Better Banking Facilities For Farmers

Everywhere in the world, small agricultural producers are entrepreneurs, traders, investors, and consumers, all rolled into one. In all these roles, small agricultural households constantly seek to use available financial instruments to improve their productivity and secure the best possible consumption and investment choices for their families. But the package of financial services available to small farmers in developing countries is severely limited, especially for those living in remote areas with no access to basic market infrastructure. When poor people have limited saving or borrowing options, their investment plans are stifled and it becomes harder for them to break out of poverty. If households have no access to insurance and are unable to accumulate small savings that enable them to pay for household and business expenses, especially during lean seasons, they are forced to limit their exposure to risk, even if high returns are expected, once again making the pathway out of poverty more arduous than necessary. Inadequate access to financial services is thus part of what is often called the “poverty trap.”

Agricultural production in India depends upon millions of small farmers. However, because of inadequate financial resources, many farmers are unable to receive improved seeds and fertilizers, nor introduce better methods and techniques. It is, therefore, of the utmost importance that the financial requirements of farmers are adequately met. The provision of sufficient and timely credit at fair rates of interest has to be considered as an integral part of agricultural development. However, assistance rendered by way of credit has to be related to specific items of productive work or of essential costs of cultivation. Set up in 1982, India's National Bank for Agriculture and Rural Development (NABARD) is the apex institution accredited with all matters concerning policy, planning, and operations in the field of credit for agriculture and other economic activities in rural areas in India. NABARD serves as an apex refinancing agency for the institutions providing investment and production credit in rural areas. This book explains the system of agricultural finance in India and it provides an in-depth analysis of the role of NABARD.

This book reflects the current state of discussion about agricultural and rural finance in developing and transition countries. It provides insight into specific themes, such as commodity value chains, farm banking and risk management in agricultural banking, structured finance, crop insurance, mobile banking and how to increase effectiveness in rural finance. Case studies illustrate various aspects of agricultural and rural finance in developing economies. The book is based on one of the yearly financial Sector Development Symposia held by the KfW Development Bank.

Forest landscapes are inhabited by approximately 1.5 billion people. The aggregate gross annual value of these smallholder producers approaches US$1.3 trillion. Adding value to that production, through financial investment, will be key to delivering the Sustainable Development Goals (SDGs). Therefore, access to finance is an important issue. The Forest and Farm Facility (FFF) commissioned this scoping paper to assess what might be done to improve access to finance. Organisation of forest and farm producers allows finance to be channelled toward valueadded investments. But the motivation to form forest and farm producer organisations (FFPOs) varies with context, from the desire to secure resource rights for Indigenous peoples in the forest core, to the desire to strengthen economic scale efficiencies in periurban forest product processing industries. The scale and type of finance needs vary and span enabling investments (grants or concessional loans)through to asset investments (market-rate capital that requires a return). Access to finance for FFPOs requires tailored approaches. For FFPOs, enabling investments in four key areas are needed to create the conditions and necessary track record to attract asset investment: (i) secure commercial rights; (ii) strong organisation for scale; (iii) appropriate technical extension; and (iv) fair market access and business incubation. Enabling investments of this sort make FFPO businesses bankable and affords them access to finance.

A joint FAO and World Bank study which shows how the farming systems approach can be used to identify priorities for the reduction of hunger and poverty in the main farming systems of the six major developing regions of the world.

Smallholder farmers are the stewards of more than 80 percent of the world’s farms. These small family businesses produce about one-third of the world’s food. In Africa and Asia, smallholders dominate the production of food crops, as well as export commodities such as cocoa, coffee, and cotton. However, smallholders and farm workers remain among the poorest segments of the population, and they are on the frontline of climate change. Smallholder farmers face constraints in accessing inputs, finance, knowledge, technology, labor, and markets. Raising farm-level productivity in a sustainable way is a key development priority. Agribusinesses are increasingly working with smallholder farmers in low- and middle-income countries to secure agricultural commodities. More productive smallholders boost rural incomes and economic growth, as well as reduce poverty. Smallholders also represent a growing underserved market for farm inputs, information, and financial services. Working with Smallholders: A Handbook for Firms Building Sustainable Supply Chains (third edition) shows agribusinesses how to engage more effectively with smallholders and to develop sustainable, resilient, and productive supply chains. The book compiles practical solutions and cutting-edge ideas to overcome the challenges facing smallholders. This third edition is substantially revised from the second edition and incorporates new material on the potential for digital technologies and sustainable farming. This handbook is written principally to outline opportunities for the private sector. The content may also be useful to the staffs of governmental or nongovernmental development programs working with smallholders, as well as to academic and research institutions.