He said the perception of serious lending risk and high cost of service delivery, among other limitations, are well-known barriers to the financing of smallholders (small family farms).
“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,” Mr. Budhan said.
He was addressing the Inter-American Institute for Cooperation on Agriculture (IICA) Regional Agri-Value Chain Financing Forum, held at The Courtleigh Hotel & Suites on September 26.
The forum was intended to facilitate further engagement of small agricultural producers, youth enterprises and groups with domestic financial institutions for the purpose of increasing their access to credit.
Mr. Budhan said stakeholders should seek to reduce the high levels of risk associated with micro, small and medium enterprise (MSME) financing.
“Our response is not to push people further away from the formal banking sector, or from the doors of our micro-financing institutions. Rather, it is about being more inclusive, having a clearer understanding of the needs of our MSMEs, and finding new ways to invest with low risk, and get big results,” he explained.
He said the Agricultural Policy Programme (APP) is critical in addressing the development needs and increasing the opportunities for smallholder agriculture.
The specific objective of the APP is to increase the capability of regional agricultural development organisations of the Caribbean and Pacific regions to address the development needs of smallholder agriculture.
The APP is financed under the 10th European Development Fund (EDF), and targets smallholder producers and enterprises as the main beneficiaries.
Mr. Budhan said initiatives under the APP that will help in all of this, both from the perspective of the borrower and lender, include electronic tools to capture and manage agricultural development initiatives and business-related information in CARIFORUM; and strengthening the capacities of small producers so that they can utilise appropriate sustainable production systems and technological packages for certain commodities.
Other focus areas include strengthening the capacity of MSMEs to increase the volume, quality, standards and differentiation of local value-added products, with particular focus on utilising local or regional root crops and ruminants; expanding the product base of value-added products among member countries, and strengthening and facilitating regional dialogue.
“We are encouraged by the role being played by IICA and certainly appreciate the fact that this Forum will be exploring innovative risk-mitigating practices, as well as the more specific opportunities involved in the agri-value chain financing of MSMEs,” Mr. Budhan said.
At the conclusion of the Forum, it is expected that some financial institutions in the CARIFORUM region and other agribusiness stakeholders will be empowered with a better understanding of smallholder agriculture and necessary innovative risk-mitigating practices.
- Countries: Jamaica