Conclusions and Recommendations 3 rd Agribanks Forum

1. Conclusions and Recommendations3rd Agribanks Forum Mary Nandazi, Calvin Miller, Dorothy Nduku & Mumbi Kimathi

2. The Development Mission • As shown in the FAO Right to Food Day presentation, access to safe and nutritious food for all is critical and increased attention on urban and rural poor is required. • Kenya’s VP and Min. of Agriculture highlighted increased Government’s recognition of the role of rural farming economies and its willingness to participate in agricultural value chains • Challenges inhibit agricultural growth; workshop participants are challenged to focus on solutions…particularly rural finance and value chain financing interventions

3. Premises • Agriculture is important to Africa – Agriculture is 70% of Kenya’s employment and 25% of GDP (Vice President, Kenya) • Farmers are interested becoming business persons; a market orientation is key • The role of women is agriculture is critical and must receive attention • The active engagement and commitment of the private sector is required for value chain development; interventions must include, learn from, partner with and strengthen the private sector’s investment in agriculture and agribusiness and their interaction with small farmers

4. Lessons and Conclusions • Huge milestones have been covered in years evolving value chains from plantations dominated to value chains integrating smallholders • Successful models aimed at increasing the participation of smallholders along dynamic value chains as highlighted by Farm Concern Intl’, Technoserve, Actis, Kafo, ADB Ghana • Infrastructure plays a major role in agricultural value chains, and must be addressed • The poor state of traditional markets in most countries is still a major challenge for stable value chains

5. Lessons and Conclusions • Strong SACCO Networks can play a role in financing and empowering many smallholders for integrating into value chains • Value chain analysis is an important part of understanding chains and relationships and how to best target work in them, especially for rural farmers • A holistic approach and partnership are required to build the capacity and services needed to integrate small farmers into commercial value chains.

6. Lessons and Conclusions • Risk mitigation – is critical in value chain finance • commodity management is central to address product quantity, quality and weight • commodity management (ex. ACE) for control, monitoring, and inspection services are needed around the world • risk mitigation begins with “knowing your client” – combining good production practices and secure markets for clients, good loan analysis and good value chain and market understanding • An emphasis must be given to efficiency – technical, economic and allocation of resources • Diversification of products and niche markets is important to reduce risk and to address opportunities

7. Lessons and Conclusions • Business development services are required to make small farmers bankable and have access to profitable value chains – many successful facilitation models exist (ex. BDS Kenya, Farm Concern, CEPCO, BASIX, DrumNet....) • Skill and capacity building – addressing needs of small farmers in a collaborative and efficient manner • Farmers have to be trained to understand commercial agriculture, take necessary measures to meet buyer specifications; most will be willing, some will not • Farmers have the potential, we need to facilitate its realization

8. Lessons and Conclusions • Investment resources are needed and comes from multiple sources; successful models include: • Savings: SACCOS, banks • Loans: Banks, MFIs, investment companies • Equity and venture capital: ACTIS, Technoserve • Shared risk models • Equity and quasi-equity sources are especially important for agribusiness finance. • Intermediaries play an important role and need to be considered when financing the supply chain

9. Lessons and Conclusions Experiences from the “Middlemen” • passion fruit, processing into pulp and selling to large buyers • Bernard Maina, aggregation and sales of tomatoes and French beans • Financial Constraints of intermediaries brought to light. Both working and fixed capital required • Play important role as value chain actors

10. Value Chain Finance Recommendations and Issues to Address in the Future • Commodity Management (ej. ACE) is an area for further work –linking with programs of smallholders through NGOs and others • Technology should be developed and shared – expanding models such as M-Pesa and E-choupal • Skill and capacity building is required • addressing needs of small farmers in a collaborative and efficient manner • addressing needs of governments, MFIs and development agencies to learn • cross-exchange, web exchange and interaction to learn from each other must be pursued

11. Recommendations and Future Issues • A standard platform and guidelines – is important to collaborate (with donor support) to build a common set of standards and tools for value chain finance, such as Microfin (for planning) and the Microfinance Standards (for analysis) and Microbanker (for MIS) • AFRACA, FAO and others are platforms for collaboration and collaborative learning – a joint effort is needed by all to grow and learn together

12. Recommendations and Future Issues • Value chain finance offers an answer to addressing agricultural and agribusiness finance; the way forward in perfecting and promoting it begins with us. Thank you!!