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Increasing agricultural productivity and profitability

Poor rural people rarely control the conditions that determine their livelihoods. Geographically dispersed in remote rural areas, small producers lack the basic infrastructure — banks, roads, power supplies and Internet connectivity — needed to run a business. 

Most cannot produce a large enough volume of products to interest buyers, and, when they do, they are often hit with high transaction costs, making it difficult to earn a living and compete in markets.

Smallholder farmers often lack opportunities to negotiate better terms of trade for their agricultural products and to hold governmental and non-governmental organizations accountable for their role in rural development. Their powerlessness is closely linked to a lack of services, as well as the limited provision, and quality, of public goods.

However, effective rural institutions and organizations can help poor rural people overcome these barriers by:

  • increasing their productivity and profitability by giving them direct access to critically needed resources, services and markets;
  • reducing the price of inputs for farmers through larger collective purchases; and 
  • acting as a forum for exchanging knowledge and experience, as well as jointly-owned assets, such as equipment and machinery.

Organized groups and communities are more likely to have their voices heard and their demands met. When farmer organizations and cooperatives join forces at higher levels, they can influence policy dialogue and decisions that affect their ability to succeed. 

Strong rural institutions also promote social cohesion and stability, decreasing the adverse consequences of political and economic disenfranchisement.

Institutions as drivers of rural change

IFAD is dedicated to securing rural people’s access to productive resources and strengthening rural institutions and organizations. Functioning, inclusive institutions are key to rural transformation and to ensuring that our poverty reduction efforts are sustainable.

Organizations such as market associations and cooperatives help rural women and men negotiate better prices for their produce and access markets. These organizations also facilitate dialogue among smallholder farmers, governments, donors and the private sector. 

When rural voices are heard, it is more likely that pro-poor policies will be comprehensive, complementary, and well-placed to meet the diverse needs and realities of small producers in rural communities.

Training, financing and practical support

IFAD-supported projects provide training and financing to support a diverse array of organisations, including water users’ groups, agricultural producer and trade associations, and women and youth associations, among others.

Our activities strengthen rural institutions and develop their organizational capacity — at both the local and national level — so that rural people can overcome social, political and economic barriers, and seize wider opportunities.

For example, we partner with rural financial institutions, such as banks, micro-finance institutions and credit unions, to make it easier for marginalized groups such as indigenous peoples, youth, and women to access loans and credit for their farm and off-farm activities, including for longer-term investments. 

IFAD also provides resources to support communities with planning processes, with a particular focus on women. Community-driven development approaches rely on local committees to prioritize investment needs for rural development. It also helps ensure IFAD-supported activities reach as many people as possible.

We have also helped to produce a Toolkit, a Field Practitioner’s Guide, and a Good Practices Guide to support rural institutions and organizations increasing food security around the world.


Spotlight

Connecting remote rural communities with financial services

6 January 2017 - Remittance flows to and within Africa amounted to more than US$65 billion in 2016 and are expected to grow to US$80 billion by 2020. These flows represent a lifeline for more than 200 million people.

Projects

Project

Tonga

Tonga Rural Innovation Project
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Project

India

Integrated Livelihoods Support Project
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Project

Kenya

Programme for Rural Outreach of Financial Innovations and Technologies (PROFIT)
Read More

Related news

Migrants send home 51 per cent more money than a decade ago lifting millions out of poverty, says new report

červen 2017 - NEWS
The amount of money migrants send to their families in developing countries has risen by 51 per cent over the past decade - far greater than the 28 per cent increase in migration from these countries, according to a new report released by the International Fund for Agricultural Development (IFAD) today.

Related publications

Lessons learned - Formalising community-based microfinance institutions

září 2016
Despite the progress made in the microfinance sector, its expansion has been hindered in large measure by institutional and financial impediments. This situation has led some institutions to embark on an institutionalization, institutional transformation, or regrouping process to overcome the obstacles in their path.
LANGUAGES: English, French

How to do note - Formalising community-based microfinance institutions

září 2016
The purpose of this publication is to provide IFAD CPMs, MFIs, and all technical and financial partners with a methodological tool that will facilitate efficient implementation of the institutional transformation or regrouping processes of microfinance institutions, especially those that serve rural populations – processes that a priori are highly complex. 
LANGUAGES: English, French

Toolkit: Formalising community-based microfinance institutions

září 2016
Microfinance institutions (MFI) take various forms these days, among them: projects, credit union or village banking networks, savings and credit cooperatives and mutual institutions, associations, capital companies, etc.
LANGUAGES: English, French

Contact us

For questions please contact Tom Mwangi Anyonge,

Lead Technical Specialist - Institutions and Organisations,

+39 0654592519 t.anyonge@ifad.org