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Catalyzing Smallholder Agricultural Finance

Posted By Stella Hanly, Aspen Institute, Monday, December 10, 2012

Catalyzing Smallholder Agricultural Finance (from, co-authored by ANDE EC Member Andrew Stern of Dalberg Global Development Advisors)

The world’s 450 million smallholder farmers represent a large — and largely unmet — opportunity for agricultural financing. As population growth and rising incomes create unprecedented demand for food, multinational companies increasingly rely on smallholders to secure their supply of agricultural commodities.

In response to consumer preferences for ethical and sustainable sourcing, traceability, and quality, companies have also made bold sustainability commitments that implicate smallholder value chains. As a result, smallholders present a compelling opportunity for buyers, lenders, and other actors in the agricultural value chain. However, smallholder production is often characterized by low yields, low quality, poor linkages, and little access to finance.

A recent Dalberg report — supported by the Citi Foundation and Skoll Foundation — called "Catalyzing Smallholder Agricultural Finance” suggests that with increased financing, farmers can improve their yields and products and in some cases double their income. Strengthening these farms is also important for the environment, as smallholders represent stewards of natural resources that are in need of sustainable management to prevent deforestation and the degradation of ecosystems.

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Tags:  Access to Finance  Agriculture 

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