NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, September 26, 2012

WASHINGTON DC – Dalberg Global Development Advisors has released a new report today identifying innovative and sustainable ways that investors can help fulfill the largely unmet need for smallholder agricultural financing.

The world’s 450 million smallholder farmers occupy a critical segment of the agricultural value chain, yet are often plagued by low yields, low quality products, poor linkages, and little access to finance. The report, titled “Catalyzing Smallholder Agricultural Finance,” aims to inform investors, multinational commodity buyers, and donors on how to deploy capital in a way that will strengthen these farms and their impact on the two billion people worldwide who depend on them for their livelihood.

“We’ve documented how smallholder farmers can improve their yields and product quality across crops and countries, including how, in many cases, they can double their incomes with access to finance,” said Andrew Stern, Dalberg’s Global Operating Partner. “Yet despite proven models, we’re only meeting two to three percent of the total smallholder agricultural financing market.”

A directional estimate suggests global demand for smallholder agricultural finance could be as large as $450 billion. Impact-driven smallholder agricultural lenders, such as Root Capital, have played a catalytic role in driving financing into this market, but with $350 million in disbursements, they satisfy a tiny portion of this demand.