Platform for African – European Partnership in Agricultural Research for Development

Monday, July 8, 2013

Agricultural Finance

“Financial services that support asset building, investment, and risk management are critical for people of all ages in frontier and post conflict environments. In The New Microfinance Handbook, the authors highlight the importance of understanding client needs and the need for a more inclusive financial sector. This work provides an excellent resource for navigating a diverse and rapidly changing microfinance sector.” 
—President Ellen Johnson Sirleaf, Liberia

Rural finance refers to financial services provided in rural areas for agricultural as well as non agricultural purposes. Agricultural finance, primarily a subset of rural finance, is dedicated to financing agriculture-related activities such as inputs, production, storage, processing, and marketing of
goods. In addition to funding for working capital, agricultural finance also funds investment and
infrastructure, such as irrigation systems, storage facilities, and machinery. It includes a variety of
products including credit, savings, insurance, and transfer payments.

Agricultural finance is provided in various forms (cash and in-kind) to agro enterprises and farmers operating small, medium, and large farms. It also includes financial services such as warehouse receipts systems, savings or other capitalization mechanisms, as well as insurance and forward contracts that are specific to agriculture.

This chapter (page 231-247) from the book The New Microfinance Handbook. A Financial Market System Perspective [Edited by Joanna Ledgerwood with Julie Earne and Candace Nelson] focuses primarily on credit products for agriculture and will be of interest to practitioners, policy makers, and regulators who want to understand the financial service needs of individuals and businesses working in the agriculture sector and to develop appropriate products for addressing those needs.

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