Credit risk management in financing agriculture

A griculture is an inherently risky economic activity. A large array of uncontrollable elements can affect output production and prices, resulting in highly variable economic returns to farm households. In developing countries, farmers also lack access to both modern instruments of risk management—such as agricultural insurance, futures contracts, or guarantee funds—and ex post emergency government assistance. Such farmers rely on different “traditional” coping strategies and risk-mitigation techniques, but most of these are inefficient. Formal and semiformal arrangements—such as contract farming, joint-liability lending, and value-chain integration—have arisen in recent decades, but they too are limited and can be very context sensitive. One consequence of inadequate overall financial risk management is that farmers in general face constrained access to formal finance. The smaller the net worth of the farm household, the worse the degree of exclusion. Formal lenders avoid financing agriculture for a host of reasons: high cost of service delivery, information asymmetries, lack of branch networks, perceptions of low profitability in agriculture, lack of collateral, high levels of rural poverty, or low levels of farmer education and financial literacy. But, predominantly, bank managers around the world say they will not finance agriculture because of the high degree of uncontrolled production and price risk that confronts the sector. A farmer can be an able and diligent manager with an excellent reputation for repayment, guaranteed access to a market, and high-quality technical assistance, but an unexpected drought or flood can force him or her to involuntarily default. In emerging countries with fair to high levels of agricultural market and trade integration, large commercial farmers may escape this predicament because they have the ability to purchase insurance, engage in price hedging, obtain financing overseas, or liquidate assets quickly in the event of a default. Consequently, formal lenders tend to overemphasize the use of immoveable collateral as the primary buffer against default risk, which means they provide services to a limited segment of the farm population. Small- and medium-sized farmers, who constitute the vast majority of farm operators, often do not have secured-title land, which is the preferred type of collateral; if they do, its value may be insufficient to cover the loan in question. Even if farmers have sufficient titled land to collateralize loans, they may refuse low-interest formal loans and assume high-interest informal ones that have no collateral requirements instead. They may also use savings to finance agricultural production because they are averse to risking their most prized possession—land. The result is limited supply or access to formal agricultural financing, even though much of the population of Sub-Saharan Africa and South Asia is rural and depends on agriculture and livestock rearing for their main livelihood activities.agricultural finance, agriculture finance, Risk management, Rural finance,

Desarrollo rural de autogestión comunitaria: ¿Qué hemos aprendido?

El objetivo de este documento es identificar las prácticas más adecuadas para el diseño e implementación de proyectos de desarrollo de autogestión comunitaria en Centroamérica, con especial énfasis en el caso de Nicaragua. El presente estudio se emprendió con el deseo de mejorar las pautas de actuación y la eficacia del Banco Interamericano de Desarrollo en este tipo de intervenciones. Se decidió concentrar el análisis en Centroamérica y, en particular, Nicaragua, dado el alto porcentaje de población de bajos recursos que habita en sus zonas rurales y la existencia de un elevado número de proyectos de este tipo.Agricultura y seguridad alimentaria, Desarrollo rural, Desarrollo comunitario, Sociedad civil, Gestión de recursos naturales, Autogestión comunitaria, gestión de recursos naturales, Desarrollo Rural de Autogestión Comunitaria, DRAC, Centroamérica

Egg development, hatching rhythm and moult patterns in Paralomos spinosissima (Decapoda: Anomura: Paguroidea: Lithodidae) from South Georgia waters (Southern Ocean)

Larval release, hatching rhythms and moult patterns were examined in a captive population of the subantarctic lithodid, Paralomis spinosissima from the South Georgia and Shag Rocks region. Larvae hatched throughout the year with the majority of females starting to release larvae at the end of the austral summer and beginning of autumn. Larval release continued over a period of up to 9 weeks with high variability in the numbers that hatched each day. A similar seasonal pattern to hatching was evident in the moulting of females. Intermoult period for two adult females (CL = 63 and 85 mm) ranged from 894 to 1,120 days while an intermoult period for males was estimated to be in excess of 832 days. The results are consistent with other species of Paralomis and are discussed in relation to physiological and environmental adaptations to the cold-water conditions south of the Antarctic Convergence

Resistance Exercise Reverses Aging in Human Skeletal Muscle

Human aging is associated with skeletal muscle atrophy and functional impairment (sarcopenia). Multiple lines of evidence suggest that mitochondrial dysfunction is a major contributor to sarcopenia. We evaluated whether healthy aging was associated with a transcriptional profile reflecting mitochondrial impairment and whether resistance exercise could reverse this signature to that approximating a younger physiological age. Skeletal muscle biopsies from healthy older (N = 25) and younger (N = 26) adult men and women were compared using gene expression profiling, and a subset of these were related to measurements of muscle strength. 14 of the older adults had muscle samples taken before and after a six-month resistance exercise-training program. Before exercise training, older adults were 59% weaker than younger, but after six months of training in older adults, strength improved significantly (P<0.001) such that they were only 38% lower than young adults. As a consequence of age, we found 596 genes differentially expressed using a false discovery rate cut-off of 5%. Prior to the exercise training, the transcriptome profile showed a dramatic enrichment of genes associated with mitochondrial function with age. However, following exercise training the transcriptional signature of aging was markedly reversed back to that of younger levels for most genes that were affected by both age and exercise. We conclude that healthy older adults show evidence of mitochondrial impairment and muscle weakness, but that this can be partially reversed at the phenotypic level, and substantially reversed at the transcriptome level, following six months of resistance exercise training

