Microcredit and Crop Agriculture: New Approaches, Technologies and Other Innovations to Address Food Insecurity among the Poor

This paper reviews innovative approaches and technologies for microfinance to better adapt to the conditions of crop agriculture, improve the management of agricultural risk, and encourage agricultural investment in order to address food insecurity among the poor.

The paper states that recent market-linkages of agriculture, evolution of MFIs, strategic partnerships, and the development of new technologies and approaches to reduce cost and risk, have made microfinance more suited to financing crop agriculture. Recommendations include:

• MFIs need to expand their credit offerings and reduce operational costs;
• MFIs should establish linkages and partnerships with non-financial organizations for financing agriculture to smallholders;
• Value chain finance has an important place in agricultural finance;
• MFIs must mitigate systemic risks through portfolio, sector, and regional diversification;
• Development agencies and policy makers should focus on building capacity, productivity and profitability of smallholder agriculture;
• They should provide development and technical assistance to MFIs, banks and other practitioners.