Innovare is an alternative investment management company focused on food and agriculture. We facilitate the capital flow to small and medium enterprises (SMEs) involved in all aspects of food and fiber production and processing in emerging and frontier markets.
Strategic Imperative for Expanding Inclusive Agribusiness
The essential requirement for addressing food security and rural development is integrating smallholder farmers into market based agriculture and commercial value chains. In fact, the whole value chain needs to be strengthened.
Over 85% of smallholders are still operating as subsistence farmers; farmers growing crops for their own consumption and selling any excess through informal “farm-gate” markets. Innovare recognizes that Micro Finance Institutions (MFIs) that provide smallholders with credit for quality inputs, as helpful as they are, cannot accomplish the objectives of food security and economic development without investments in local SMEs which buy, process and package farm produce enabling increased production to reach commercial markets.
In order to integrate smallholder production into commercial value chains and eliminate the bottlenecks where smallholders’ harvests are blocked, wasted or otherwise locked out of markets, investments need to be made in post-harvest processing and logistics. The ‘Demand-Pull’ of the processors needs to be strengthened so they are able to buy produce consistently from the smallholders, locally. With revenues generated from more consistent sales of their produce, smallholder farmers are then able to increase production by buying higher-yielding seeds, fertilizer and other crop inputs, purchasing machinery and seeking technical assistance (for example, soil surveys). Increased local processing capacity enables smallholder farmers to have more secure sales agreements, better pricing and improved quality control resulting in a more sustainable and virtuous cycle for rural communities.
However, lack of access to the capital needed by the local SME processors to purchase equipment and expand their capacity and, thus, demand for inputs, is a primary obstacle to improving the lives of smallholders and their communities. Working to solve this problem is Innovare’s top priority.