Finance for Small-Scale Commodity Processing: From Micro to Meso Finance

This paper summarizes the discussions of an international workshop that focused on sustainable financial services for the first stages of commodity processing to support small scale producers to move up the value-added chain and increase their efficiency and earnings in commodity production.

The paper identifies the following topics that were addressed by the workshop:

• Micro and meso-credit requirements of commodity producers and processors;
• Mechanisms employed by the financial sector in micro and meso-credit to the commodity sector;
• The role of other financial institutions in this sector.

The paper finds agreement among workshop participants on:

• The importance of commodity production, processing, trade and finance in the rural world;
• The need for a shift towards:
  • Value addition through processing and marketing the processed goods,
  • Dynamically growing financial services;
• The importance of viability, sustainability and outreach.

The paper examines discussions on:

• The potential and needs of rural agro-processing;
• Diversification and trading of non-financial services for commodity processing;
• The challenges of physical commodity infrastructure;
• The experience of banks and other financial institutions in finance for small and micro enterprises in commodity production, processing and trade.

The paper lists the following conclusions of the workshop:

• Sustainable microfinance institutions (MFIs), micro banks and agricultural development banks, with appropriate risk management technologies, are able to successfully lend to the agricultural sector;
• Networks of MFIs and banks can develop support strategies in cooperation with government and donor agencies.