Genetic Networks of Liver Metabolism Revealed by Integration of Metabolic and Transcriptional Profiling

Although numerous quantitative trait loci (QTL) influencing disease-related phenotypes have been detected through gene mapping and positional cloning, identification of the individual gene(s) and molecular pathways leading to those phenotypes is often elusive. One way to improve understanding of genetic architecture is to classify phenotypes in greater depth by including transcriptional and metabolic profiling. In the current study, we have generated and analyzed mRNA expression and metabolic profiles in liver samples obtained in an F2 intercross between the diabetes-resistant C57BL/6 leptinob/ob and the diabetes-susceptible BTBR leptinob/ob mouse strains. This cross, which segregates for genotype and physiological traits, was previously used to identify several diabetes-related QTL. Our current investigation includes microarray analysis of over 40,000 probe sets, plus quantitative mass spectrometry-based measurements of sixty-seven intermediary metabolites in three different classes (amino acids, organic acids, and acyl-carnitines). We show that liver metabolites map to distinct genetic regions, thereby indicating that tissue metabolites are heritable. We also demonstrate that genomic analysis can be integrated with liver mRNA expression and metabolite profiling data to construct causal networks for control of specific metabolic processes in liver. As a proof of principle of the practical significance of this integrative approach, we illustrate the construction of a specific causal network that links gene expression and metabolic changes in the context of glutamate metabolism, and demonstrate its validity by showing that genes in the network respond to changes in glutamine and glutamate availability. Thus, the methods described here have the potential to reveal regulatory networks that contribute to chronic, complex, and highly prevalent diseases and conditions such as obesity and diabetes

Lessons Learned in Rural Finance: The Experience of the Inter-American Development Bank

This paper reviews the Bank's lending experience in rural finance and extracts the lessons learned from that experience. It is based on a review of project documents, evaluation reports, and interviews. A sample of 27 projects were studied in detail. Although the review of IDB projects is far from exhaustive, it nevertheless serves to identify some important lessons for the design of future interventions. This paper will help policymakers, practitioners, academics, and consultants to better understand the history and types of interventions that the IDB has made in the past. The hope is that new operations will benefit from the lessons of the past and build on existing strengths. As we move into an era of increased market integration and globalization, the importance of well-functioning financial markets cannot be overemphasized. This paper shows how rural financing in Latin America and the Caribbean might be improved in the coming years

Agricultural Insurance Revisited: New Developments and Perspectives in Latin America and the Caribbean

The purpose of this paper is to provide Bank staff interested in agricultural yield insurance market development, public officials responsible for financial market policy formulation and supervision, and insurance industry practitioners in Latin America and the Caribbean with a basic primer on the topic, an overview of previous experiences, and a set of guidelines and recommendations on how to develop viable and sustainable agricultural yield insurance markets. The paper relies heavily on the data and analysis stemming from a regional technical cooperation project financed by the Spanish Trust Fund, which conducted reviews and pre-feasibility studies in three countries--the Dominican Republic, Peru, and Uruguay--between 2003-2004. That work has been supplemented by an extensive economic literature review, fieldwork in Honduras, and numerous interviews and exchanges of opinions with leading authorities on the topic and key regional stakeholders

Agricultural Credit Card Innovation: The Case of Financiera Trisan

The purpose of this paper is to analyze a program that extends credit cards to agricultural input suppliers and rural producers in Costa Rica and to determine whether this program is financially viable and potentially replicable in other rural areas of Latin America. A credit card program is very innovative and unusual for a rural setting. Normally, credit cards have been promoted in urban areas with business firms and salaried employees who have steady cash flows. Credit cards in rural areas are not as common because potential clients, especially agricultural producers, have more seasonal and uncertain monthly cash flows. This paper seeks specifically (1) to recount the genesis of an agricultural credit card program; (2) to describe the product, the typical client, and service delivery methodology; (3) to analyze the financial performance of this product; and (4) to conclude with outstanding challenges facing the expansion and replication of the product

Lessons in Microfinance Downscaling: The Case of Banco de la Empresa, S.A.

Few commercial banks have engaged in profitable microfinance lending despite repeated attempts by donor agencies to entice their entry. The case of Banco de la Empresa, a Latin American private bank, illustrates how penetration of the microenterprise market segment could evolve. This paper reviews the bank's experience with microfinance, what its motivations were for starting such a program, what adjustments it made in operating procedures and what risks the program faced. The study is based on a real experience of the Inter-American Development Bank but in order to preserve the confidentiality of the institution studied, names, dates and other non-critical data were changed

Lecciones en la penetración de la banca comercial en microfinanzas: El caso de Banco de la Empresa, S.A.

Pocos bancos comerciales se han dedicado en forma lucrativa al campo de las micro finanzas, pese a repetidos intentos por parte de entidades donantes de entusiasmarlos para ingresar a este segmento. El caso de Banco de la Empresa, banco privado latinoamericano cuya identidad ha sido disfrazada en esta publicación, ilustra la manera en que podría evolucionar la penetración del segmento del mercado de la microempresa. En este documento se examina la experiencia del banco en el campo de las micro finanzas, cuáles fueron sus motivaciones para iniciar un programa de esta índole, qué ajustes realizó en los procedimientos operativos y qué riesgos enfrentó el programa. El estudio se basa en una experiencia real del Banco Interamericano de Desarrollo, pero para preservar la confidencialidad de la institución, se han cambiado los nombres, fechas y otros datos no críticos