Asia | Smallholder farmers

Unique collaboration gives Indian farmers a chance to grow

28 September 2021 17:00

Smallholder farmers in India have been hit hard by the coronavirus pandemic, because access to financing and technical support have become restricted. Rabo Foundation aims to help these farmers grow and innovate by offering the financing they need.

Indian smallholder women farmers

To do just that, we launched an unique partnership on 23 September 2021, led by US International Development Finance Corporation (DFC) and supported by USAID along with Rabo Foundation and two European foundations and three financial institutions in India.

The first discussions about the partnership program ‘India Covid Response Program for Agri transition’ were held in May 2020. “We saw the effects that outbreaks of the virus had on smallholder farmers”, recalls Dheeraj Mutreja, one of the driving forces behind the partnership at Rabo Foundation in India. “Their value chain – end buyers like hotels and restaurants – was severely disrupted, which in turn disrupted the existing supply chain. Add the fact that they had even less access to financing during the risky period, for example because of stricter underwriting requirements, and you get farmers who are in need of financial support.”

“We knew that we needed a combination of parties to have the greatest impact”

Financially effective

“We’ve worked with all of the other program partners before, but never with all of them at the same time. That’s really unique”, Dheeraj explains. “We knew that we needed a combination of parties to have the greatest impact, so we brought the three foundations together – us and two European foundations. We’re more effective financially together than we are individually. And development bank US DFC magnifies that effectiveness many times over, which enables us to provide 55 million dollars in loans. We were only able to get such a massive, complex partnership off the ground thanks to our expansive financial expertise and relationships.”

86x as much impact

The partnership means that every dollar Rabo Foundation puts into the program provides 86 dollars in financing to smallholder farmers in India. That also applies to the dollars invested in the program by the other foundations. As a result, around 220,000 smallholder farmers will receive assistance over the next eight years. “That makes the program so unbelievably powerful”, exclaims Dheeraj. “That kind of scale and impact is completely unprecedented.”

Goals for sustainable change

How will the 55 million dollars be spent? Over the next eight years, three financial institutions that Rabo Foundation has worked with before will use the funds to provide loans. These institutions are Samunnati Financial Intermediation & Services Private Limited, Maanaveeya Development & Finance Private Limited and Avanti Finance Private Limited. Dheeraj: “The focus will be on financing organizations that unify (women) smallholder farmers, fight food loss, offer innovative technologies to those farmers or promote renewable energy in the agricultural sector. Those are all goals that contribute to the sustainable change that the partner foundations all strive to achieve.”

220,000 farmers moving forward

But how will that all help the 220,000 smallholder farmers, exactly? First, farmers who are members of an organization will have better access to financing, which will allow them to invest in their own farms: from buying the right seeds and fertilizers for their produce to expanding and innovating their farms. But the greatest impact may well come from the agtech startups, which will be able to use our financing to reach more farmers with their agricultural innovations.

Better lives, faster

One excellent example is the agtech startup that sets up storage facilities closer to the farmers. Dheeraj: “As a result, farmers don’t have to make long journeys to cities to put their produce in storage. The startup also helps them find buyers and arrange transport for their produce to the buyers. That all results in less post-harvest losses. Or take the startup that does almost the same thing, but with refrigerated storage powered by solar energy. Thanks to our Covid program, these kinds of agtech firms can reach many more farmers and dramatically improve their lives in a very short time frame.”

That kind of impact suits Rabo Foundation’s goal to give smallholder farmers the space and opportunities they need to grow. Dheeraj: “To do that, we join forces with our network, especially in the areas of financial support, knowledge and innovative solutions. And that not only helps the farmers who receive the direct support; it also helps their local communities in India.”