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Agricultural value chain finance

A guide for bankers

The perceptions of serious lending risks and high costs of service delivery, among other limitations, are well-known barriers to the financing of smallholders. These barriers make it difficult and sometimes impossible for farmers to get a loan, therefore denying them a chance to grow their businesses and incomes. Clearly, traditional banking does not meet the needs of the smallholder. Experience suggests that value chain finance is arguably one of the most sustainable and effective ways of reaching smallholder farmers, with the potential to benefit a significantly greater proportion of the 450 million smallholders worldwide.

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The Guide has been created by bankers for bankers

The Guide has been developed by practitioners carrying out field experiments (in partnerships with AgriFin) that involve new agricultural value chains in their relevant markets. These field case studies have been supported by a comprehensive review of existing literature and experiences worldwide, and the drafting of this Guide has been assisted by expert advice.

The intended audience

The Guide will be useful to financial institutions and practitioners already engaged in agricultural lending and rural finance who are interested in improving outreach and profitability. Information contained within the guide will also be useful to those not currently active in agricultural lending, but who might be considering a strategy to enter this market.