About 80% of Mozambique's population depends on agriculture as their main source of income. However, agriculture (including livestock, forestry and fisheries) is the sector that contributes less to the country's GDP, indicating that the productivity of the agricultural sector is very low compared to other sectors of the economy.
The gap between demand and supply of financing for family farmers in Mozambique is very large and affects the majority of farmers in the country. With about 3.8 million family farmers producing approximately 95% of national agricultural production and cultivating an average of 1.5 hectares/family, family farming in Mozambique is responsible for ensuring good part of the food and nutritional security of the country, and is responsible for employing about 86% of labour force at national level.
In many cases, farmers are unable to buy inputs at the right time and in the right amounts. The lack of seasonal credit lines often forces farmers to sell to middlemen at a low price. Moreover, farmers who are already highly exposed to natural disasters go into debt with few prospects to break free of this burden.
The Government of Mozambique and FAO agree that “smart subsidies" programmes through the use of vouchers, can be a powerful tool to facilitate access to seeds, fertilizers and other inputs needed for production.
Rural extension, when practiced effectively, can help solve many of the constraints related to access to finance and therefore support the expansion of the use of agricultural inputs by family farmers.
A combination of financial and extension services can help financial institutions overcome limitations in designing and distributing financial products suitable for family farmers. For example, the agricultural extension service could assist farmers in obtaining and using credits through value chain development programs; this would result in an institutional strengthening of the public sector and the creation of a favourable environment for the entry of financial institutions.
When combined with financial instruments (e.g. vouchers, credit lines, crop insurance, etc.) agricultural extension services can play an important role in mitigating risk and increasing the confidence of farmers in financial institutions.
It also requires a better coordination between rural extension services (public and private) and development partners along the supply and demand process in order to help to share perspectives, disclose financial instruments and provide technical assistance that simultaneously addresses the various constraints of the value chains.
In short, there is a great opportunity to boost the development of local economies through specific policies (e.g. increased productivity, promotion of mechanization for small-scale farmers, access to credit and markets, agribusiness, etc.) in support to family farming.
We know however that there are a number of barriers that must be removed in order to use the most of the farmer’s productive potential. In Mozambique, the percentage of farmers with access to credit has declined steadily over the past 10 years and inefficiencies in the production and distribution chain reduced the competitiveness of domestic products. The limited development of small and medium-scale agro-industry further reduces market opportunities for family farmers. With no market prospects and no support for hedging, it is difficult for farmers, especially small farmers, to have access to the capital needed to invest and expand their farms.
Improving Access to Agricultural Inputs for Family Farmers in Mozambique
About 80% of Mozambique's population depends on agriculture as their main source of income. However, agriculture (including livestock, forestry and fisheries) is the sector that contributes less to the country's GDP, indicating that the productivity of the agricultural sector is very low compared to other sectors of the economy.
The gap between demand and supply of financing for family farmers in Mozambique is very large and affects the majority of farmers in the country. With about 3.8 million family farmers producing approximately 95% of national agricultural production and cultivating an average of 1.5 hectares/family, family farming in Mozambique is responsible for ensuring good part of the food and nutritional security of the country, and is responsible for employing about 86% of labour force at national level.
In many cases, farmers are unable to buy inputs at the right time and in the right amounts. The lack of seasonal credit lines often forces farmers to sell to middlemen at a low price. Moreover, farmers who are already highly exposed to natural disasters go into debt with few prospects to break free of this burden.
The Government of Mozambique and FAO agree that “smart subsidies" programmes through the use of vouchers, can be a powerful tool to facilitate access to seeds, fertilizers and other inputs needed for production.
Rural extension, when practiced effectively, can help solve many of the constraints related to access to finance and therefore support the expansion of the use of agricultural inputs by family farmers.
A combination of financial and extension services can help financial institutions overcome limitations in designing and distributing financial products suitable for family farmers. For example, the agricultural extension service could assist farmers in obtaining and using credits through value chain development programs; this would result in an institutional strengthening of the public sector and the creation of a favourable environment for the entry of financial institutions.
When combined with financial instruments (e.g. vouchers, credit lines, crop insurance, etc.) agricultural extension services can play an important role in mitigating risk and increasing the confidence of farmers in financial institutions.
It also requires a better coordination between rural extension services (public and private) and development partners along the supply and demand process in order to help to share perspectives, disclose financial instruments and provide technical assistance that simultaneously addresses the various constraints of the value chains.
In short, there is a great opportunity to boost the development of local economies through specific policies (e.g. increased productivity, promotion of mechanization for small-scale farmers, access to credit and markets, agribusiness, etc.) in support to family farming.
We know however that there are a number of barriers that must be removed in order to use the most of the farmer’s productive potential. In Mozambique, the percentage of farmers with access to credit has declined steadily over the past 10 years and inefficiencies in the production and distribution chain reduced the competitiveness of domestic products. The limited development of small and medium-scale agro-industry further reduces market opportunities for family farmers. With no market prospects and no support for hedging, it is difficult for farmers, especially small farmers, to have access to the capital needed to invest and expand their farms.
