When I envision how to make agriculture work for the world, I think of a system that feeds the global population of nine billion that is expected by 2050 — especially those in cycles of chronic hunger and malnutrition. I think of better farming practices that increase yields and productivity, and that dramatically improve incomes for small-scale producers and the rural poor. I think of an enlightened food industry, as locally based as possible, that creates good jobs across every value chain and protects fragile ecosystems and biodiversity everywhere. And I think of agriculture as a crucial equalizer of opportunity for women and girls, one that provides dignity for the most marginalized populations on earth.
Visiting with coffee farmers on the shores of Lake Kivu in western Rwanda
Each of us would benefit from such a system, especially the world’s 450 million smallholder farmers who, together with the right partners, inputs and services, can play a critical role in bringing this aspirational vision to reality.
The vast majority of smallholders, however, are incapable of making such profound contributions to our global well-being. They’re trapped in time because they lack adequate investment, in terms of both capital and knowledge, as well as market access and core capacities such as financial management and appropriate agronomic practices. Root Capital has spent the past 15 years playing a small but increasingly significant role in unlocking the opportunity of agriculture. Each loan we make is a drop in the ocean, but those drops will surpass $1 billion in cumulative lending by the end of this year — and we’re just getting started.
Still, no matter how much we scale or how far we push the frontier, Root Capital, through our direct service provision, will never get anywhere close to reaching those 450 million hardworking farm families by ourselves.
That’s why, last year, we banded together with several other social lenders to launch an industry alliance called the Council on Smallholder Agricultural Finance (CSAF). Together, our organizations are working alongside numerous others like BRAC, One Acre Fund and Opportunity International to catalyze a thriving financial market that will one day serve all the agricultural businesses and farm households that none of us could ever reach singlehandedly.
We’re making progress. Total lending among CSAF members is up 56 percent from just one year ago. Earlier this month CSAF released its annual “state of the union” report, citing that last year, our seven members collectively lent $560 million to small and growing agricultural businesses connecting 1.2 million smallholders to formal markets. It’s a far cry from meeting the capital demand of the entire smallholder agriculture sector, but it’s certainly a step in the right direction.
Years ago, Root Capital was one of a very few organizations lending to agricultural enterprises in Africa, Asia and Latin America. Today, there’s an alliance of social lenders involved in this work and a growing cadre of peers taking similar or complementary approaches, generating the healthy competition and collaboration needed to build a durable smallholder agriculture finance industry.
That such a thing has emerged is, in no small measure, thanks to you, Root Capital’s donors and investors who have believed steadfastly in the power of enterprise and inclusive finance; our clients who have demonstrated that an agricultural business can repay its loans, grow and create impact for farmers, communities and ecosystems; the buyers who have welcomed us as trusted business partners; and our peers who have served as valued business and thought partners, helping each of us navigate the often choppy waters of agricultural development in emerging markets.
In closing, I would like to pause, take a step back, and just say thank you. We are lucky to have you as part of the Root Capital family. Together, we are growing rural prosperity and making agriculture work for the world.
My sincere thanks,
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What do you think?