The Agribusiness Finance Programme (AFP) providing affordable finance for tractors, threshers, combine harvesters and other equipment to thousands of farmers around the country was officially launched in Yangon on December 15.
The Livelihoods and Food Security Trust Fund (LIFT) has contributed $11 million to the financing scheme for farm machinery operated by Yoma Bank. The AFP is improving farm productivity by providing financing for farm machinery on terms that more farmers and rural entrepreneurs can afford.
Labour-intensive farming methods result in low labour productivity and yield losses. Labour shortages and rising wages in rural farming communities mean farmers need to mechanise to be productive and help transform the rural economy. However due to its cost, farm machinery has been out of reach for many farmers.
Since the AFP began in January, 2016, 2,687 lease contracts for farm machinery valued at more than $50 million, have been taken up by farmers and rural entrepreneurs, many of whom would otherwise not have been able to afford to introduce machines such as tractors and threshers to farms.
Yangon Region Chief Minister Phyo Min Thein made the opening remarks at the event stressing how important it was for farming businesses to access finance.
“Accessing finance has been difficult for farmers and they need this support and investment for their businesses,” Phyo Min Thein says.
In his keynote address Central Bank of Myanmar Director General Win Thaw thanked LIFT and Yoma for supporting farmers with affordable finance, which led to improved productivity and incomes
U.S Ambassador Scot Marciel spoke on behalf of LIFT’S Donor Consortium. He said the AFP was a good example of how donors, government and the private sector could form partnerships that effectively delivered what communities needed to increase productivity and prosperity.
“Through this partnership we have come up with a mechanism that is already working. This programme has already been able to mobilise $50 million, and it’s not just farm equipment. It is increases in what farmers can grow, increases in incomes and increases in productivity,” Ambassador Marciel said.
LIFT Fund Director Andrew Kirkwood said the partnership with Yoma helped develop a more robust, inclusive rural financial market and contribute to the economic development of the rural sector by improving farm productivity and stimulating the growth in off-farm businesses. “This financing drives down costs for smallholder farms, increases their profits and stimulates the rural economy,” Kirkwood said. “Farmers who purchase machinery not only improve labour productivity and yields on their own land, they also then set up businesses providing agricultural services like tillage, threshing, harvesting, transportation and processing. This speeds up the structural transformation essential for the modernisation of Myanmar’s agriculture sector.”
The AFP allows for hire purchase agreement terms to be reduced from a 30% deposit to a deposit as low as 10% and reduces repayment periods from one year to up to three years. Special Adviser to Chairman and Yoma Bank CEO Hal Bosher said: “Yoma Bank is very pleased to support Myanmar’s agriculture sector. Ultimately, we hope to mainstream our Agribusiness Finance Programme to provide further support to the community”.
A video featuring farmers in the Ayeyarwady Delta who have purchased farm machinery through the AFP was shown at the launch event.
