »
Benefits to smallholders? Evaluating the world food programme’s purchase for progress pilot
Published by Global Food Security journal,
This article, published in the Global Food Security journal, examines the impacts of the United Nations World Food Programme's (WFP's) Purchase for Progress (P4P) program on smallholder farmers in Tanzania. P4P is a multi-year, multi-country pilot that sought to improve smallholder farmer wellbeing through a combination of food purchases from farmer organizations and supply-side interventions. »
Impact of cash transfer programs on food security and nutrition in sub-Saharan Africa: A cross-country analysis
Published by Global Food Security journal,
This paper by the Global Food Security journal explores the extent to which government-run cash transfer programs in four sub-Saharan countries affect food security and nutritional outcomes. These programs include Ghana's Livelihood Empowerment Against Poverty, Kenya's Cash Transfer for Orphans and Vulnerable Children, Lesotho's Child Grants Program and Zambia's Child Grant model of the Social Cash Transfer program. »
Financial inclusion fit to size: customizing digital credit for smallholder farmers in Tanzania
Published by RAF Learning,
This briefing by The Initiative For Smallholder Finance explores the causes of low uptake in digital credit for smallholders in Tanzania. Dalberg's Design Impact Group (DIG) explores these causes to better understand how concrete product solutions to jump-start adoption of digital credit products can be developed. Digital credit products represent an important financial inclusion opportunity for smallholder farmers in Tanzania, where close to 80% of the workforce is engaged in farming. Uptake of these products by smallholder farmers, however, remains limited. »
Lessons learned: Digital financial services for smallholder households
Published by IFAD,
This note by IFAD is focusing on how digital financial services (DFSs) are meeting the financial needs of smallholder households. The authors offer examples of smallholder-specific DFSs as well as mainstream ones, highlighting the implications in each case for smallholder farmers and their households. Significant challenges remain to a more extensive, scalable supply of digital financial offerings for smallholder farmers. »
Private sector investment in a changing climate: resilient rice value chain development in Uganda
Published by IISD,
This research from the International Institute for Sustainable Development (IISD) focused on private sector investment in a changing climate and aimed to explore how domestic private sector investments can support climate risk management along agricultural value chains. Two briefing notes and a video share the insights from case study research that was conducted in collaboration with a domestic seed company, Equator Seeds Ltd in Northern Uganda, and the Centenary Bank Ltd., a commercial bank in Eastern Uganda. »
FinTech for micro, small and medium sized enterprises
Published by ING,
This report by ING addresses the benefits of FinTech for MSMEs in developing countries. The role of FinTech is centre-stage in the discussion on how to financially include poor people in developing economies. This report shifts the focus on to MSMEs as they are important job creators at the bottom of the pyramid. The report contains 10 main insights that could offer important opportunities for the agro-food sector. According to the authors, FinTech has the potential to impact the whole financial value chain and thus improve financial access for MSMEs. »
Farm input subsidy programmes (FISPs): A benefit for, or the betrayal of, SADC’s small-scale farmers?
Published by ACBIO,
This paper by the African Centre for Biodiversity (ACBIO) reviews the farm input subsidy programmes (FISPs) within countries belonging to the Southern Africa Development Community (SADC), to ascertain whether input subsidies have benefited small-scale farmers, have increased food security at the household and national levels, and have improved the incomes of small-scale farmers. »
National survey and segmentation of smallholder households in Tanzania
Published by CGAP,
This working paper by CGAP examines how smallholder families manage their income and expenses and the issues they face that often lead to financial instability. CGAP conducted a nationally representative survey of smallholder households in Tanzania between August and September 2015. The report shares the findings, observations, and insights from the national survey. »
Agriculture finance support facility – lessons learned
Published by AgriFin,
This report by the Agriculture Finance Support Facility’s (AgriFin) has two main chapters: the first deals with lessons learned from the design and implementation of AgriFin's Technical Assistance program, while the second covers the lessons emerging from the design and implementation of the program. AgriFin aims to provide technical assistance and knowledge support primarily to financial institutions to help them develop their business models for financing smallholder farmers. »
Making climate finance work in agriculture
Published by World Bank,
This report by World Bank inlcudes qualitative interviews with key experts representing different stakeholder groups in the agriculture, climate, and financial sectors were conducted to inform the potential opportunities and innovations that should be further explored to make climate finance work for agriculture. The paper was produced as a background document for the 2016 FAO State of Food and Agriculture report. »
