Active 0 Reply 984 Views 2018-03-01 13:01:37 AgriFinance
Farming is a sector that gives only as much as it gets. This means the value of agricultural inputs cannot be overestimated. To produce better, farming has to be done on an increased scale. Improved factors of production such as seeds, fertilizer, machinery and so on would play a huge role in helping farmers achieve maximum growth and productivity.

Farming is the main source of income for most rural communities. It is expected that by 2050 the global population will reach about 9.6 billion, so food production must be increased up to 60% in order to feed every mouth. Empowering farmers remains one of the surest bet to increasing their production capacity.

However, to achieve aforementioned, farmers need capital investment. This can come in the form of loans and credit facilities. For rural farmers accessing capital investments can be likened to passing a camel through a needles eye.

Financial institutions responsible for providing assistance to these farmers are very skeptical of the safety of their investments, this is due to a seemingly in-availability of quality metrics to track loan disbursements and manage risk in the agricultural sector. Financial Institutions prefer knowing to some degree that farmers are capable of paying back loans and financial disbursements.

For this problem to be solved to a reasonable extent, creativity is needed. A lot of parameters are used to track loan disbursements in developed countries. One of such is the SSN (Social Security Number) used in the United states.

Luckily, Nigeria already has a similar system in place with the BVN (Bank Verification Number). BVN is a number that gives a unique identity that can be identified across the Nigerian Banking Industry. With this number, Banks can track a loan applicant’s financial history, run a credit check, award credit ratings e.t.c. The introduction of Blockchain technology together with BVN will further enhance the security and availability of the data for other stake holders to verify their credit history.

A carrot and stick approach can be applied in ensuring the system is maximized to its fullest. Farmers should be enlightened on dangers of having bad ratings and the risk of serving jail term for defaulting on loans. Government can reward farmers with good credit ratings by considering them for special Agric aid programs such as sale of fertilizer at subsidized rate or free access to improved seeds and so on.

Technology is also making it easier to track loan disbursement. By necessitating farmers to keep a record of their farm’s progress and productivity, Financial institutions can easily follow up on a farms progress and productivity. Some AgriTech solutions have developed metrics to help achieve this.

Agri-Tech Solutions such as ProbityFarms has incorporated features such as NDVI farm mapping which shows performing and non performing areas of a farm, a cost and expenses template which shows expected costs of production for a given crop on a given field, gallery for showing pictorial evidences of farm’s state and condition e.t.c

Big data acquired would be further used to streamline the process until bottlenecks are removed and objectives are met. Agriculture is a strong key to achieving economic development and empowering farmers is essential for agricultural development.