The Missing Middle in Agricultural Finance: Relieving The Capital Constraint On Smallhold Groups and Other Agricultural SMEs
The Missing Middle in Agricultural Finance: Relieving The Capital Constraint On Smallhold Groups and Other Agricultural SMEs
The Missing Middle in Agricultural Finance: Relieving The Capital Constraint On Smallhold Groups and Other Agricultural SMEs
OXFAM
RESEARCH
REPORT
Agricultural Finance
Relieving the capital constraint on smallholder
groups and other agricultural SMEs
17 December 2009
Alan Doran, independent consultant on SME
finance
Disclaimer
This paper was written by Alan Doran, Ntongi McFadyen, and Robert Vogel
who were working as consultants to Oxfam GB. The views expressed in the
text and its recommendations are those of the authors. The authors take
responsibility for any errors herein.
1. Introduction ......................................................................................................... 8
Notes .............................................................................................................................. 45
Acknowledgements ...................................................................................................... 0
Agricultural SMEs are one segment of the broader SME market and their missing middle
is just one part of the overall rural finance gap. This paper is concerned with
commercially-oriented, small- and medium-scale farming businesses. Some are larger
privately-owned firms employing women and men workers, others group smallholders
in collective production and marketing activities. The aggregation process can move
families working small plots, typically under two hectares, from household subsistence
production to surplus farming for markets. To attract external finance, these businesses
need organisational cohesion and management capacity, especially in financial and
business planning.
The main activity focused on in this paper is the primary production and marketing of
crops and livestock. The financing of SMEs specialising in downstream activities, such as
processing and agro-industry, is not excluded, though the gap for them is less serious
because of their more favourable risk profile. The paper does not specifically cover other
rural enterprises, although their importance in the rural economy is well-understood. 10
Organisationally, enterprises range from informal associations, through traditional co-
operatives, to privately-owned businesses providing employment for primary producers.
There are also hybrid structures that combine the features of member-based co-
operatives and private companies.
Geographically, the paper has no specific regional focus, and draws examples from many
countries. A useful global perspective on agriculture is the tripartite one adopted by the
World Bank. 11 The first category is agriculture-based countries: these have a large share
of GDP (gross domestic product) in agriculture and most of their people in poverty live
in rural areas. It includes most of sub-Saharan Africa. In transforming countries, most
economic growth is in non-agricultural sectors, but poverty remains overwhelmingly
rural. This covers most of Asia, the Middle East and North Africa, as well as parts of
Europe and Central Asia. Finally, urbanised countries: these are mostly in Latin America
A second set of smallholders wealthier individual farmers with larger landholdings (up
to 10 hectares) and employing significant levels of hired labour have potential capital
requirements in the lower tiers of the missing middle. These larger individual farm
households are in a better position to borrow for specialised agricultural activity, but one
constraint on their effective demand for credit is the lack of complementary financial
services, such as savings and insurance, more appropriate for coping with some kinds of
risk (see Figure 2 and Box 2). With a range of basic financial services and given access to
market outlets these farmers have the potential to manage the risks of specialisation and
build their production capabilities to produce at a sufficient scale to be attractive small
enterprises.
INCREASING
FREQUENCY OF
LOSSES
Frequent, Less Severe Risk;
Independent Losses
Savings
Source: Oxfam GB
In considering effective demand, what is required is judicious rather than maximal use of
external capital. Heavy use of inputs such as fertiliser, pesticides, and herbicides as well
as expensive seed varieties that require external capital is not the only route to improving
Trade credit
Traditionally, marketing linkages what is now called the value chain have been the
dominant, albeit insufficient, source of working capital for smallholders. Credit can be in
cash or in-kind, whereby repayment is deducted when production is delivered to traders.
Local suppliers and buyers, however, rarely have sufficiently deep pockets to meet even
the short-term capital requirements of more substantial agricultural SMEs. Also fewer
would have an interest in providing credit for investment in expansion, given the larger
amounts needed, higher risks, and longer exposures.
