FAE Agro: What can be done to reach small farmers?

At the end of March, the validity of the Business Support Fund for the Agrarian Sector (FAE Agro), a state-guaranteed credit program that in almost a year and a half of creation, has only managed to reach 4% of the 270,000 producers that were expected to benefit.

And it is that, according to data from Cofide, through the program financing was provided to only 11,300 agricultural producers. Even at the sectoral level, this number of beneficiaries only represents 0.51% of the total of 2.2 million farmers in the country.

But what are the factors that led to the failure of the program? According to the specialists and representatives of the sector consulted by this newspaper, the main problem was that the FAE Agro was implemented by copying the Reactiva Peru model, when the treatment should have been specialized, since the agricultural sector is a particular area where sales are not daily or monthly, but are handled by quarterly or semi-annual campaigns.

Oswaldo Seminario, a pulse producer in Piura, pointed out that they ask for many requirements, such as property titles, which most small farmers do not have because they work on land inherited for several generations. “Generally they don’t have because they are inheritance, documentation is complicated, for a small farmer it doesn’t work, only the big ones comply,” he pointed out.

For his part, Clímaco Cárdenas, president of Conveagro, pointed out that most financial entities ask to be clients in order to give them credit from FAE Agro. “And that is difficult because in the sector less than 9% have access to credit in the financial system.”

Meanwhile, Jorge Delgado, president of the Association of Microfinance Institutions of Peru (Asomif), pointed out that there is little information on the sector, which prevents microfinance institutions from executing plans for expansion and financial inclusion in the sector.

Delgado added that when it comes to sustaining their income, small farmers have little profit margin.

What can be done to finance small farmers?

Both Clímaco Cárdenas and Oswaldo Seminario emphasized that an immediate response is needed in the field, so access to financing must be opportune, because they are governed according to climatic factors “that they do not expect.”

Although the validity of the FAE Agro expires at the end of this month, there have been no news as to whether the term will be extended again. Since no new auctions have been called for 7 months; that is, the program has stalled.

Seminario pointed out that in the case of the north the harvest will be between May and June, so it would be convenient to receive financing; however, he emphasized that they expect adjustments to be made closer to small producers. “We ask that it be a less cumbersome procedure, and as long as the Ministry of Agrarian Development and Irrigation (Midagri) encourages everyone to have a property title,” he said.

In this regard, Gerardo Freiberg, former general manager of Cofide explained that other justifiable mechanisms will be achieved in which the entity will be able to compensate costs in the face of a delay in payment, additional guarantees such as property titles and other requirements that make inaccessible credits to small farmers.

Along these lines, he commented that a year ago in Cofide a proposal was being prepared for a model different from the FAE-Agro, with seed capital to boost credits in the sector, which contemplated the natural characteristics of financing and transfer of the cost of money. , and whose fund covered the risks.

“Instead of punishing the farmer who for some reason had an inconvenience, he was looking for a way to cushion the effect without harming the financial entity that bears the cost,” he explained.

He added that the rates could be between 10% and 12%, if a mechanism was generated to reduce the risk of delinquency. “Delinquency is not necessarily a loss, delinquency is that they were late in paying, but if you increase the rate in some way you are forcing the loss to occur because you make it difficult for them to pay,” he said.