Offering optimal financial packages to larger numbers of smallholder farmers at lower costs is the aim of a new project led by Principal Investigator Dr. Ana Marr, Reader in International Development Economics at NRI and the Business School at the University of Greenwich. The three-year project, to be known as AgricreditPlus, has been awarded a GBP 745,000 grant by the Economic and Social Research Council (ESRC) and the Department for International Development (DFID).
Dr Marr is leading a large collaborative international team including research institutes from Africa and Europe, African insurance providers, banks, microfinance institutions, farmers' unions, and the African Development Bank.
Investing in something intangible, such as insurance, can be a hard decision for the purchaser – you can't immediately see any benefits, or predict whether you will actually need it, so why waste your money now? If you don't have insurance, however, the consequences could be devastating – and for smallholder farmers on the poverty line, this could mean the difference between life and death.
Financial packages for farmers?
Farming can be a risky business, ruled largely by weather systems: crops need the right amount of rain at the right time, just enough sun, and the right temperatures to produce a healthy harvest. In the face of climate change, more extreme weather events such as hurricanes, flooding, drought or unseasonal frosts, could mean increased risks for farming. To manage the risk involved, Dr. Marr suggests the double-barrelled approach of insuring the farmers, whilst also providing them with credit to invest in their business: a financial package designed to manage the risk for both the farmers and the financial institutions.
Redress the balance
The AgricreditPlus team of researchers will analyse the supply and demand of financial packages offered to smallholders in east Africa, focussing mainly on maize farmers in Kenya and Zambia, and weigh up the pros and cons of each one. Using interviews, surveys and experimental games, the project aims to calculate the optimal financial package needed to improve the productivity of smallholder farmers, build up their businesses, improve their livelihoods, and help them find a risk-free way out of poverty.
A project website will be available soon.