Early Insights from Financial Diaries of Smallholder Farmers

This focus note shares early insights from the Smallholder Diaries, a research initiative undertaken by CGAP. The initiative seeks to provide a holistic picture of the financial lives of smallholder households not only as agricultural producers, but also as consumers, laborers, and off-farm entrepreneurs. The note provides a first look at how smallholder households weave together agricultural and non-agricultural sources of income and employ a range of financial tools to meet their families’ needs. The insights provided are useful to identify opportunities for financial service providers, policy makers, funders, and other stakeholders to improve and innovate in the financial tools used by smallholder households. Key insights include:

• Smallholder households earn income from a range of sources, including agricultural production, odd jobs from both agricultural and non-agricultural activities, self-employment, and transfer payments;
• Agricultural production offers smallholders’ families an important source of in-kind income;
• Smallholder households use a wide range of formal and informal financial tools such as checking accounts, rotating savings and credit associations, borrowing from friends and family, and credit from agricultural middlemen;
• There is no single, perfect financial tool that has the capacity to meet the needs of each smallholder household. Different financial tools are used to accomplish different objectives.