Throughout the world 500 million families depend on earnings from their small-scale farms to make a living. But the economics of farming are tough. How do these farmers earn stable incomes to support their families when year after year, they face steep challenges including obtaining working capital, repaying loans despite uncertain crop yields, and selling to limited commercial markets? It is a struggle that leaves many in a cycle that impedes economic advancement and improvement in quality of life.
A multi-faceted solution that provides the right blend of financial and non-financial services and products is required to address this complex challenge. To make a difference and ensure long-term sustainability, we invest in partners dedicated to developing solutions that are tailored to serving each local area’s agricultural needs, such as financial loans timed to farmers’ crop cycles; access to cheaper inputs and processing facilities; and agricultural technical assistance.
Some of the innovative approaches we are exploring include investments in partners that work across an entire value chain. This is critical because rural families are sustained by local economies that depend on the income generated across a value chain. Value-chain investments strengthen an entire economic system which in turn supports farmers and families over the long term. For farmers, this creates an interconnected environment that supports their ability to earn a living, improve their quality of life, and ultimately achieve long-term prosperity.
To illustrate how value-chain investments improve local economies, consider this: coffee producers need reliable buyers willing to pay premium prices for a quality product (such as organic shade-grown coffee). Buyers (such as coffee exporters) need reliable sources of quality product to serve markets (such as international coffee chains), and markets demand a steady supply of quality product. Our partners provide producers with the necessary technical assistance to acquire organic and fair trade certifications; connect producers to specialty channels through which they can sell their quality products for higher prices; and establish purchasing agreements with buyers, providing income stability for producers and satisfying buyers with a stable supply chain. Working with partners that integrate these different participants ensures that the entire system remains strong and thus, creates better and more secure conditions for farmers.
- Providing tailored credit products, such as loans timed to match the crop cycle, empowers farmers to earn higher profits when yields are high.
- Clients’ access to non-financial services such as agricultural training helps improve crop results and therefore, income.
- With improved and stabilized income farmers can reinvest their money into their business and improving the quality of life for their families which further expands opportunity for future generations.
- Value-chain investments strengthen local economies and set the conditions that allow for long-lasting impact from producer to buyer to distributor.
- In order to earn more stable and better incomes, smallholder farmers need agricultural training, access to commercial markets, and tailored credit products and services.
- To create lasting impact, GP invests in partners that combine financing along with non-financial services (e.g. technical assistance to increase crop yields, creating access to commercial markets, etc.).
- We are exploring new investment opportunities that include investing in partners that work across an entire value chain from producer to buyer to distributor. One such partner is IDEPRO, an MFI in Bolivia that has established value-chains in wood, quinoa, grapes and nuts.