Can insurance help manage climate risk and food insecurity? Evidence from the pastoral regions of East Africa
Published by Montana,
This article by Michael R. Carter, Sarah A. Janzen and Quentin Stoeffler suggests that insurance can help manage climate risk and food insecurity. If well-designed, insurance contracts can be implemented and priced at a reasonable level, despite the uncertainties that attend climate change. Evidence from the Index-Based Livestock Insurance (IBLI) index insurance project in the pastoral regions in East Africa suggest that practical difficulties can be overcome and that insurance can have the impacts that underlay the positive theoretical evaluation. »
How agricultural insurance can improve food security – and why regulation matters
Published by Access to Insurance Initiative,
This policy note by the Access to Insurance Initiative (A2ii) makes the case for agricultural insurance in the context of food security, explains the role of regulation to make effective risk protection work and highlights some of the challenges in regulating innovative index-based insurance approaches. »
Agriculture and adaptation to climate change: The role of insurance in risk management – the case of Colombia
Published by Inter-American Development Bank,
This paper by the Inter-American Development Bank, analyzes in detail the market constraints on the development of the agricultural insurance market in Colombia and provides recommendations so that it can fulfill its potential as a risk management tool in the country. Insurance can potentially play an important role in climate change adaptation for rural households in developing countries as part of the overall climate change adaptation strategy. However, agricultural insurance markets have many market failures that inhibit their full development. »
Financing farm renovation: How to build resilience using a blend of capital
Published by Root Capital,
This report by Root Capital explains how a blend of capital can help build resilience against a dwindling supply and rising demand in commodities such as coffee, cacao, and tea. The report states that investment in agriculture—perhaps more than any other sector—has the potential to bring about unprecedented change today and into the future, from food security and nutrition to environmental sustainability and economic growth. »
Unlocking local currency lending: Foreign exchange risk in agricultural finance
Published by The Initiative for Smallholder Finance,
This briefing note by the The Initiative for Smallholder Finance, details how philanthropic investment can play an influential role in mitigating foreign exchange risk. The note emerged from conversations with stakeholders at various levels of the agricultural value chain who expressed concerns about managing the foreign exchange (FX) exposure in their businesses – traders who pre-finance farmers and financiers who lend to smallholders and agri-businesses, among others. »
Inflection Point: Unlocking growth in the era of farmer finance
Published by The Rural and Agricultural Finance Learning Lab & the Initiative for Smallholder Finance ,
This report by the Rural and Agricultural Finance Learning Lab and the Initiative for Smallholder Finance captures the way the smallholder finance space currently operates by describing the key actors and the nature of their interactions, and by conceptualizing these in a new “industry model.” The report identifies market frictions across the major components of the “industry model” that continue to inhibit smallholder farmers’ access to financial services and opportunities for removing them, and rallies sector actors around the need for more collective action than ever before. »
Agricultural value chain finance – A guide for bankers
Published by AgriFin,
This guide (PDF), developed by AgriFin (World Bank Group), in partnership with Bankaool (Mexico), HBL Bank (Pakistan) and HDFC Bank (India), provides a practical, evidence-based guidance to financial institutions engaging in agricultural value chain finance (AVCF). It includes a comprehensive picture of agricultural value chains to enable financial institutions to adapt financial products to the specific demands of value chain actors; and examples of field-tested AVCF products and procedures that have shown value or promise for financial institutions. »
The rise of the data scientist: How big data and data science are changing smallholder finance
Published by The Initiative for Smallholder Finance ,
This briefing note by the Initiative for Smallholder Finance explores how innovative lenders are using new data sources and analytics to assess the creditworthiness of borrowers. It seeks to supplement the growing body of literature on alternative applications of data in assessing credit risk with a discussion of the opportunity to extend these models to the agriculture sector. »
Opportunities for value chain finance in Africa’s intra-regional food trade
Published by CTA,
This brief paper explores the opportunities for African banks in financing intra-African food trade, in particular using value chain financing mechanisms (also called structured financing techniques). Value chain financing is used widely in the continent’s agricultural trade, but mostly for exports to and imports from other parts of the world, not for intra-African trade. And most such value chain financing transactions are managed by international banks, with African banks having at best a supporting role. »
Smallholder diaries: building the evidence base with farming families in Mozambique, Tanzania, and Pakistan
Published by CGAP,
