December 5, 2018
The Financial Times ran a special report on Food & Agriculture that featured an interview with Managing Director Allie Burns and a reference to Village Capital alum FarmDrive. In early 2019 Village Capital will be releasing a report about the impact of early-stage entrepreneurs on the sustainability and security of the global food system.
The Financial Times report is reprinted in part below.
By Sarah Murray
Post-harvest loss — food that rots before it reaches consumers — plagues small-scale farmers in developing countries.
Among those attempting to address the problem is InspiraFarms, a company launched in 2012 by former Oxfam executives Michele Bruni and Tim Chambers, which produces affordable, energy-efficient cold storage and processing equipment. This helps farmers reduce losses and comply with international food safety standards, allowing them to access higher-value markets.
InspiraFarms’ clients are among an estimated 450m-500m households globally for which agriculture is the principal activity. While a few are commercial producers, most are subsistence farmers, growing food only for their families. Yet some argue that, with assistance, some of the larger of these farms could sell into global markets, helping to improve livelihoods.
“There’s a piece in the middle we think should be helped because they can become more commercial — that’s our target,” says Tania Lozansky, head of agribusiness advisory services at the International Finance Corporation (IFC), the private sector arm of the World Bank.
Diversification could also increase the viability of rural livelihoods, says Lorenzo Bellu, a senior economist at the UN Food and Agriculture Organization. He says “integrated agriculture” could include everything from renewable energy generation to tourism and “ecosystem services”, such as forest stewardship for greenhouse gas sequestration — capturing carbon — and land stability, or the conservation of lakes and rivers.
“Paying for these services could contribute to a multi-output form of agriculture,” he says. “This is an avenue that we have not investigated sufficiently.”
Meanwhile, a number of obstacles need to be removed if smallholder farmers are to become more commercially successful. Lack of access to finance is one. Farmers need credit to invest in machinery and high-quality agricultural inputs such as fertilisers. Yet in Africa, for example, while agriculture employs about 55 per cent of the population, only about 1 per cent of bank lending goes to the sector, according to the IFC.
Part of the problem is that many small-scale farmers own little or no land. “Banks are struggling with being able to finance smallholder farmers when they don’t have collateral,” says Allie Burns, managing director at Village Capital, which invests in early-stage ventures that are solving problems in sectors such as agriculture.
While the microfinance industry has developed financial products for small-scale farmers, from loans to crop insurance, Ms Burns says entrepreneurs are coming up with new solutions.
She cites Kenya-based FarmDrive, one of Village Capital’s investees, which uses machine learning and mobile phone, satellite and other data to create alternative credit scores for smallholder farmers based on things such as their social and commercial activities and farming practices.
Access to information is also essential for farmers. The ubiquity of the mobile phone in many developing countries has made it an important tool, giving access to knowledge about anything from improved farming practices to real-time market prices...
As Communications Director at Village Capital, Ben works on sharing what we’ve learned from our work in order to amplify our impact and help catalyze the fields of impact investing and entrepreneur support.
