POLICY RESEARCH TO IDENTIFY APPROPRIATE FINANCIAL SUPPORT SYSTEM(S) FOR FARMER PRODUCER ORGANIZATIONS/FARMER COMPANIES OF THE SMALLHOLDER SECTOR

Funding Source and Objective

This research under the Agriculture Sector Modernization Project (ASMP) in Sri Lanka focuses on addressing the critical financial barriers faced by smallholder farmers. Despite efforts to modernize agriculture and improve productivity, smallholder farmers and their organizations continue to struggle with accessing formal financial support due to a lack of collateral and the perceived risk by financial institutions.

The research involves a comprehensive analysis of existing financial support systems both within Sri Lanka and in neighboring countries that target smallholder farmers and their organizations. This also, will examine the specific conditions, advantages, and disadvantages of these systems and recommend the most appropriate financial models for implementation by local financial institutions.

Additionally, this includes an in-depth review of the policy, legal, and institutional frameworks necessary to facilitate these financial systems, identifying any gaps or required changes. The consultant will also propose relevant policy instruments that the Sri Lankan government could adopt to enhance financial access for smallholder farmers and support the sustainable growth of the agriculture sector.

This research will provide vital insights and recommendations to empower smallholder farmers, enabling them to increase productivity, improve market access, and add value to their agricultural produce, thereby contributing to the broader goals of the ASMP.

Agreement No. LK-MOA-PMU-347462-CS-CQS
Contract Period- July – October 2024
Total Cost – LKR 2,500,000.00

Objective

The objective of this research is to analyze and evaluate the various financial support systems implemented by financial institutions in Sri Lanka and other countries in the region. The analysis will focus on identifying the most appropriate models that can be effectively applied in the Sri Lankan context to support smallholder farmers, Farmer Producer Organizations (FPOs), and Farmer Companies. The financial support systems should be tailored to meet the investment needs of these stakeholders, specifically aimed at improving the agriculture production system and developing crop value chains for perishables and climate-sensitive crops, including fruits, vegetables, pulses, and spices.

Overall Goal

The main objective of this study is to investigate ways to grant smallholder farmers, farmer-producer organizations, and farm companies in Sri Lanka better access to capital and investment opportunities. Through the identification and recommendation of suitable financing models, the research also seeks to enhance the agricultural value chain, boost productivity, and guarantee the sustainability and resilience of the nation’s crop production systems, particularly for perishable and climate-sensitive crops.