Access to finance is a well-documented constraint for businesses in many developing countries including Fiji and other Pacific islands.
This issue is particularly exacerbated for the agriculture sector in the Pacific region given smaller markets, high costs of business, under-developed capital markets and a relatively smaller commercial agricultural sector.
The European Union through the Pacific Agriculture Policy Project (PAPP) implemented by the Pacific Community (SPC) is helping to provide farmers better links to markets by ensuring that farmers can access key services such as finance.
On 12 February 2016, SPC held a consultative workshop for up to 25 selected farmers with Merchant Finance Limited (MFL) to discuss lending and saving products for the agricultural sector. MFL is developing a range of new Agri-Trade Finance banking products to cater to the needs of farmers and other smallholder agri-business stakeholders in the agriculture sector who participate in some aspect of selling or purchasing. All selected farmers had some form of purchase contracts and provided valuable input into the design of such products.
David Hickes, a representative of the famer groups selling to hotels in Sigatoka welcomed MFL’s initiative. He stated that, “the participatory approach taken via these workshops is very important. This has allowed farmers’ voices to be heard in determining their financing needs.”
SPC’s Pacific Agriculture Policy Project Adviser, Vili Caniogo applauded MFL’s thinking, stating that bold steps were needed by the financial community now to address this long-held issue.
Mr Caniogo also thanked the Reserve Bank of Fiji for encouraging these initiatives, noting that while more can be done, this was an important first step in bringing more changes as to how banks think and approach the agricultural sector.
MFL welcomed the collaborative approach taken to hear directly from farmers who were already in the business of contracts. MFL also welcomed the collaboration with SPC given strategic and technical linkages directly with farmers and buyers.
Further collaboration is planned by SPC and MFL around a more detailed programme of awareness and support at least in the early phase of the rollout of the new products.