The connection between marketing linkages and agricultural finance has been studied for
many years. A seminal study from the 1970s analysed linkages between marketing and
credit in Colombia and various Central American countries. 33 Marketing agents (sellers
of inputs and buyers of outputs) tended to be the main providers of finance for
agricultural producers, especially small-scale ones, rather than banks. The main reason
was, of course, the intimate knowledge that buyers of output in particular have about the
cash flow and reliability of producers, especially compared with what bankers know. The
main barriers to more widespread lending by marketing agents were found to be the
prejudices against middlemen nicknamed coyotes in the development community.
Their services were seen to be unproductive or at worst exploitative from local
monopolies, so that they were typically excluded from the credit lines for agriculture that
were so prevalent at that time. Such exclusion from formal finance not only reduced their
Commercial banks
The reluctance of private-sector commercial banks to lend to the agricultural sector,
beyond a few large-scale agribusinesses, is well known and driven by the perception that
agricultural enterprises are not only higher risk and less well-managed than SMEs in
other sectors but also fail to offer the prospect of a compensating higher return. Banks
generally have had no incentive to incur the fixed and recurrent costs required to build
an understanding of the risks of SME agriculture, such as weather and price variability,
and then to service large numbers of geographically dispersed enterprises requiring
small loans. Most of them simply limit their engagement in rural areas or impose heavy
collateral requirements even in production sectors with reliable markets, such as
commodities. Even where collateral is available, the cost to the bank of perfecting it
registering it to make it legally useable is often high in relation to the return on an SME
loan. In some cases, banks require additional security such as government guarantees,
and some of these have proved unreliable in the past, making banks in those countries
wary.
Handling the funding of longer-term loans required for investment projects by
agricultural SMEs can also be more problematic for smaller banks with less ability to
raise funds through issuing bonds or other capital market instruments, or from central
bank refinancing. There is a failure of bankers, and even regulators, to recognise the
overall stability of large pools of small sight deposits 35 , despite their being withdrawable
on demand. As a result, there is exaggerated concern over any dependence of funding on
a small number of large-scale time deposits that are indeed vulnerable to flight when
competing interest rates rise.
Banks also have fears, often grounded in historical experience, of political interference in
the finance market for agriculture, a sector that typically dominates the economy and
population. Such involvement can affect market dynamics, loan recovery, and the
reclaiming of assets. Generalised loan pardoning by state-owned banks has occurred in
several countries, India and Honduras, for example, 36 reducing the willingness to repay
of a new generation of borrowers.
Compared to larger international and regional banks, local independent banks that are
closer to the ground tend to be more willing and able to be flexible and innovative in
responding to the needs of the agricultural sector. 37 But their advantages in local
knowledge are offset by their vulnerability to systemic default from covariant risks
climate, pests, and so on, faced by most or all the farmers in a small area, and to the
Public-sector credit
A principal role for agricultural development banks in earlier decades was to channel
subsidised credit to farmers. While this approach to agricultural finance has been largely,
though not entirely, abandoned, recent discussion on the failure so far of the private
sector to do much to replace it has reopened the debate on whether it should be
reintroduced in some form. 44 What contribution can public-sector credit, which is almost
always accompanied by elements of subsidy, overt or hidden, make to filling in the
missing middle?
The first obvious drawback to subsidised credit is that it is limited in scale, relying as it
must on government budget allocations, sometimes backed up by external donor capital,
both subject to fierce competition from other priorities. Attempts to target the credit to
those most in need, such as small-scale farmers and their organisations, to maximise its
effect, have run into another problem: rent-seeking. Rent-seeking is appropriation of the
programme resources by others interested just in obtaining the cheap credit, not in using
it for the intended purpose and also thinking it need not be repaid, given the source.
Larger and more sophisticated borrowers have the resources to circumvent in various
ways the rules that govern the intended allocation of the cheap credit line, such as
making multiple applications to stay below the ceiling for individual loans. Officials may
collude for gain or give in to pressure. The efforts to control such rent-seeking, by
managing the credit-line more carefully, raise transaction costs for all borrowers as
application procedures become more complex and slower. It is nearly always the smaller
borrowers who give up the struggle first. 45
Government-owned and managed credit distribution systems have a poor record on
efficiency and cost control. If new privileged institutions are set up to distribute a fresh
wave of internationally-supported agricultural credit lines at favourable rates, they will
still face the fundamental problems of keeping transaction costs down without the
discipline of competition. The high transaction costs associated with restricting credit to
particular beneficiaries can also bear down on commercial distributors of subsidised
credit, if governments excessively restrict their interest margins, further reducing their
incentives to push the credit to its intended targets.
