A Roadmap on Agricultural Finance
Over the years, Développement international Desjardins (DID) has carried out dozens of projects related to rural finance, with numerous partners and in highly diversified environments.
Across these interventions, we made some recurring observations:
- The agricultural system covers a great number of actors. Because they all have an influence on the success and sustainability of the interventions carried out, close coordination must be implemented among these actors.
- Financial institutions need to be efficient and strictly control risks.
- Producers have varied needs that depend on their stage of development, the maturity of the value chain, and the business environment in which they operate.
Based on this experience, we just issued a roadmap designed to guide our action as well as that of our partners and funding agencies in order to increase agricultural yields, associated revenues, and the level of agricultural and financial knowledge among the actors in the system. This roadmap outlines the importance of keeping a global view on the agricultural system, and of strengthening every actor in this system. This is how we believe we can have a true and sustainable impact on rural development and food security.
Historically, DID’s approach has focused more specifically on strengthening the capacities of financial institutions. Though this kind of support is essential, our experience has shown that it’s not enough. It is also necessary to work directly with the agricultural producers and make sure they have access to
- agricultural advice,
- financial literacy programs, and
- support for commercialization designed to facilitate access to markets.
And to move the entire agricultural system forward, we should also work on strengthening the entire value chains in which producers operate, the capacity for innovation and the business environment.
Our roadmap concludes on a few lessons learned, including the following:
- Producers are best placed to make the choices that will lead them to increased productivity and revenues. Therefore, interventions must focus on the producers (with an accent on women and youth, who are too often marginalized) and be profitable for them.
- Financial services are a strong catalyst and while they constitute only one of the required components for proper functioning of the sector, they may play a major role in coordinating and strengthening all actors involved.
- Access to financial services can also play a key role is disseminating innovations produced by research centers, making it possible for producers to gain access to quality production factors throughout the value chain.
By emphasizing the sequence of our interventions, DID’s roadmap complements the position paper issued by DID in 2010 in which we outlined our vision and convictions regarding the best practices related to agricultural finance. Both documents use a sector approach aimed at strengthening the overall agricultural finance system.