Responsible service delivery to smallholder farmers
Thomas Kockmeyer�8 June 2023
Developing a client protection tool for the agricultural sector
Contents
IDH Farmfit Fund envisions a mature smallholder farmer finance sector.
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As a social investor we want to drive implementation of CP in this industry.
100M Blended Fund
3M smallholder farmers
Improve farmer income
Part of IDH
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(India, Sravanth & Sundaram, 2019)
Farmer suicides
Debt as a coping strategy�
(Ghana, Teye & Quarshie, 2021)
Loan terms as exclusion mechanism
Different context, similar headlines
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Bundled services can have positive income impacts for smallholders, but CP risks may undermine the impacts we are seeking.
Financial services not solely provided by traditional FSPs
Loans are provided in kind and repaid in kind
Bundled services imply additional risk
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Three simple conclusions in the context of smallholder farmer finance:
Farmer-specific risks need to be added to existing CP standards
Need to broaden the scope:
Lack of shared understanding & language of responsible service delivery.
IDH Farmfit Fund started on a journey with CERISE+SPTF to close this gap
Problem definition and first pilot tool
Feedback rounds and first field testing
Second iteration of pilot tool
More field testing, reaching out to peers
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H1 2022
H2 2022
H1 2023
H2 2023
A tool to evaluate Client Protection in due diligence, monitoring, and as a self-assessment
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Objective: �Consistent application of Client Protection Standards in context of smallholder farmers.
Value chain actors: �Self-assessment
Investors: �DD and monitoring
“Do no harm”
Establish a business case
Ensure long-term sustainability
Suitable for all agricultural value chain actors.
The tool | 8 client protection standards plus additional safeguards and best practices
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Financial services
Crop procurement
Input supply
Other services
Data collection
Integrating standards on…
… to prevent issues of …
Example: The organization enforces fair and respectful treatment of smallholder farmers.
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The organization protects smallholder farmers' rights to respectful treatment during the loan collection process or the production purchase process
[Production purchase] The organization ensures transparent volume evaluation, quality check and calculation of the amount to be paid to the farmer for the delivered produce.
[Production purchase] The organization pays the farmer within a reasonable delay, and no later than 15 days after the delivery of produce.
Next steps
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Short-term: Building value
Medium to long-term: pending sector interest
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Thank you!
Please reach out if you are interested in supporting this work
Thomas Kockmeyer
Monitoring, Evaluation and Impact Advisor
kockmeyer@idhtrade.org