Finally, the partial availability of low-interest finance, administratively restricted to
certain activities or sub-sectors, introduces unhelpful distortions into the market place,
and can make capital allocation sub-optimal, by diverting resources away from other
more profitable sectors, thus reducing its overall return.
New public-sector credit lines are becoming available as part of the response to climate
change. For example the Clean Development Mechanism under the UN Framework
Convention on Climate Change (UNFCCC) is designed to channel funding from public
Rather than applying the subsidies to credit, governments may be better advised to
subsidise inputs such as fertiliser and seeds, as this avoids rent-seeking; has lower
transaction costs; and creates fewer distortions. It is important of course that the bulk of
subsidy is passed onto the farmers rather than being retained by the suppliers. The recent
programme in Malawi, for example, appears to be showing signs of success and may be
self-funding. 47
Publicly-funded agricultural credit programmes delivered through state-owned channels
or via reluctant commercial institutions have been frequently problematic. Governments
and donors can invest more safely, productively, and with high financial returns 48 in
improving the physical infrastructure in rural areas. Many components of this kind of
investment are not narrowly related to finance, but rather to overcoming the general
discrimination against rural areas that is typically found lack of roads, power,
communications, schools, health facilities, and so on. In the context of climate change,
investment in water infrastructure, both supply and conservation of sources, and in
weather data systems for forecasting and modelling should be moving up in priority.
Achieving such improvements will certainly benefit all farmers.
How public investment can also be productive through improving financial
infrastructure is covered in a later section.
Leasing
To obtain the use of a specific asset, such as a processing machine or a vehicle, leasing
offers advantages both to the finance supplier and the agricultural enterprise. The risks
and costs are both reduced, because the equipment itself is the security for the loan, and
typically it is paid for gradually, over several years. After the down payment, cash can be
conserved or used for working capital. Lease payments can be tax-deductible. Services
such as insurance and maintenance can be bundled into the leasing contract. Specialist
leasing companies can co-operate with equipment dealers, making supply possible in
rural and remote areas even where banks have little presence.
The International Finance Corporation (IFC), the commercial arm of the World Bank, has
long prioritised the encouragement of private-sector leasing activity, including services
for rural SMEs and households (see Box 4), through both technical assistance and
investment. 63 Often new legislation is needed to allow leasing within the financial
regulatory framework and under commercial contract law, and also to determine tax
treatment. Education, advocacy, and awareness-raising about the concept and its practice
are also important. Over 30 years, IFC has committed over $850m in 177 leasing projects,
and in 25 countries was an investor in the first leasing company established. In Mongolia,
for example, IFC has supported the leasing activity of a supplier of solar panels for
electricity supplied to herder households.
A third example of the hub-outgrower model, and one that is established in a number of
contexts, is that used by the long-established (1968) US NGO Technoserve. It has applied
the approach of a nucleus business providing a range of services to outgrower farmers to
various crops, including coffee in Tanzania; jatropha for biofuel in Guatemala; and
pineapples and sorghum (for brewing) in Ghana. 88 The model is able to reduce credit
risks so as to substantially improve access to external financing. In the dairy sector,
Technoserve has promoted farmer-owned bulk collection and cooling centres enabling
rural farmer groups to sell to major urban processors; these centres also serve as hubs for
farm supplies and veterinary and financial services. 89
Overview
These examples show that lending to, and investment in, agriculture demands an
innovative approach and a proper understanding of the risks of the sector and how they
can be managed with complementary inputs. Commercial banks in particular find it
difficult to innovate as they are constrained by legal and regulatory pressures as well as
by the demands of depositors, shareholders, and central bank supervisors. There are
exceptions, such as Rabobank, which has a unique agricultural and co-operative heritage.
