On one hectare of land, Faustina, a widowed noncommercial farmer in Rwanda, grows just enough maize, as well as small amounts of millet and peanuts, to feed her family. She doesn’t use financial instruments and has no insurance; when crops fail, she must either consume less or work more. “I used to save a little in a box at home,” she says. “I would use it for food or health in times of need. But now it’s difficult for me.” She hopes one to day to have enough land and yield to both sustain her family and be able to send her four children to school.
Although definitions vary, a “smallholder farmer” is typically characterized as having a plot of less than 2 hectares. There are an estimated 500 million smallholder farmers worldwide and 2 billion of the world’s 7 billion people belong to smallholder farming households.
1.4 billion of the world’s 7 billion people live on less than $1.25 per day—and most of these people are members of smallholder farming households in Africa and Asia.
We cannot reduce the number of people living in extreme poverty worldwide unless smallholder farmers are able to improve their livelihoods. Historically, microfinance institutions have struggled to effectively meet the needs of smallholder farmers at a large scale.
One Acre Fund has developed a method to reach smallholder farmers using asset based lending with flexible repayment options. One Acre Fund is expected to reach over 400,000 farm families in Kenya, Rwanda, Burundi and Tanzania by the end of 2016. In the past ten years, One Acre Fund has received over 50 million USD in funding from organizations like The Gates Foundation and USAID.
Please join us for a discussion about the predicament of serving smallholder farmers with appropriate financing. We will discuss the following topics:
- Why are smallholder farmers so difficult to reach?
- How has asset based lending with flexible repayment been able to succeed when other methods have failed? What are the problems with this model?
- What does the future look like for smallholder farmer financing?