Understanding Demand for Smallholder Financing
An estimated 500 million smallholder families live on less than $2 a day. Smallholder families are not only agricultural producers. They are also consumers who have diverse financial needs, typically earning income from a variety of non-agricultural sources. This blog series brings together a range of perspectives on farming households' array of financial services needs.
Smallholder families represent the largest global segment of those living on less than $2 a day, yet relatively little is known about their demand for financial services.
Even though making information “mobile” can increase outreach to smallholder farmers, the potential of mobile information services far exceeds farmers’ current demand for it. Mobile phones are not a panacea, and many farmers prefer more traditional sources of information.
Banks that recognize the unique characteristics of farmers as customers and adapt their businesses using financial and skill-based support from donors will be best positioned to address the huge gap in demand for smallholder financing.
For smallholder farms, expenses come early in the season before the planting while income arrives only several months later with the harvest. How, then, can these farmers access the cash they need to plant their crops and, more importantly, to survive between harvests?