It has a dedicated agricultural risk-management centre.
However, in general, the diverse financial mechanisms and approaches being applied to
the missing middle are changing attitudes about risk and performance in the sector. They
are also challenging received perceptions of the level of entrepreneurship, sophistication
and skilled labour among smallholder farmers and their organisations. The ongoing
challenge will be to continue to identify, evaluate, and match the available financing
tools with the capabilities and appetite for risk of the producers, their organisations, and
capital providers themselves.
Better returns
With the increase in food demand driven by population growth; greater food
dependency as a result of migration from rural to urban areas; and changes in dietary
preferences, the agricultural sector is becoming more attractive. In May 2009, The
Economist highlighted that, no matter how hard things get, people still need to eat and
argued that at a time when much of the global economy is falling apart and demand
both for consumer goods and the firms that make and finance them is collapsing, the
notoriously cyclical world of agriculture is holding up notoriously well. 109
The potential productivity gains in developing country agriculture from the application
of technology, both basic and innovative, are huge. New technology alone is not expected
to drive a major transformation in the short term. Greater use of existing, inaccessible,
and underused technologies, such as efficient irrigation, fertiliser, seed selection as well
as improved market access and transport, are likely to facilitate big gains and improve
returns in the short term. Further productivity gains, and incidentally greater emissions
reductions, could come from the cost-effective provision of knowledge-based inputs,
Buyers and intermediaries in agricultural value chains are another important element
reducing risks for external finance and supplying internal finance along the chain.
Early movers in the missing middle market are making strategic investments in higher-
risk projects that give credibility to SMEs in poor countries, and are developing options
for lower-risk and longer-term follow-up capital injections. These efforts are ramping up,
though so far primary agriculture is not a favoured sector, except for the restricted
segment favoured by the more socially-oriented funds. The size and spread of credit
commitments to the SME agriculture sector from regional and international banks is
already increasing, though as with investment, reliable commercial returns have yet to be
proven. Yet the trend is a sign of increased confidence in the capacity and
entrepreneurship of agricultural SMEs and the potential for growth and profits in the
sector.
Root Capital recently launched a $63m capital-raising campaign to triple its loan
portfolio, which would allow the fund to lend $121m each year to 350 grassroots
businesses. 123 That is roughly the cumulative amount lent since it started operations in
1999 and will provide the scale needed for the organisation to break even. Root Capital is
just one example of how financial services embedded or linked with value chains can be
expected to continue to grow as the integration of production and marketing systems
intensifies with globalisation. 124
On the banking side, the Standard Bank of Africas $100m multi-country lending
programme, backed by tapering risk-sharing support from Rockefeller and AGRA
foundations, will be an important test of returns in SME agriculture. Mitigation of
weather risk and market price risk are complementary to this effort, but the use of both
index-based insurance and futures markets is still in the pilot phase.
Unlocking agricultural enterprises access to domestic commercial banks, including
reformed agricultural development banks, will also be essential to close the missing
middle gap. Encouragement for banks to address the sector and innovate with partners
to reduce costs and risks should be the responsibility of the central bank. Local banks
have the scale of capital, presence, and cost-base to be competitive, but they need
sufficient means of diversification, and access to extra liquidity in difficult seasons. Some
local banks need to supplement their demand-deposit bases, though, as noted earlier,
these are more stable than commonly perceived, with additional sources of funds,
preferably with longer maturities, for lending to SMEs. All banks need properly
incentivised lending officers at branch level. Larger banks, internally better diversified,
1Lennart Bage, Supporting smallholders is crucial to food security (as published in the
G8 Summit special report of the Financial Times, 7July 2008).
Hhttp://www.ifad.org/events/op/2008/g8.htmH (last accessed 17 November 2009).
2 Several studies show that the returns to capital for agriculture can be very high in many
developing countries: Christopher Udry and Santosh Anagol, (2006) The return to capital
in Ghana Yale University Economic Growth Center Discussion Paper No. 932; S. de Mel,
David McKenzie and C. Woodruff (2008) Returns to capital: Results from a randomized
experiment Quarterly Journal of Economics, forthcoming.
