One Country, Two Models: Adjusting Financial Services to Fit Smallholder Input Supply Systems (Event Resources)

  • Date Posted: December 18, 2014
  • Authors: Jean-Michel Voisard
  • Organizations/Projects: IRG/Engility
  • Document Types: Tool, Other
  • Donor Type: Non-US Government Agency

Establishing lasting business and financial linkages in staple crops is challenging because of their role as both a cash and food security crop, the numerous side-selling options on less demanding markets, and the intrinsic climate risk associated with rain-fed crops.

USAID/Senegal’s Project Croissance Economique (PCE), or Economic Growth Project, is a Feed the Future initiative that aims to boost the incomes of smallholder farmers engaged in the country’s rice, maize, and millet value chains. The project has developed and mainstreamed contract models, which have enabled farmers to link with input dealers and access financial services designed to address their initial lack of collateral. These arrangements now guarantee timely access to quality inputs and have secured loan reimbursement rates nearing 100 percent -- resulting in significant gains in yields, income, as well as sustainable access.

Initially designed as buyer-driven input systems, USAID/PCE’s work in the irrigated rice and rain-fed maize value chains progressively evolved into two models, adapted to the specific contexts. 

Jean-Michel presented these two different case studies to illustrate the role of contracts and financial services in securing timely access to inputs by smallholder farmer groups. It also stressed the importance of focusing on the overall value chain skill set that contributes to the robustness of the transactions. This includes farmer forecasting and tracking capacity; quality assurance norms; testing methods; crop insurance; and warehouse collateral systems, among other topics.

Below, Jean-Michel talks about some of the main takeaways from PCE that he highlighted at the event.