Perceptions of profitability drive “fundamental shift” in small-farmer finance market

Just a few years ago commercial banks and even microfinance institutions mostly served large-scale farmers in commercialized valued chains. Smallholder farmers, and the agri-businesses that serve them, faced at least a $150 billion annual financing gap.

“We have witnessed a fundamental shift in the market,” say the Rural and Agricultural Finance Learning Lab and ISF Advisors, a Dalberg spinoff. In a preview of an update to their landmark “Inflection Point,” the rural finance experts say perceptions around the profitability of lending to small farmers in emerging markets is changing. “Rather than being a beneficiary, the smallholder farmer is increasingly viewed as a potentially valuable customer,” they say.

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