3 Lennart Bage, op. cit.
4About 90 per cent of the very large potential for GHG abatement from agriculture could
be achieved through soil carbon (C) sequestration. Enabling Agriculture To Contribute
To Climate Change Mitigation, FAO Submission to UNFCCC March 2009
Hhttps://unfccc.int/resource/docs/2008/smsn/igo/036.pdfH (last accessed 20 October
2009).
5 Anne Perkins (2008) The Future for Agriculture in Africa guardian.co.uk 9 July (last
early as the 1970s by the work of Karl Liedholm and others at Michigan State University.
11
World Bank (2007) World Development Report 2008: Agriculture for Development
Washington DC: World Bank.
12 The Moznosti Savings Bank.
13
This point was endorsed by several interviewees, including Emma Caddy, Director
ERM Foundation Low Carbon Enterprise Fund and by Roy Parizat, Project Director,
FAST Finance Alliance for Sustainable Trade.
14 Lennart Bage, op. cit.
15 J. Hartell, and J. Skees, (2009) Pre-feasibility Analysis: Index-based weather risk
transfer in Mali, Westport: Save the Children, Washington DC: USAID, and Lexington:
GlobalAgRisk Inc.
16E. Duflo, M. Kremer, and J. Robinson (2009) Nudging Farmers to Use Fertilizer:
Evidence from Kenya Hwww.econ.upf.edu/docs/seminars/duflo.pdfH (last accessed 17
November 2009).
carbon added to soils (as plant residues and manure) and/or reduce the relative rate of
CO2 released through soil respiration, for example, low tillage.
19 FAO (Food and Agriculture Organsiation) (2009) Enabling Agriculture To Contribute To
Undermining Rural Development with Cheap Credit, Westview Press, 1984. Vogel,
Robert C. and Donald W. Larson. "Limitations of Agricultural Credit Planning: The Case
of Colombia, Savings and Development. Vol. IV, No. l, 1980. pp. 52-62.
34For a collection of articles on value-chain finance see journal, Enterprise Development
& Microfinance Vol. 18, No. 2/3, September 2007 and Vol.19 No. 4, December 2008.
35 Joachim Bald (2009), Stability of Small Balance Deposits, A Technical Note, January
Central America, A Case Study About the Influence of Supermarkets on the Development
and Evolution of Creditworthiness Among Small and Medium Agricultural Producers,
Microreport 57, DAI for USAID
Hhttp://www.microlinks.org/ev02.php?ID=12564_201&ID2=DO_TOPICH (last accessed
17 November 2009).
37Examples of more flexible banks are Peoples Bank and Hatton National Bank in Sri
Lanka.
38
Finance Alliance for Sustainable Trade (FAST) (2009) Presentation to the Specialty
Coffee Association of America. 2009. Survey included Burundu, Kenya, Malawi, PNG,
Uganda, and Zambia.
39Deutsche Gesellschaft fr Technische Zusammenarbeit (GTZ) GmbH. the
development agency owned by the federal German government.
40 Hans Dieter Seibel, Thorsten Giehler and Stefan Karduck (2005) op.cit.
41The Land Bank of the Philippines, in contrast to the other two state-owned Philippine
banks, avoided bankruptcy during the Marcos era because the chairman of the board for
this bank (and not for the others) was the finance minister, who recognised that he would
end up being responsible for covering the losses that the Land Bank would incur if the
typical intrusions were allowed (see Robert C. Vogel and Gilberto M. Llanto, (2006)
Successful experiences of government-owned banks in rural and micro finance: the case
of the Land Bank of the Philippines, Washington DC,USAID).
42 A World Bank project in Nicaragua in the 1990s offered an interesting variation on
liquidation, as branches of the agricultural development bank were offered at auction to
private banks; in towns were there was no private bank, monetary incentives were
offered to private banks to purchase such branches if there were initially no bidders.
43APRACA (Asia Pacific), AFRACA (Africa), NENARACA (Near East North Africa) Rural
and Agricultural Credit Associations, ALIDE (Latin America) Association of Development
Financing Institutions.
