Growing Green Finance: Harjan Kuiper, Rabobank

New services must win over farmers.

Share on linkedin
Share on facebook
Share on twitter

New approaches and technologies will only gain traction once they have buy-in from farmers on the ground, emphasizes Harjan Kuiper, Singapore CEO of Rabobank, an agri-business specialist.  

“If you put yourself in the shoes of smallholder farmers, you depend on the crop you’re going to raise or produce,” he says. 

“If it fails, you don’t have any income, so you’re not very likely to take any risks.”

Relevant Sustainable Development Goals

Growing Green Finance

Smallholder farmers are especially vulnerable to the impacts of climate change, yet solutions are failing to reach the last mile.

Tech For Impact has teamed up with Grow Asia to explore different ways to unlock the economic power of Asia’s smallholder farmers, while helping them adopt climate-smart practices.

In our Growing Green Finance video series, six industry leaders discuss the future of inclusive finance, and the partnerships that can maximize the potential of rural enterprises in Asia.

Interview transcript

Teymoor Nabili  

As you know, our agenda here is to consider the broad question of how can we unlock the economic potential and power of smallholder farmers in Asia? And what are the obstacles to doing that? So let’s begin there, particularly from the perspective of finance, because so much of the problems arise from the issue of how do we get the money into the hands of the farmers to let them grow and let them develop? Now you’ve been in this business for a while, tell me how you see the landscape and why you think it is that we’re still asking this question after so long.

Harjan Kuiper 

As a starting point we need to think about the scope of how many smallholders are we talking about here in Southeast Asia. I think there are roughly 88 million or more in the region, and 70% of that 88 million need access to finance. Some of them obviously have means to do. However, a large part doesn’t have the kind of access ability to finance on a daily basis. So how are you going to address that? I think from where I’m sitting from a financial point of view is get access and creating scale. You’re not going to reach out to individual smallholder farmers themselves because that’s simply almost impossible to go out in the woods and try to find the smallholder farmers.

Teymoor Nabili  

When you say impossible, you mean impossible for an organization of your size? Because that last mile, that contact is absolutely essential.

Harjan Kuiper 

It totally is essential, but you need to find ways to kind of get to that scalability aspect. So by doing that, there are ways to do that, when you think about smallholder aggregators. And what I mean by that is cooperatives, for example, smallholder cooperative memberships of almost 50 to 150 smaller farms, that’s a great starting point to get to that last mile aspect. Retail input providers, for example, is another element to allow you access to smallholder farmers. So by pooling or accessing that aggregator, the smallholder aggregator, that’s a valuable starting point to get you access to the smallholder.

Teymoor Nabili  

So where is the break in that chain? I mean, all those things exist. There are the financiers, there are the intermediaries, and of course there are the consumers. Why is that passage not functioning properly?

Harjan Kuiper 

The challenges in the chain is a little bit, how you assess what the credit rating is of a smallholder. How are you going to provide ultimately that kind of financing to the smallholder. A way of doing it,  and that’s what we’re exploring right now, is by providing credit vouchers, for example, instead of just providing direct cash to the smallholder farmer. So you need to find this kind of retail input provider, for example, or the cooperative as a middleman, that will then issue those kind of credit vouchers to the smallholder who then in return can buy the inputs  they require to raise crops.

Teymoor Nabili  

That sounds like an interesting approach. Is that a new approach? Tell me about the evolution of how you’ve addressed this problem over the years.

Harjan Kuiper 

I think it’s kind of a new approach. Think about what technology allows you to do now, with an e-wallet for example, that didn’t exist 20 years ago, or even 10 years ago now. So we’re having this kind of e-wallet approach whereby you provide a smallholder with the kind of accessibility through this intermediary, that’s maybe an area whereby there’s a way to get access to financing, through banks but also other interested parties, some are farm input providers, for example. They’re interested in providing the seeds and fertilizer to the smallholder. But there’s other services that could also potentially use that kind of value chain, through kind of this intermediary.

