Agricultural small- and medium-sized enterprises (agri-SMEs) are responsible for much of the sale of inputs, food production, collection and distribution, and processing and retail of food products. Hence, they are critical to the development of more inclusive and sustainable food systems. However, because of the absence of a widely shared definition and comprehensive taxonomy, the role of the agri-SMEs in the food systems has not yet been fully understood.
Therefore, the Smallholder and Agri-SME Finance and Investment Network (SAFIN) commissioned ISF Advisors to develop a framework for comprehensively considering agri-SMEs. ISF Advisors is an advisory group committed to transforming rural economies by delivering partnerships and investment structures that promote financial inclusion for rural enterprises and smallholder farmers.
The goal of the initiative was to create a common language that:
• Fosters a shared understanding among actors concerned with agri-SMEs about the shared features of different types of enterprises that fall under this label.
• Proposes a new taxonomy and language to establish agri-SME segments—drawing on existing case studies and literature to illustrate how these might apply in different markets.
• Provides a solid grounding for assessing different financial needs of agri-SMEs, which can inform SAFIN's work and that of other relevant actors in the agri-SME finance space.
Consequently, ISF Advisors conducted a literature review of more than 80 publications and held consultations with key experts, including SAFIN members. The research brought out the importance of agri-SMEs in the food system. Furthermore, it helped to develop a more comprehensive taxonomy based on key profiling dimensions. The research also shows the applicability of the taxonomy across value chains and various food systems priority areas.
Finally, this research presents a growth profile classification to link the agri-SME taxonomy to investability criteria and needs, allowing for a more nuanced understanding of how to support specific segments of agri-SMEs.
The complete learning brief can be downloaded from here:
Click here to read the original article published by The Rural and Agricultural Finance Learning Lab.
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