Understanding Smallholders' Financial Needs is Key First Step

A new survey of 1,800 banks conducted by the Initiative for Smallholder Finance reveals that the total amount of debt financing supplied by local banks to smallholder farmers in the developing world is approximately $9 billion. This is a small figure compared with the total demand for smallholder financing, which is $300 billion excluding China and $450 billion globally.The gap is huge. Only 16 percent of surveyed banks provide smallholder farmer financing. Where formal financing is available, 80 percent of the existing supply comes from public institutions—state and agricultural development banks that were originally established by local governments and later fully or partially privatized.