Teymoor Nabili  

You talked about the size of that industry, that space. So presumably, for an organization like yours, that also equates to an opportunity.

Harjan Kuiper 

I think opportunity lies more in the partnerships you can build. I mean, we as a bank, we need to find partnerships with other financial institutions on the ground. Why I’m saying it, because from a regulatory perspective, retail lending is a highly regulated activity. So you’d rather work with somebody on the ground, in their own regulatory environment, that has accessibility, and they have a regulatory framework already in place, rather than for us to duplicate that. So creating that kind of partnership model and collaboration, with financial institutions on the ground in the country is an absolute must. Besides that, what I said before is in the sense of what are the other services that you can provide to the value chain. Think about crop insurance, for example, or educational services. There are definitely multiple areas you can think about, how you can channel services to the smallholder farmer.

Teymoor Nabili  

A lot of the problem is that all those multiple actors in this environment tend to operate independently, in their own little sphere. And they talk about collaboration, they talk about partnership, but do you think that that degree of engagement, that degree of interaction is sufficient?

Harjan Kuiper 

Perhaps take one step back, put yourself in the shoes of a smallholder farmer. There’s a lot of interest in you. There’s a lot of activities that have been thrown at you – NGOs, banks, startups, they all want a piece of the cake from what you do. So they’re a little bit cautious in their approach, because they haven’t seen the benefit of engaging with any of those. So if you put yourself in the shoes of a smallholder farmer, you’re very much dependent on the crop you’re going to raise or produce. If it fails, you don’t have any income. So you’re not very likely to take any risks. So there’s risk averseness from a smallholder farmer. To convince them that this is the way forward, you need to partner with such-and-such and do this and that, that requires a lot of buy-in and trust from a smallholder farmer to do that. And that’s what I’m saying, it’s very important to work with trustworthy stakeholders in a process whether it be retail input providers, but also, for example, the cooperatives or other aggregators that have that accessibility to smallholder farmers.

Teymoor Nabili  

What you’ve been saying is that really one of the key elements here is that smallholder farmers, and perhaps people at that end of the process chain, need to be a little bit more knowledgeable and more on board with the conventions and the processes of business, in the context that you’re thinking about it. Which is the more important element in this, is it the farmer that’s resisting taking the money? Or is it the lender that is resisting giving the money?

Harjan Kuiper 

I think it’s a bit of both. Ultimately, you need to educate and get the farmer on board. And they need to be convinced about the change that you deliver will ultimately result in their livelihood and wellbeing improved at least; and also the accessibility to credit, affordability, how you can achieve that. From a financier’s point of view, what is it that we can deliver and how we can deliver that last mile approach, the creditworthiness of the smallholder farmer. That’s ultimately what I said earlier about credit vouchers, for example. It’s a different way to make the assessments, because you don’t provide financing themselves, because it could potentially be misused in terms of how they come to deploy that cash. So there is the credit voucher aspect, the e-wallet aspect, which makes it easier from a financier point of view to get the buy-in of the smallholder farmer.

Teymoor Nabili  

An e-wallet is a great idea, but how do you get an e-wallet into the hands of a farmer with a feature phone? How do you get even the understanding of an e-wallet into the minds of smallholder farmers?

Harjan Kuiper 

I think ultimately, it is pretty straightforward. You can draw it on a board, for example. There’s an e-wallet that belongs to you. The e-wallet is being governed or owned by or looked after by the small aggregator. You have credits as a smallholder farmer so you can buy farm inputs from the cooperative, or from the retailer. And then you grow your crop and you ultimately sell it and you pay off the credit back to the cooperative and the additional cash you can do whatever you want to do with it. So it’s not that difficult, in essence, what we’re looking to do here. It’s more making sure that there’s the connectivity between , on the one hand the aggregator and the other hand, the smallholder farmer community. Because aggregators have 150 to 250 or thereabouts, clients or members. So they’re a relatively small or large covering. So how do we make sure that the aggregator is pooling all that financing, if you will, from an e-wallet perspective, and that the smallholder farmer sees the benefits? Okay, if I deal with this aggregator I got better crop, better value, better livelihood. So I will continue to build on that relationship with the aggregator.

