Getting microfinance to the farmers

Peter Koh

September 08, 2008

Commercial farmers have benefited from higher food prices but subsistence farmers in developing countries have missed out on the boom because they need to consume all their production themselves and do not have enough surplus to sell at market prices. Helping farmers in developing countries is crucial to increasing global food production and combating food inflation where it hurts the most. However, poor access to banking facilities is a barrier.

Feast and famine as food prices soar

France’s third-largest bank, Crédit Agricole, is at the forefront of the development of innovative financial services to help meet the financing needs of such farmers.

Earlier this year, Crédit Agricole announced a partnership with microfinance pioneer Grameen Bank to develop a second-tier microfinance institution, the Grameen Crédit Agricole Foundation, that will aim to improve mid-sized microfinance institutions’ access to funding and eventually help them to develop new products such as micro-leasing and micro-insurance when it launches in September/October this year.

"There are about 10,000 microfinance institutions in the world but the vast majority of them have a problem with funding," explains Jean-Luc Perron, head of microfinance at Crédit Agricole in Paris. "This is because in many cases they are not authorized to collect savings and because local banking institutions are often reluctant to lend them money.

"The purpose of our foundation is to help these institutions gain access to funding by providing credit guarantees and by lending to them in local currencies. While there is an increasing number of investment funds that are prepared to lend to microfinance institutions, of the €2.5

Getting microfinance to the farmers

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