Willy Foote

Introducing the Council on Smallholder Agricultural Finance: The group’s seven social lenders collectively lent $360M in 2013

There’s a lot I’ve learned since founding Root Capital, but one thing’s been crystal clear from day one: No single capital provider could ever serve the 450 million smallholder farmers across the world. That’s why Root Capital, along with a group of other like-minded, impact-first agricultural lenders, is working to catalyze a thriving financial market that one day serves all the agricultural businesses and farm households that none of us could ever reach singlehandedly.

With that common vision in mind, Root Capital and six other social lenders recently announced the launch of the Council on Smallholder Agricultural Finance (CSAF), an industry alliance committed to promoting the development of the smallholder agricultural financial market. CSAF members — Alterfin, Oikocredit, Rabobank’s Rabo Rural Fund, responsAbility Investments AG, Root Capital, the Shared Interest Society and Triodos Investment Management — will convene on a pre-competitive basis to exchange views and experiences related to industry standards, responsible lending practices and social and environmental impact.

The Council was launched earlier this month at the Skoll World Forum in Oxford, where I joined representatives of the Global Development Incubator, Triodos Investment Management, the International Finance Corporation and Yara on a panel to discuss the power of collaboration in achieving large-scale change through smallholder finance. Collaborative industry building seemed to capture the zeitgeist of this year’s forum, and I’m hopeful that CSAF and other complex, industry-wide partnerships will lay the groundwork to serve the 450 million smallholder farmers across the world.

The $360 million collectively disbursed by the seven CSAF members in 2013 is just a drop in the bucket relative to the vast unmet need, but we’re optimistic that it’s the start of something much larger. We aspire to ‘blueprint’ lending standards, metrics, and practices and thereby foster replication by other financial institutions, such as local banks.

Ultimately, it’s our hope that CSAF’s activities will encourage increased lending to small and growing agricultural businesses while ensuring responsible lending practices that will enable our nascent industry to serve agricultural businesses and smallholder farmers sustainably and in perpetuity. As the financial market serving agricultural businesses grows in both size and inclusivity, all participants in the value chain—from smallholder farmers and their families, to buyers, to financial institutions—benefit.

(Above: Thomas Carroll, director of Initiative for Smallholder Finance at the Global Development Incubator; Michael van den Berg of Triodos Sustainable Trade Fund; Willy Foote of Root Capital; Laura Mecagni, head of the Global Agriculture and Food Security Program (GAFSP); and Sean De Cleene, at the 450 Million Farmer Opportunity discussion. Image credit: Skoll World Forum).

Catalyzing a financial market to serve 450 million smallholders, is, to paraphrase Skoll Foundation and Participant Media Founder and Chairman Jeff Skoll, “a team sport” – and the team extends far beyond the seven agricultural lenders in the Council on Smallholder Agricultural Finance. Technical assistance providers, certifiers, investors, donors, and, of course, our clients – small and growing agricultural businesses and the smallholder farm families they aggregate across Africa and the Americas – all play critical roles in growing rural prosperity around the globe.

We hope you’ll join us in celebrating the launch of CSAF, a small but important addition to the global team that is growing rural prosperity.

Willy Foote is the founder and CEO of Root Capital.

impact investing, smallholder farmers