The project concerns an initiative to introduce an independent rule-based evaluation framework for farmer organizations to reduce the barriers they face in accessing investment. The project addresses one of the fundamental problems of small producers in Developing Countries concerning their poor access to bank credit. Traditional approaches of lending are based on collateral as the volume of lending involved is too small and proper due diligence proves prohibitively expensive. The result is that large number of farmers with good skills, good track record and productive practices cannot get themselves recognized as good borrowers because of their small size, and have no opportunity to grow because they unable to raise investable resources. The project aims to develop an economically feasible and reliable scheme of assessment of creditworthiness based on the successful experience of certification schemes into financing for agribusiness in developing countries. The assessment of credit risk would be based on the capacity of the borrower to generate sustained cash flow and manage their production successfully, as opposed to traditional approach of banks based on collateral. The project proposes an innovative solution based, part, on information technology and part on lessons from volumes of data from value chain certification schemes and microcredit operations. A set of simple and observable indicators, based on past experience, have been identified, and evaluated for large number of farmer groups by independent assessors. The data is being put on a common database. The easily accessible database would reduce the costs of credit assessment of the financial institutions by a few orders of magnitude, and eliminate the due diligence barrier in accessing bank lending for large numbers of small farmers.



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