44Credit lines for crop production are available in Senegal at 7.5 per cent and in Sri
Lanka at 8 per cent for example, well below market rates of 15 per cent or more.
45 The first major study of transaction costs in agriculture, carried out in Honduras in the
late 1970s by the Rural Finance Group at The Ohio State University, showed quite
precisely the perverse impact of subsidised interest rates on transaction costs, which
rose to the point where equilibrium between supply and demand for the subsidised credit
developing countries. The highest are in agricultural research, rural roads and education,
More and Better Investment in Agriculture Policy Brief attached to World Bank (2007), op.
cit.
49 This section draws on World Bank, Agricultural and Rural Development Department
(2007) Providing financial services in rural areas: A fresh look at financial co-operatives,
Report no 40043-GLB, Washington DC, World Bank.
50 Technical assistance over a sustained period from countries with advanced financial
profits will not be enough to compensate for the inevitable, and expected, capital losses
from investee failures in the high-risk high-return business of venture capital, as well as to
cover the transaction costs essentially the same for a small deal as for a large one, and
finally the cost of capital, including the managers profit share.
53 Finance Alliance for Sustainable Trade (FAST) www.fastinternational.org
54 Contract-based lending refers to a three-way partnership arrangement whereby credit
is provided based on the value of a buyers order. The lender is paid directly by the
buyer, who subtracts the principal and interest before passing the remaining proceeds
onto the producer group.
55 Brian Milder (2008) op.cit.
56 World Bank (2007), op. cit. p129
57 Kathryn Tully (2008) Investors boost the missing middle Financial Times 24 June;
Root Capital (2009) Root Capital Awarded 2009 Financial Times and IFC Sustainable
Banking Award Press Release: 4 June; Interview (June 2009) with Brian Milder, Director
Strategy and Innovation, Root Capital.
58 Interview Vivek Bharati, PepsiCo India (June 2009) and confidential programme review
analyze the core conditions for developing a weather insurance market in Mali.
62Lillian Diaz, and Jennifer Hansel, lead authors (2007) Practitioner-Led Action
Research: Making Risk-Sharing Models Work with Farmers, Agribusinesses, and
Financial Institutions. Paper given at FAO International Conference on Rural Finance
Research: Moving Results into Policies and Practice, Rome, January 2007.
63 Hwww.ifc.org/ifcext/sme.nsf/content/LeasingH (last accessed 8 October 2009).
64
Hwww.ifc.org/ifcext/africa.nsf/Content/Leasing_Feature_May07H (last accessed 8
October 2009).
65Factual data on Standard Bank, AGRA, and Equity Banks activities in this section
come from the following sources: (1) Standard Bank of Africa, AGRA, and MCA
Mozambique (2009) op. cit., (2) Rachel Keeler (2009) Africa Agenda: Standard Bank
Ventures into Smallholder Agricultural Financing, Ratio Magazine 23 April 2009
Hwww.ratio-magazine.comH (last accessed 17 November 2009) (3) Josephat Juma
(2009) Public-Private Partnership Targets Smallholder Farmers The African Executive
205, 2501 April 2009
http://www.africanexecutive.com/modules/magazine/articles.php?article=4230 (last
accessed November 2009).
66A 2006 programme in Lesotho, for example, used a 100 per cent government
guarantee to back bank lending, combined with a 30 per cent credit subsidy. Farmers
only had to repay 70 per cent, and will require significant re-education in basic loan
processes.
67Hwww.coton-acp.org/.../Cotton_price_risk_management_World_Bank.pptH (last
accessed 26 October 2009).
68 Standard Bank of Africa, AGRA, and MCA Mozambique (2009), op. cit.
69 B Milder (2008) Reaching the missing middle and rural poor through value chain
finance Enterprise Development & Microfinance, Vol.19, No. 4, December 2008. The
author points out that the bank did not relax its normal fixed asset collateral requirements,
however.
70 Sources: B Milder, op.cit and Rabobank website.
71 USAID (2009) Whats New: Credit Guarantees: Promoting Private Investment in
Development: Year in Review 2008.