The Smallholder Diaries (PDF) provide a deep view of how smallholders are affected by the agricultural cycle and manage their money in response to its ebbs and flows, as well as point to ways that financial service providers might better meet smallholders’ needs. »
Webinar on “The role of governments in scaling up agriculture (index) insurance”
Published by The Impact Insurance Facility,
This webinar by the Impact Insurance Facility looked at how governments can catalyse the development of agriculture insurance markets through a variety of interventions such as the provision, administration and management of subsidies, support for developing infrastructure for effective implementation of insurance programmes, investment in collection and sharing of data and customer education. »
Evidence on the impact of rural and agricultural finance on clients in Sub-Saharan Africa: a literature review
Published by The Rural and Agricultural Finance Learning Lab,
This report by the Evans School Policy Analysis and Research Group (EPAR) and commissioned The Rural and Agricultural Finance Learning Lab, reviews and summarizes the existing evidence on the impact of access to financial services/products on measures of production, income and wealth, consumption and food security, and resilience for smallholder farmers and other rural customers and their households in Sub-Saharan Africa. This study covers four main types of financial products/services: 1) credit; 2) savings; 3) insurance; and 4) mobile money and digital products. »
Designing digital financial services for smallholder families
Published by CGAP,
A new report published by CGAP presents insights in how digital financial services (DFS) can work for smallholders. Digital tools offer great opportunities for the world's 450 million smallholder families, but cannot replace personal support, according to the new human-centered design research. Recognizing the need for DFS that better respond to smallholder demand, CGAP partnered in early 2015 with a financial service provider (FSP) in each of Zimbabwe, Senegal, Rwanda, and Cambodia to design a new generation of smallholder-specific digital financial products and services. Under the guidance and expertise of two human-centered design (HCD) firms, CGAP and its FSP partners worked to explore, create, evolve, and test possible digital solutions for smallholder families. »
Agricultural Lending: A how-to guide
Published by IFC,
This toolkit by IFC introduces and explains step by step the key elements of success for financial institutions (FIs) to expand financial services to farmers. The guide includes advice on each step involved and tips on how to address the complex challenges that might arise during product development process. »
Innovations and emerging trends in agricultural insurance
Published by SME Finance Forum,
Index based insurance is a promising innovation that might yet help scale up agricultural insurance to needed levels, as well as help underwrite many public relief programs. It also promises to be a useful bridge for increasing the engagement of private insurers in managing these risks, either directly or through various kinds of public-private or nonprofit-private partnerships. Yet despite many promising pilots, IBI has not yet taken off at scale. There are a number of challenges holding back IBI. »
New trends in financing agricultural value chains – promising practices and emerging recommendations for policy development
Published by SME Finance Forum,
This publication (PDF) by Dr. Rauno Zander from the GPFI SME Finance SubGroup aims to provide development policymakers with some practical recent insights on new trends in agricultural value chain financing. It highlights good practices, success factors and lessons to be learnt from recent experiences, covering the past five years. The paper looks at innovation challenges in agricultural value chain financing and details three possible types of innovation. »
Financial innovation and poverty reduction: Evidence from rural northern Nigeria
Published by MFW4A,
This paper (PDF) by the Making Finance Work for Africa Partnership (MFW4A) examines the effect of financial innovation on poverty reduction in rural northern Nigeria. Households from this part of the world are farmers hence, exposed to the vagaries of Climate Change. Assessing whether or not the poorest income quintile (the poorest of the poor) benefit from existing financial inclusive strategies, would inform policy makers and direct the attention of microfinance entrepreneurs to better innovate products that would increase financial inclusiveness and reduce poverty in developing countries. »
The impact of investment in agricultural research and development and agricultural productivity
Published by IFPRI,
This study by IFPRI was conducted to determine the impact on world prices, agricultural commodities production, and food security and nutrition of raising the annual growth in agricultural total factor productivity (TFP) from the current estimate of 1.6 percent to 2 percent by 2030 through investment in agricultural research and development (R&D). The study also compared three R&D investment strategies: (1) gradual TFP increase, (2) accelerated TFP increase, and (3) developing-countries-only TFP increase. »
Investment contracts for agriculture: maximizing gains and minimizing risks
Published by IISD & World Bank & UNCTAD,
This joint IISD, World Bank and UNCTAD discussion paper marries two substantial bodies of research to show how investment contracts can be set up to promote sustainable development. It presents the top five positive outcomes and the five downsides from private sector investments in large- scale agricultural projects. »
