Action for Inclusive and Sustainable Food System Finance

Upgrading of food value chains for improved productivity, nutritional quality, safety, and standards, would require financing which is not in the means of many small-scale farmers, fishers, and agri-SMEs that lack collaterals. Financing is critical for accessing better technologies and innovations needed to sustain agri-food systems. Financing of food value chains entails both credit and insurance – the latter being critical in risk management while at the same increasing the prospects for credit qualification and repayment. Lending interest rates are prohibitively high (up to 17% in commercial banks). Despite the mounting risk,  agricultural insurance is still unpopular among smallholder farmers due to a number of factors including among others – untailored design of the product, inability to afford premiums, and socio-cultural issues.  Women, youth, and people with disabilities tend to be disproportionately the most financially excluded segments. In this respect, increased financing of the food value chains is direly needed to upgrade food value chains hence transform the food systems.

UTR COMMITMENT

Strengthen the capacity of the Tanzania Agriculture Investment Bank (TADB) to scale agricultural finance and formers’ cooperatives; embark on the formalization of land and livestock assets as collateral; promote credit guarantee schemes to improve lending to smallholder farmers and fishers; strengthen block and contract farming systems; support schemes for agribusiness off-takers.