Financing challenges for commercial farmers and SMEs

Ministry of Agricuture and Waterways, and Agriculture permanent secretary, Ministry of Agriculture Economic Planning officer in charge, Suruj Prasad chats with Dr Andrew Tukana, who has been appointed Permanent Secretary Agriculture and Waterways during the Agriculture discussion forum at the Grand Pacific Hotel in Suva on Fridy, Sep 22, 2023. Picture: JONACANI LALAKOBAU

The Reserve Bank of Fiji sets a target of just 4 per cent of total loans to go to the agriculture sector, says Agriculture permanent secretary Andrew Tukana.

Officiating at the agriculture discussion forum yesterday Mr Tukana said neither commercial banks nor the emerging microfinance industry was willing or able to sufficiently meet the financial needs along agriculture value chains.

“This leaves commercial farmers and agricultural small and medium enterprises (SMEs) underserved,” he said.

“Yet even with this low target, in practice the sector receives approximately only 2 per cent of the total value of commercial loans.

“Given the public goods benefits of an expanding agriculture sector, there is a case for government intervention to increase the availability of finance for farming investments and cash flows.

“However, finding the right incentives to increase the provision of sustainable financial services for agriculture is particularly challenging.

“The complicated environmental, structural and production features of agriculture limit the demand for, and supply of, credit and insurance, despite efforts by the RBF, the Fiji finance industry and development partners to find solutions.

“Nevertheless, given the systemic importance of agriculture to the achievement of national economic and social objectives, we need to keep working to identify more innovative and market-based approaches that can reach many more clients in the agriculture sector.

“I know that the RBF, Fiji Development Bank and commercial banks are all working towards this.

“My team and I look forward to hearing from you all about the latest efforts being made and the status that has been reached in terms of access to finance for the agriculture sector development.”

More Stories