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Agri-SME Finance: Navigating Volatility in the Wake of the War in Ukraine

This learning brief summarizes the challenges, opportunities, and responses of agri-SMEs, financiers and development partners to the food crisis caused by the war in Ukraine.

Highlights
→ Small and medium-sized agricultural enterprises (agriSMEs) are facing unprecedented pressure due to rising prices for food, fertilizer and fuel, with many scaling back their operations, raising prices for consumers or cutting costs to maintain cash flow and margins.
→ Some agri-preneurs have exploited opportunities to scale up the production and consumption of local crops and to decrease sector dependency on fossil-fuel-based energy and fertilizer.
→ Despite excess liquidity, financial service providers (FSPs) perceive growing risks and are backing away from lending to agri-SMEs and small-scale farmers.
→ Development partners have proven instruments to de-risk private lending to the hidden middle, and are repurposing billions of dollars in programming to shore up agri-SME finance.
→ Urgent collaborative action on agri-SME finance by development partners, FSPs, and SMEs in food insecure countries is needed to mitigate the crisis and support long-term food system transformation.