Agri-Financing Made Easy!

Financial institutions and investors must consider cash flow based lending which is best suited for “un-bankable” business owners that have a regular cash flow but have personal credit issues. In this scenario, loans are based on the cash flow of the business instead of the credit rating of the owner and usually do not exceed a certain percentage of annual cash sales. Any smallholder farmer that keeps a record of his/her transactions can then qualify.

THE GFAR BLOG

Palm with a plant growng from pile of coins

Financial support for farmers and agribusinesses is poorly understood, however at the Global Conference for Agricultural Research in Johannesburg recently, Calvin Miller, Group Leader of the Agribusiness Finance Group at the UN Food and Agriculture Organization (FAO), presented some  recommendations for all actors in the value chain that may just make agri-financing accessible.

Worldwide, agriculture is a major source of income for the rural poor, and agricultural growth has been shown to help reduce rural poverty.  Access to finance is one way to achieve this growth. Mr Miller says that agribusinesses that look for financing must understand their market demand and how their outputs respond to that demand. Since the lending institutions do not have the competence to assess individual market demand, the burden is on the borrower to do so. Because the market is at the one end of the value chain and the farmer is at the other,  solutions to access to finance depend on the actors…

View original post 514 more words

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s