Funding small scale farming

Financing small agricultural enterprise
Sustaining small agricultural efforts

Description

Funding small scale farming involves providing targeted financial resources, such as microloans, grants, and credit facilities, to smallholder farmers. This strategy aims to overcome barriers like limited capital, inadequate access to inputs, and outdated technology. By enabling investment in seeds, equipment, and sustainable practices, funding empowers small-scale farmers to increase productivity, improve livelihoods, and enhance food security, directly addressing rural poverty and supporting resilient local agricultural systems.

Context

Relatively few institutional loans are available to small farms which are therefore forced to rely on informal credit markets where real interest rates are typically 50% or higher. These farms are thus discouraged from using credit to finance technological improvements such as the introduction of high-yielding varieties of seed, inorganic fertilizers or chemical pest and weed controls. They resort to borrowing mainly in emergencies such as crop failure. Small farms generally have less contact than large farms with government seed and fertilizer programmes and extension services and are usually inadequately connected to the main markets.