Small Farmers in Mozambique Access Credit and Markets by Forming Associations with Assistance from CLUSA

This document looks at a case study wherein the Cooperative League of the USA (CLUSA), through its Rural Group Enterprise Development Program, organized isolated and poor farmers in the Mozambique into crop marketing associations utilizing credit for their agricultural operations.

The case study dwells upon the challenges faced by CLUSA in providing agricultural credit to the rural poor in Mozambique. The approach adopted by CLUSA to overcome these challenges included:

• Organizing farmers into managed associations;
• Assisting farmer associations to:
  • Connect with new buyers;
  • Access short-term agribusiness credit;
  • Forge credit relationships with a local financial institution.

The author concludes by highlighting the following key lessons learned from this experience:

• Farmer associations can make small farmers more attractive borrowers for financial institutions;
• The development of strong, self-managed producer organizations requires a substantial investment of money, time, and expertise;
• The investment in creating farmer association leads to long-term benefits, such as access to credit and markets for small farmers, enhanced skill levels, and improved incomes;
• An effective intermediary, such as CLUSA, could compensate for the lack of knowledge of the financial institutions about agribusiness;
• There exists a need for rigorous and ongoing training in credit management and monitoring to ensure effective management of group loans by farmer associations.