Thumbnail Image

Innovative agricultural finance and risk management. Strengthening food production and trade in the transition region

FAO Investment Centre. Directions in Investment No. 7

Year of publication 2012

Pages 142 p.

Author Rutten, L.;Investment Centre Division

Product type Document

Series title FAO Investment Centre Studies and Reports

Edition 1

Synopsis (short abstract) Ensuring that food production keeps up with population and income growth, changing dietary patterns and climate conditions in the decades to come is but one of the challenges currently facing developing and advanced countries around the globe. The world’s population is expected to stabilize at around 9.1 billion people in 2050, a 30 percent increase from current numbers, but demand for food will grow by 70 percent. To keep up with the pace of demand growth, yields need to improve drastically, y et there is little scope to expand acreage. Transition countries, some of which face food security problems of their own, can play an important role in achieving global food security as yields can be improved. Countries such as Kazakhstan, the Russian Federation and Ukraine, which have been net grain importers up to the late 1980s, can emerge as the world’s leading grain exporters. In order to meet rising food demand, significant investment from the private sector will be required in these tra nsition countries. Such investment needs to be catalysed through supportive policy and regulatory, legal and institutional frameworks. International financial institutions, in turn, can facilitate the creation of these frameworks in transition country governments. This paper focuses on one particularly important action area: how can various agricultural finance and risk management products, mechanisms and institutions that are relatively new to the transition region, enhance the region’s food production, processing and trading systems? These products, mechanisms and institutions include: market-based price risk management, weather index insurance, structured finance and other innovative forms of finance, warehouse receipt (WHR) systems and commodity exchanges. The paper aims to identify how international financial institutions such as the European Bank for Reconstruction and Development (EBRD) can most effectively leverage their investments and technical assistance programmes to boos t the adoption and scaling up of such products, mechanisms and institutions

Language English

Also available in:
No results found.

Related items

Showing items related by metadata.

  • Thumbnail Image
    Document
    Commodity exchanges in Europe and Central Asia. A means for management of price risk
    FAO Investment Centre. Directions in Investment No. 5
    2011
    Also available in:
    No results found.
    This study discusses commodity exchanges in the European and Central Asian (ECA) region as a tool for risk management. There are well over two-hundred entities active in the region that call themselves “commodity exchange” (and many more registered commodity exchanges that are no longer active) but most exchanges would not be recognized as such by people familiar with commodity exchanges as they exist in Europe and the Americas. Exchanges resemble wholesale markets or merely act as a mechanism f or registering commodity transactions for taxation purposes. This study does not aim to provide a comprehensive overview of all such exchanges but rather focuses on exchanges that provide explicit risk management tools and discusses how the offer of risk management tools (particularly for agriculture) by such exchanges can be improved.
  • Thumbnail Image
    Meeting
    Promoting Private Sector Investments in Sustainable Forestry: Expert Workshop on Financial and Institutional Innovation for Reducing the Risks of Private Sector Investments in Sustainable Forestry 2016
    Also available in:
    No results found.
    This workshop was organized in the framework of the Food and Agriculture Organization of the United Nations (FAO) led initiative on “Financial and institutional risk mitigation and management strategies”. This initiative stems from the lack of significant funding for the forest sector in key areas of intervention such as forest plantations, natural forest management, small and medium forest enterprises, local and community forestry, and large‐scale forest investment projects including REDD+, whi le private capital is available for investments. Underlying efficient business models can bring substantial financial returns to investors in all these activities, but many traditional investors are still reluctant to invest.
  • Thumbnail Image
    Book (stand-alone)
    Innovations for inclusive agricultural finance and risk mitigation mechanisms 2016
    Also available in:
    The Government’s Green Morocco Plan (Plan Maroc Vert) underlines agriculture’s important role and sets strategies to promote the sector’s development. Despite these efforts, however, important challenges remain. An important one refers to the availability of appropriate financial services for rural actors engaged in agriculture. The average capital required yearly to finance agriculture is estimated at 30 billion Dirhams. The Moroccan banking sector finances only 17 percent of such demand and Cr edit Agricole du Maroc is responsible for about 80 percent of this share of financing to agriculture. A significant part of the rural population composed of poorer households continues to see its financial needs satisfied mainly by informal financial service providers given the inability of the formal financial sector to reach rural areas with appropriate and sustainable products. This case study documents a particularly innovative model for providing financial services to poorer rural household s dependent on agriculture – the Tamwil El Fellah (TEF) model developed by the Groupe Crédit Agricole du Maroc (GCAM – the Morocco Agricultural Credit Group). TEF has built on the long-standing experience of financing the agriculture sector and the network of agencies and human resources of GCAM, putting in place its own business model with risk management mechanisms adapted to its specific client segment: farmers with small and medium-scale agribusinesses. The analysis presented in this study a ims to highlight important principles that can be applied by financial institutions and supporting organizations to promote inclusive rural and agricultural financial services the context of developing countries.
Show more

Users also downloaded

Showing related downloaded files

No results found.