Unlocking Innovations for Farmers Via Non-traditional Financing

Giving Compass’ Take:

• Next Billion discusses how to give smallholder farmers access to more capital, along with agriculture innovations, in order to break the cycle of poverty.

• What are aid organizations and impact investors doing to make sure that people in rural area have the resources they need not just to survive, but to thrive as well? Non-traditional financing (NTF) is key.

• Here’s how agritech startups are helping to address this area.

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While the estimated 500 million farmers worldwide make up 6 percent of the global population, they play a vital role in the global economy, producing food for a substantial proportion of the world’s population and supporting over 2 billion poor women and men who rely on agriculture for their livelihoods. Yet, many of these farmers still experience poor yields, have uncertainty in trading and limited market access, earn low profits, and are vulnerable to climate shocks and volatile financial markets that keep them reliant on subsistence or marginal commercial farming activities.

Access to finance is not only a core need of small holders, but also an opportunity for them to increase their agricultural innovation.

In the effort to address production and financing challenges that smallholder farmers face, scalable and sustainable agricultural innovation uptake is worth exploring; this will help to further understand how innovation adoption and finance are interrelated.

These and other examples are beginning to contribute to an underdeveloped body of knowledge that demonstrates how non-traditional financing may be critical to unlocking innovation processes among smallholder farmers and may represent an untapped opportunity to enable these farmers to break the cycle of poverty.

Read the full article about a new era of financing farmers by Clara Yoon at Next Billion.

“Finance is a necessary but not a sufficient condition for productivity growth – it can unlock critical constraints but just as critical are unlocking of constraints in agricultural systems, such as access to markets for other inputs, storage, and logistics.."