Last Updated on Tuesday, 29 July 2014, 19:41 by GxMedia
by Adelle Z. Roopchand
July 2014 – Nairobi….The access to finance is and has been a debilitating factor in the progress of agricultural development across the African, Caribbean and Pacific (ACP) regions. Farmers from the regions have called on governments to address the financial strategies for better access by the agricultural sector to funding from lending institutions.
The farmers addressed the issues of finance or lack thereof, at the recently concluded ‘Finance for Agriculture’ (Fin4Ag) 2014 international conference in Nairobi, Kenya hosted by the Technical Centre for Agriculture and Rural Cooperation (CTA) ACP-EU, and the African Rural and Agricultural Credit Association (AFRACA).
The Fin4Ag 2014 conference brought together 731 delegates from public and private sector in finance and agriculture from 81 countries from across the ACP and other developing countries around the world at the Kenya School of Monetary Studies between the 14 and 18 July 2014. The conference provided a forum to discuss issues, explore experiences across regions and strategize on the best way forward to transform smallholder farmers into a profitable and sustainable enterprise, under the theme ’Revolutionizing finance for agri-value chain’, in the series of conference – Rethinking smallholder agriculture.
Addressing the delegates, Mr Michael Hailu, director of CTA said, “there is a great degree of optimism that all the actors working together can turn around Africa’s agricultural sector into a modern and profitable business that will create decent jobs for millions of young people and feed the continent’s growing population,” and that other regions could learn from these experiences to ensure that the sector continues to grow by addressing the challenges of financing agriculture.
According to CTA director, “agricultural finance institutions and the policies, rules and regulations under which they operate, are lagging behind changes in the real economy.” While many countries are developing and using innovation to bridge gaps in the value chain sector, the innovations are not spreading across regions or even institutions quickly enough. Mr Hailu advises that the institutions should shift approach from “incrementally trying to improve existing models to reinventing their business or regulatory models in order to capitalize on the new possibilities.”
Mr Saleh Usman Gashua, secretary general of AFRACA gave good news for Africa, “the Association will develop an inclusive financial sector aimed at empowering rural and agricultural communities in Africa.” This met with resounding approval by delegates from the continent, with the hope that the plans will materialise as early as possible.
The Caribbean was represented by over 20 delegates from the public and private sector including agencies: Caribbean Agricultural Research and Development Institute (CARDI), Inter-American Institute for Cooperation on Agriculture (IICA), the Caribbean Agri-business Association (CABA), Caribbean Development Bank (CDB) and the Caribbean Farmers Network (CaFAN).
Senator Norman Grant, president of CaFAN said that the organization together with its partners will be examining the financial risks management for the region’s agriculture and farmers in an effort to identify solutions to ensure continuous development in the sector, “there must be greater use of the learning from Fin4Ag, and CaFAN will utilise the risk management tools for agricultural finance in the Caribbean to review its risks.”
“Some of the risks includes, high financing interest rates; markets; insurance; lack of access to financing; lack of partnerships; inefficiencies of farmers; and challenges in value chain financing”, according to Senator Grant.
Mr Jethro Greene, farmer and chief coordinator of CaFAN during the Caribbean forum entitled, ‘The Caribbean farmers’ challenge: factoring for farmers’ said, the Caribbean is in a unique position to utilise the lessons learnt in the ACP, “CTA has been providing the opportunity for us in the Caribbean to learn from other regions and it is time for action. We must get the financers, government and all those involved to partner with the farmers, the processors, the suppliers…to ensure our sustainability in agriculture in the Caribbean.” He added, “One of the greatest challenges faced by our farmers is factoring – the long production cycle, the long wait to get paid and the high cost of perishables – makes the sector a difficult one to get traditional financing.” Mr Greene stated that there is need now to get the governments and all the stakeholders involved to revisit the finance regulations for farmers to be able to cope with the high cost of factoring from farming in the field to processing and markets.
At the conference, African farmers also called on its central banks addressing representatives present at the event, to review its regulations and for governments to review policies to look at the high rate of interest offered to agricultural sector by banking institutions.
In an earlier statement Dr Arlington Chesney, executive director of CARDI said, “investment should be prioritized to allow maximum total benefit with as equitable distribution as possible along the value chain.” Mr Greene commented on the statement of Dr Chesney saying, “I am in total agreement with Dr Chesney, it is about time that all sectors along the value chain are recognised for its worth. A farmer need a market and vice versa.”
“CaFAN is committed to working with CTA and all its partners to ensure that not just the lives of Caribbean people are improved but also that farmers and its stakeholders in the value chain have the necessary tools for continuous growth to effect change for improved business practices in the sector,” Greene said.
During the conference, some of the key takeaways included:
· Scaling up best practice
· Finance cannot stand alone, need input of partners
· Revamp the governance, include farmers organizations in the process
· Building capacity of farmers with the support of partners
· Banks to be trained in agri-business
· Build partnerships
· Increased coordination between public and private sectors
· Governments should provide more support for farmers
· Incentives for youth involvement in agriculture example ICT innovation, business management
· Committed to continuous dialogue.
According to Mr Lamon Rutten, Policies, Markets & ICT Programme Manager at CTA, “CTA wants to play a catalytic role in bridging the gap between agricultural and financial markets. We got the right people together in Nairobi. We saw them discussing what needs to be done to link farmers to financial markets, what the Governments and Central Banks have to do and what farmers have to do. At the end of the conference, we can say that we all accept everyone has to work together, that we all know what to do and that we all share the responsibility for moving ahead.”
In the open dialogue to strategize on how to revolutionise finance for agriculture, the conference heard from delegates from over 30 countries on the following topics:
– Best practices in agri-value chain finance;
– Leveraging ICTs for agricultural finance;
– Agriculture and price stability;
– Central bank interventions in agriculture;
– Pan-African collateral management;
– Managing production and marketing risks to enable agricultural finance;
– Risk management tools for agricultural finance.
The fin4ag brings together the critical actors for building a modern and high performing agricultural financing system. The conference will help decision-makers, from both public and private sectors to break through the walls that so often prevent innovation, in this case the smallholder inclusive agricultural finance. conceptualized based on the increased need to secure supply of food commodities that fast-growing and increasingly competitive markets require, proper and more access to finance is needed to drive agricultural financing system, and transformation in the ACP countries.