Partnership Ford Foundation and Rabobank Foundation
Ford Foundation partnered with Rabobank Foundation by placing grants worth USD 690,000 to facilitate access to finance to small holder producer organizations in India.
Ford Foundation has placed a grant of USD 690,000 with the Client Fund of Rabobank Foundation to provide guarantees to Indian Financial Institutions who would lend to Farmer Producer Organisations (FPO). Rabobank Foundation will be responsible for implementing and governing the projects. With Rabobank Foundation’s deep understanding of the sector, human resource expertise of agribusiness, banking structuring capabilities and existing relationship with Indian Financial Institutions, it is well placed to be able to roll out the guarantee product quickly.
Member based agribusiness enterprises in India
Indian agriculture, which is dominated by small holders, is marred with issues such as lack of scale, timely inputs and technology, limited access to finance and an inefficient marketing system. This has necessitated the formation of member based organisations run on cooperative principles who are able to leverage their collective strength and bargaining power to access financial and non-financial inputs and services, technology, reduce transaction costs, tap high value markets and enter into partnerships with private and public entities on more equitable terms.
Access to finance
As the number of these farmer organisations grows across the country, the issue of access to affordable sources of financing for working capital and infrastructure investment has assumed centre stage. Early stage producer organisations in particular face hurdles in accessing investment and working capital loans. Formal financial institutions are wary of lending to these bodies, largely due to the latter’s inability to provide adequate collateral. One way of encouraging financing to these FPOs is through provision of Guarantee Cover to Financial Institutions. Rabobank Foundation has proven that the guarantee structure can be effective and suitable to enable access to finance for member based agribusiness enterprises in India.
The partnership is expected to provide first time banking linkage to farmer producer organisations, increase in profits of the producer organisations and have a positive income impact at the producer level. It is estimated that this facility would impact at least 5000 primary producers. This follows the success of Rabobank Foundation of incubating and nurturing farmer producer organisations for over 5 years in India.
About Ford Foundation and Rabo Foundation Client Fund
The Ford Foundation headquartered at New York, is the second largest private foundation in the United States, which makes around 1400 grants annually. The Rabo Foundation Client Fund enables Rabobank customers to use part of their assets to offer a helping hand to the disadvantaged and underprivileged. Participants in the Client Fund can choose from a variety of projects world over which receives assistance from the Rabobank Foundation