Mobile payments: How digital finance is transforming agriculture
Published by CTA,
This report (PDF) by The Technical Centre for Agricultural and Rural Cooperation (CTA) offers new and interesting insights on the role that digital finance can play in providing a more cost-effective and secure method for financial transactions in the agricultural sector, particularly for rural smallholder farms. In doing so, it offers a three-step approach for digital financed-based business development that emphasizes deep engagement with smallholder farmers, innovative partnership strategies, and a focus on mutual value creation. »
Managing risk with insurance and savings: Experimental evidence for male and female farm managers in West Africa
Published by IFPRI,
In order to inform gender targeting of rural finance policy, this paper by IFPRI investigates which financial products best improve farmers’ productivity, resilience, and welfare, and whether benefits affect men and women equally. Using a randomized field experiment in Senegal and Burkina Faso, the authors compare male and female farmers who are offered index-based agricultural insurance with those who are offered a variety of savings instruments. »
Finance for Smallholders: opportunities for risk management by linking financial institutions and producer organisations
Published by NpM, Platform for Inclusive Finance,
This research (PDF) initiated by the Rural Finance working group of NpM, coordinated by ICCO Terrafina Microfinance and carried out in cooperation with AgriProFocus and the Wageningen UR, aimed to investigated the bottlenecks that exist to finance smallholder farmers. The research provides insight into how food production systems work and how they can be strengthened with... »
Financing Sustainable Development: Implementing the SDGs through Effective Investment Strategies and Partnerships.
Published by UNSDSN,
This working paper (PDF) by the Sustainable Development Solutions Network (UNSDSN) provides a roadmap for the Financing for Sustainable Development discussions in the lead-up to the Addis Conference. The paper focuses on a broad array of issues and examines some of the key questions involved in designing new institutions to handle the long-term, complex investments needed for key sustainable development priorities. Chapter 5.3 covers Sustainable agriculture, food systems, and improved nutrition. »
Revolutionising agricultural finance: a post Fin4Ag conference special report
Published by CTA,
The Fin4Ag conference was held in Nairobi, Kenya, July 2014, specifically focusing on agri-financing. This conference report (PDF) by The Technical Centre for Agricultural and Rural Cooperation (CTA) provides a valuable overview of the event... »
Rural finance and agricultural technology adoption in Ethiopia
Published by IFPRI,
Financial cooperatives and microfinance institutions (MFIs) are the two major sources of rural finance in Ethiopia. Whereas MFIs are relatively new, financial cooperatives have existed for centuries in various forms. The coexistence of two different institutions serving the same group of people, and delivering the same financial services, raises several policy questions. Those questions have become particularly relevant, as the government has embarked on developing a new strategy for improving rural financial services delivery. This study serves as an input to that policy discussion. »
Improving agricultural microfinance through risk mitigation
Published by NpM & Cordaid,
The risk management factsheet (PDF) elaborated by Cordaid presents four categories of risk mitigating measures that microfinance institutions (MFIs) can adopt to enhance safe opportunities for agricultural lending, in terms of: preparation, product risk alleviation, operations and collaborations. »
Scaling up index insurance for smallholder farmers: Recent evidence and insights
Published by CGIAR CCAFS,
This report (PDF) by CGIAR CCAFS explores evidence and insights from five case studies that have made significant recent progress in addressing the challenge of insuring poor smallholder farmers and pastoralists in the developing world. »
Financing strategies for integrated landscape investments
Published by Landscapes for People, Food and Nature,
Integrated Landscape Initiatives (ILIs) have unique financing needs: they need investment and financial support timeframes. Integrated landscape management (ILM) provides a context to spatially target and harmonize investments so that they can efficiently yield public goods and private financial returns while mitigating investment risks. In Africa, financing systems for ILM must support local, national, and... »
Firm to Farm Finance Toolkit (F2FF)
Published by USAID,
The Firm to Farm Finance Toolkit (F2FF) (PDF) was commissioned by USAID and in a pilot project in Bangladesh. This toolkit suggests an approach and process for achieving sustainable and mutually beneficial market linkages between poor rural farmers and financial institutions. »
Insight into social lending and direct-to-farmer finance for smallholder farmers
Published by Initiative for Smallholder finance,
The Initiative for Smallholder Finance is a multi-donor effort designed to demonstrate how specific products and services can expand the reach of financing for smallholder farmers. They have published several briefings which provide insight into targeted market research, product development and testing and investment facilitation in the smallholder finance market. »
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