Financing Family Farming: Microfinance as a Mean to Reduce Impact of Food Crisis

This presentation analyzes the impact of rural microfinance in Madagascar, and its ability to finance family farming, thereby reducing the impact of the food crisis. Several factors have limited the effects of the food crisis in Madagascar, such as a strong local currency and relatively stable domestic prices. Banking and rural microfinance outreach has been poor, but has expanded in the last few years. Study findings indicate that:

• Farming production financing is improving, although it is still insufficient;
• It offers households the opportunity to increase production by extending farming areas and allowing a second harvest on the same field;
• Financing storage stabilizes local markets;
• Agricultural production loans have led to an increase in national production, decrease in imports and savings on imports.

Agricultural financing has had a significant impact on rural revenues and on the country's capacity to progress on the path to food balance equilibrium. Finally, donor focus on urban MFIs, reduced outreach to rural areas and regulatory constraints threaten rural microfinance development.