New engagement of Rabo Partnerships & the Gates Foundation
Since 1989, Rabo Partnerships (RP) has been aiding Financial Institutions and Agri Value Chain actors to enhance access to financial services, focusing on rural development and unlocking Agri Finance. Drawing on the resulting lessons learned, the Gates Foundation (BMGF) has enlisted RP to conduct research on unlocking agricultural finance, to provide actionable insights for the Sub-Saharan Africa and Asia markets.
In short, the research will focus on what it takes to capitalize agricultural finance, by analyzing two key areas including 1) the Macro-level, exploring the role of public organizations and their collaboration with corporate players in unlocking sustainable financing for smallholder farmers, small-scale producers and agri-value chain actors, and 2) the Meso-level, investigating the specific role(s) of the formal financial systems and its various actors in extending access to agriculture financing. In addition, exploring levers at the micro-level e.g. the potential of technology in addressing obstacles for farmer finance as enablers for findings on macro- and meso-level.
To bring these key areas – and corresponding perspectives – together, a crucial part of the input gathering phase consists of stakeholder roundtables on dedicated topics.
In the week of June 8, RP organized the first roundtable in Brazil. Being an agricultural powerhouse and world’s largest exporter of many popular agriculture commodities like coffee, sugarcane, soybean, beef, and poultry, Brazil is naturally the right place to start when collecting insights on sustainable agricultural finance. In only four decades, the country went from being a net importer of food into one of the largest exporters, after the European Union and United States. One crucial factor that has contributed to this transformation, has been access to credit. This is offered leveraging various innovations, tools and products through banks like Rabobank, government subsidized instruments, farm inputs producers, traders and the “Cédula de Produto Rural” (CPR), or Rural Product Note.
In short, a CPR is a promissory note issued by a farmer or farmer organization to deliver a certain amount of farm produce – crops or livestock – or the cash equivalent thereof at a future date. Against this promise, the financier advances a certain amount of money or inputs to be settled upon the maturity of the note. But apart from the law that enabled this product, what are prerequisites in making the CPR work in Brazil - from a legal, financing, and value chain perspective? What were key enablers for growing volume & liquidity? And, importantly in the context of this engagement, how can these insights be used for financing smallholder farmers operating in different contexts?
Those are exactly the questions we aimed to answer in the first stakeholder roundtable of the project. Next to the RP/BMGF team, a broad range of Brazilian experts on the topic joined to share their insights & perspectives. Bringing together various banks, traders, the registry, a crop surveyor, lawyers, and a research institute was of huge value to find answers to these questions and build upon for the continuation of the project.
In the coming months, roundtables will be organized in India, the Netherlands, and Ethiopia. These insights, combined with ongoing desk research and case deep-dives in additional countries, will form the basis for our recommendations to BMGF, aiming to contribute to unlocking agriculture finance at scale.