New Analysis: Improving Financing for Smallholder Farmers

Grassroots has completed an assessment of an innovative fund targeting smallholder producers of non-traditional crops with working capital and investment financing. The world’s 450 million smallholders — farmers who cultivate less than two hectares — are often subject to low productivity, production risks due to weather and pests, low market power and volatile prices. Many of the world’s poor, and disproportionately women, are concentrated among the two billion people dependent on these farms. Providing them with financing and technical assistance and working with others in the national and global value chains to more equitably spread risk will be key to addressing the intersecting challenges of rural poverty, climate adaptation, GHG emissions reduction, and ensuring global food security.

As one of the early funds providing access to finance for smallholder farmers, the fund inevitably faced difficult challenges in meeting its ambitious original objectives. However, its experiences provide valuable lessons in developing recommendations for enhancing the effectiveness of smallholder farmer financing in Latin America and globally as the need to address the challenges of both urban and rural poor, the importance of smallholders for national food security, and the crucial role of agriculture in meeting climate goals continue to be more widely recognized by policy makers, investors and other stakeholders.