Dear Sir/Madam,

Guidelines for Value Chain Contract Farmer Financing

With a view to improve small farmers’ access to finance to achieve the broader goal of financial inclusion, SBP, in consultation with stakeholders, has developed Guidelines on Value Chain Contract Farmer Financing.

2. Value Chain Contract Farmer Financing is an internationally recognized best practice in agriculture financing that is being increasingly adopted by banks. It provides a step away from the traditional collateral based lending, which is difficult to obtain particularly in the case of small farmers. The concept is woven around key value chain players including farmers, input suppliers, processors, traders and the financing bank. The Guidelines provide detailed instructions on securing a mutually benefitting tripartite agreement among the participants.

3. Banks are advised to use the guidelines for developing their own products for providing credit to contract farmers according to bank’s credit policy, operational and marketing requirements and compliance with SBP’s regulations.

Please acknowledge receipt.

Encl: As above