The Brussels Development Briefing n. 57 on “Investing in smallholder agriculture for food security and nutrition” organised by CTA, the European Commission/EuropeAid and the ACP Secretariat was held on Wednesday 11th September 2019, 9h00-13h00 at the ACP Secretariat, Avenue Georges Henri 451, 1200 Brussels, Room C. The Briefing discussed smallholder agriculture and its key role in delivering food security/nutrition, and sustainable food systems, as recognised in SDG 2.

1. STRENGTHENING
AFRICAN RURAL
SMALLHOLDERS (STARS)
Blending financial and market
solutions
Dr. Marco Dekker
MERL Manager STARS program
E-mail: m.dekker@icco.nl

2. Supporting 210,000
smallholder farmers through:
• Access to Finance
• Value Chain Development
The solutions we bring are
based in the local market
system
Smallholder farmers are
actors in that market system,
but existing products are not
always aligned to their needs
5 years, $17 mln

3. Standard micro-loan
Agricultural micro-loan
Planting season Harvesting season
An micro-credit example:
• Agricultural cycle
• Inputs needed
• Required loan size
• Crop-specific repayment
capacity
• Repayment scheme
Regular repayment
Repayment after crop sale
Disbursement
Disbursement

4. Smallholder farmers already accessed credit before STARS

5. But smallholder farmers need targeted financial products
STARS develops a mix of loan products to
address the actual needs of farmers:
• Value Chain Finance (producer
organizations + banks + big buyers)
• Leasing products (equipment)
• Crop-specific individual loans
• Warehouse receipt lending
• Group solidarity lending

6. STARS goes beyond just developing credit, we look at the
agricultural value chain as a whole
Without access to quality farm inputs or a market to
sell his crops, the farmer still does not benefit
We strengthen services like input supply, fee-
based training, market information services,
agronomic extension services
We build the capacity of Producer Organizations
on management, financial skills, quality control
We link POs to big buyers, commercial banks,
organize B2B sessions, we help develop business
models

7. And the combination is key to raise yields, sell to markets,
increase crop revenue, and improve food security
Processors, big buyers
Traders
Producer organizations (CB)
Smallholder farmer
Input supplier, BDS provider,
FFS
State and commercial banks
Microfinance institutions (CB)
Crowdsourcing
Refinancers
Savings mobilization
1) Access to finance 2) Value Chain Development

8. Our results so far across four countries (Y4)
Solidarity group clients
Individual clients (loose VCs)
VC Clients (tight VCs)
Warehouse lending (in Senegal only)
Leasing
Total
63,022
10,262
74,758
1,981
Under development
150,023
Training
Farm inputs
Market access
Agri-info access
Total
31,674
34,791
88,673
23,241
178,379
Access to Finance
Value Chain Development

9. Our results so far across four countries
Some examples from studies:
BF - Sesame farmers after improving farming
techniques and accessing credit increased
yields from 80 to 300 kg/ha and farmers went
from 2 to 3 meals a day
SG – Farmers accessing warehouse receipt
loans received higher prices, had less PHL, and
increased their food security in the lean season
RW – After credit risk assessment was
improved in one branch, agri-loan sizes
increased and non-performing loans dropped to
almost zero
ET – A group of potato farmers that were linked
to a big buyer (a Dutch potato chip
manufacturer) sold 244 MT in the first year,
generating interest of MFIs to offer credit

10. Drivers of success:
• It starts with a good understanding of market constraints and client needs, incl learning loops
• Flexibility to adapt to changing (market) conditions, no linear blueprint implementation
• An approach that goes beyond a single solution, blending multiple solutions
• Focus on systemic change (scale up)
Systemic change (early signs):
MFIs internally scale up and expand developed products to other crops and other branches. POs
become more service and market oriented, and receive credit from banks. Farmers have shown a
willingness to pay for services like training. Value chain coordination improves. New MFIs and POs
join STARS, and the STARS approach is replicated in other value chains.
Challenges:
• Government control of input supply systems, market prices, and producer organizations
• Market distortion by donors providing subsidized products and free services
• Collaboration with big market actors as a relatively small program (no co-investment)
Emphasis in last year:
Climate-resilient agriculture, youth and gender, digital innovation (loan assessment, product flow),
fair and transparent pricing

11. We help Farmers and
Small Businesses Grow.