MICROCAPITAL BRIEF: IFAD Lends Soafiary $3.6m to Boost Direct Sourcing from Smallholder Farmers in Madagascar

The UN’s International Fund for Agricultural Development (IFAD) recently extended a loan of EUR 3.5 million (USD 3.6 million) to Soafiary, an agribusiness in Madagascar, to support the firm’s effort to “grow sustainably and reorient [its] business model, by increasing from 30 to 70 percent its direct sourcing from small-scale farmers,” potentially increasing grower incomes by 30 percent. Soafiary aims to broaden its supplier base to “5,000 farmers, expecting to purchase an estimated 15,000 tons of produce by 2025.”

Rabenoro Malala, who co-founded the firm with her husband, stated that “IFAD’s support allows us to go to scale, while providing great support to small-scale farmers and contributing to building sustainable and resilient food markets.…” Soafiary provides farmers with seeds, fertilizer and training under written contracts that specify “the terms and conditions for the production and marketing of agricultural products.” One of these farmers, Razafarinirina Lanto, argued, “Contract farming is beneficial for us because it provides a stable market with fair prices but without middlemen.”

Founded in 2006, Soafiary specializes in processing cereal products for sale domestically and abroad. The firm has 200 employees, about 160 of whom are women.

Established in 1977, IFAD is governed by its 176 member nations with the goal of eradicating rural poverty in low- and middle-income countries. With a focus on agriculture and food supplies, the organization provides grants and loans to research organizations, governments, private firms and civil society organizations. As of 2020, IFAD had USD 9.5 billion in assets.

By Hasnat Aslam, Research Associate

Sources and Additional Resources

IFAD press release
https://www.ifad.org/en/web/latest/-/ifad-%E2%82%AC3.5-million-loan-to-promote-women-led-agribusiness-in-madagascar-and-support-small-scale-farmers

Soafiary homepage
https://www.soafiary.mg

IFAD homepage
https://www.ifad.org

Previous MicroCapital story on IFAD
https://www.microcapital.org/microcapital-brief-ifad-lends-indias-uttarakhand-state-105m-for-rural-enterprise-acceleration-project-reap-to-address-incomes-climate-resilience-out-migration/

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