Investing in the future of the Caribbean means investing in Agriculture
EU-INTRA-ACP APP TO HOST A TWO-DAY FORUM DISCUSSING THE WHO, WHAT, WHY AND HOW OF INVESTING IN MICRO, SMALL AND MEDIUM AGRI-ENTERPRISES IN THE CARIBBEAN
KINGSTON, Jamaica, September 21, 2016 – Most everyone probably agrees that farms are important. Without farms and other agricultural enterprises, there would be no food. Countries could rely on imports to feed their population but that is expensive and leaves a country vulnerable. So, why is it so challenging for agricultural enterprises to secure financing and attract investors?
Operators of micro, small and medium sized enterprises (MSMEs) involved in agriculture in the Caribbean cite access to financing as one of their greatest challenges.
“It is difficult for small farmers to obtain financing because there are certain levels of record keeping and guaranteed markets that are required by lending institutions before you can even be considered,” says Neil Gomes, Vice President of the Team Fresh Produce, Caribbean Farmers Network (CaFAN) group in Antigua. “As a result, many farmers are reluctant to even approach a lending institution.”
Robert A. Reid, International Consultant, Agribusiness agrees that pre-requisites are an issue, along with the matter of risk. “The difficulty in obtaining financing also stems from a general perception on the part of Financial Institutions (FIs) of the level of risk in lending to agricultural SMEs,” says Mr. Reid. “They are known to experience production and market failures due to factors outside of their control such as adverse climatic conditions, theft of crop, unfair market competition, and failure to collect sales receipts from buyers in a timely manner. FIs have not been proactive in looking at innovative financing schemes where the exposure of the MSME and themselves to high levels of risk can be reduced.”
It is for this reason that the Agricultural Policy Programme (APP), which aims to address the development needs of smallholder agriculture, made it a priority to increase opportunities to secure financing for agricultural MSMEs. Previous activities executed under the APP have generated a wealth of raw data and analysis pertaining to production, markets, commodity-based value chain development initiatives, and the financing needs of agricultural MSMEs. Now, as stated in the action plan for the APP, it is time to “enhance CARIFORUM financial service providers understanding” of opportunities in agriculture.