Hhttp://www.usaid.gov/our_work/economic_growth_and_trade/development_credit/H
(last accessed 17 November 2009).
72Alternative index measures, not dependent on ground weather stations are being
researched, such as an area-yield index based on field cuttings, or remote satellite
detection of vegetative health, known as a Normalized Difference Vegetation Index.
73 J. Hartell, and J. Skees, (2009), op. cit.
74Jerry Skees (2007) Challenges for Use of Index-Based Weather Insurance in Lower
Income Countries, Lexington: GlobalAgRisk, Inc.
75 Jason Hartell (2009) Presentation on the pre-feasibility of index-based weather
Analysis of Law (CEAL), Washington DC, have carried out studies on how to improve
collateralisation, including for moveable property, in several countries, mainly in Latin
America, but implementation has seldom resulted.
97 For more detail on risk-based supervision, see Tom Fitzgerald and Robert C. Vogel
16 February 2009http://www.ft.com/cms/s/0/0fa98852-fc45-11dd-aed8-
000077b07658.html (last accessed 24 November 2009).
108 This is more likely to occur if government initiatives include inappropriate interventions
in financial markets.
109The Economist (2009) Green Shoots 19 March 2009
http://www.economist.com/node/13331189 (last accessed 24 November 2009).
Hhttp://www.financialexpress.com/news/pepsico-to-sell-seasons-harvest-to-lt-
overseas/390581/H (last accessed 17 November 2009).
111 Rachel Keeler (2009) op.cit.
112 Anne Perkins (2008) op.cit.
113 World Bank (2007) op. cit.
114
FAO (2009) quoted in Africa Invest (2009) Africa Agri Development Plan April 2009,
Hhttp://www.africainvestmw.com/literature/literature.php#H(last accessed November 17
2009).
115 Standard Bank of Africa, AGRA, and MCA Mozambique (2009) op. cit.
116Farmers apply about 9 kg/ha of fertilizer in Africa, compared to 86 kg/ha in Latin
America, 104 kg/ha in South Asia, and 142 kg/ha in Southeast Asia: Source: Study
quoted in Jonathan Agwe, Michael Morris, And Erick Fernandes (2007) Africas Growing
Soil Fertility Crisis: What Role For Fertilizer? Agricultural and Rural Development Notes
Issue 21 May 2007, Washington DC: World Bank.
117 World Bank (2007) op.cit.
118Source: NEPAD [The New Partnership for Africa's Development] Secretariat (2005)
Agribusiness, supply chain, and quality control initiative CAADP implementation concept
note (Midrand, South Africa, 2005).
119 World Bank (2007) op.cit.
120 Kathryn Tully op.cit.
121In the drive to seek higher returns and improve microfinances standing as an asset
class some commercial investors and their MFI investees have seriously departed from
the original concept. Especially since the Compartamos MFIs stock market flotation in
May 2007, there has been sharp controversy in the microfinance world over how to
balance access to large-scale capital with preservation of the mission to provide
affordable and appropriate personal financial services for people living in poverty.
122 World Bank Group announcement June 8 2009.
123
Root Capital (2009) Root Capital Announces Launch of Innovative Five-year $63m
Growth capital Campaign, Press Release, 26 March 2009 Hwww.rootcapital.orgH (last
accessed 17 November 2009).
124
Calvin Miller and Carlos Da Silva (2007) Value Chain Financing in Agriculture
Enterprise Development & Microfinance Vol. 18, No. 2/3, June/September 2007.
125
FAST (2009) Guarantee Facility for Social Lending at
Hhttp://www.fastinternational.org/en/node/65H (last accessed 27 October 2009).
126Directed lending to agriculture and other priority sectors at below market rates has
long been a policy in India, but banks have not always met their quotas, there is evidence
of widespread corruption in credit allocation and small farmers still suffer credit
shortages. See for example: India Knowledge at Wharton article 15 November 2007
Raghuram Rajan on Rewriting the Rules for Indias Banks
Hhttp://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4239H (last accessed
November 23 2009) and Priya Basu (2006), Improving Access to Finance for Indias
Rural Poor, Directions In Development 36448, Washington DC: World Bank.