Access to finance yields big gains for farmers (FAO and Rabobank)
The agriculture sector remains one of the world’s largest employers, but many who enter the sector often find they face significant challenges in generating a profit. Rabobank, a cooperative bank founded in 1895 by farmers and horticulturalists in the Netherlands, understands the challenges that farmers face: with an international focus on the food and agricultural sectors and a stated mission to promote healthy nutrition and enhance the stability of the food industry by increasing the availability and access to food, the bank is a natural partner for FAO.
FAO and Rabobank began working together in 2013, when the Rabobank Foundation, a corporate foundation funded by the bank, partnered with FAO to improve smallholder farmers' incomes, access to financial tools and ability to invest in more efficient production of food crops. This partnership supported the implementation of FAO projects in Eastern Africa, benefitting more than 2400 families of small-scale producers engaged in women’s cooperatives.
Smallholder agriculture remains the main economic activity in sub-Saharan Africa and employs the majority of the people, but despite the central role they play in food production and food security, smallholders tend to have little or no access to formal financial services. Rural financial institutions often lack both the agricultural sector expertise and the tools to properly assess farmers’ and cooperatives’ credit worthiness, and the lack of lending limits smallholder farmers’ capacity to invest in the technologies and agricultural inputs they need to increase their yields and incomes and in turn, reduce hunger and poverty. Rabobank Foundation and FAO worked with communities in Ethiopia, Kenya and Tanzania to develop and encourage the use of financing instruments, with Rabobank providing technical assistance and risk sharing facilities which allowed local smallholders and cooperatives to develop a financial track record.
Building on the success of the initial projects, FAO and Rabobank Foundation expanded their cooperation in 2018, with a focus on supporting financial professionals and legislators in developing rural and agricultural financial markets, and developing a programme of longer-term interventions in Ethiopia, Kenya and Tanzania. In 2020, FAO signed a new partnership with the bank itself to promote inclusive and sustainable food system transformation with a focus on improved land and water use and lowering greenhouse gas emissions, increasing the resilience of farmers and companies, innovative financial instruments and mechanisms, and knowledge sharing between the parties, with both organizations exchanging their specialized research and expertise to enhance the beneficial impact of their respective activities. The new partnership is also broader in scope geographically, supporting projects not only in sub-Saharan Africa, but also in India and Latin America.
Rabobank, a Dutch cooperative bank, and FAO signed a Memorandum of Understanding (MoU) in July 2020 to promote more inclusive and sustainable food systems. The partnership focuses on increasing the resilience of farmers and small-scale businesses while improving land and water use, lowering greenhouse gas emissions and reducing food loss. The collaboration between the two organizations dates back to 2013, when FAO and Rabobank Foundation partnered to improve smallholder farmers' incomes, access to financial tools and ability to invest in more efficient production of food crops.