Teymoor Nabili  

I mean, Grow Asia has its own particular approach to creating value chain partnerships, and there are multiple other intermediary sessions out there. So whose responsibility is it ultimately, to be able to pull this stuff together and break down those silo barriers?

Harjan Kuiper 

What we are set out to do is also finding farm input providers and financiers and local parties in terms of providing that local access to smallholders. As I said before, from a regulatory point of view, that’s a real challenge from where we are from the bank’s perspective. So you need a team of local players that has that local insight and accessibility and also the regulatory approvals in place to be able to provide that retail funding, if you will.

Teymoor Nabili  

But the real challenge that we have is making it happen is that last mile activity.

Harjan Kuiper 

I think the digital tools, development of digital tools, and also testing it out with proof of concept, minimum viable product, to go into the fields and to understand really, truly what the smallholder farmer requires. So ultimately, it is absolutely crucial to have that understanding, first and foremost.

Teymoor Nabili    

When we talk about unlocking this economic power, we’re also to a large extent, increasingly these days, talking about responsible behavior, responsible financing, responsible crop and agricultural practice. Rabobank has been actually one of the the leading banks in thinking about sustainability as part of their business model. Tell me how these two things combine. How are these playing together now?

Harjan Kuiper 

Yeah, banking for food. Rabobank in their DNA, we are a food and ag bank. We have done with already for more than 100 years, well, more than 120 years; we are a cooperative. So it is very much in our nature to think about sustainable food and food transition, that is clearly also now what we’re looking to see what happens in the future with nine billion people that are obviously on the planet in a few years from now, how we can make sure that everybody has access to sustainable food. That food transition is a crucial part also of knowing what’s happening with climate change, how we can make sure that there is definitely a sustainable program there that allows us to grow crops in a more sustainable way. And we can only do that with companies that are obviously equally minded in terms of achieving that same goal.

Teymoor Nabili  

So you’re you’re lending is conditional upon various elements of this agenda?

Harjan Kuiper 

Absolutely. Yeah, definitely. I mean, looking into our portfolio missions, and we signed up for the Net-Zero Banking Alliance, we are certainly looking to see how we can further optimize our portfolio to reduce emissions over time.

Teymoor Nabili  

What can governments do? Or even regional organizations like ASEAN, which is active in this space? What can they do to perhaps make this space more comfortable for you, perhaps motivate you to do more?

Harjan Kuiper 

I think creating more stimulus, and allowing that penetration to smallholder farmers and smallholder aggregators. What is there, and what what can we do together? And they do a lot already, don’t get me wrong, it’s not that they have been blocking our way at all. No, it’s more making sure that the alignment is there. And the access to smallholder farmers, also through kind of the bigger companies that are out there as well, have their own smallholder community on their plantations, for example. How we can through their means utilize that accessibility. I don’t think it’s really falling short on funding, it’s more kind of finding ways how to how you deploy it in the end of the day.

Teymoor Nabili  

What would a perfect market look like from your perspective? If we had the situation and the capacity to just will into being a system that really would work, from all your experience, what would that look like?

Harjan Kuiper 

In an ideal scenario, what we’d like to see is smallholder farmers as a start seeing the benefits of engaging with the agricultural value chain. Their reservation is in large part due to the fact that they are not thinking about origins of the industry and looking around, how do I feel kind of using this? So I think it starts with a smallholder farmer’s ability to make sure that they feel comfortable with creating this conditional crop, value of crop, quality of crop, if you will, and then through that means getting more buy-in, using the smallholder aggregator and then also the financiers that are behind that, to use that whole value chain.

Teymoor Nabili  

What advice would you give to other companies, other lenders, and other members of this ecosystem that we’re discussing, when it comes to joining in these collaborative activities, joining these platforms, joining these aggregator initiatives? What’s the best way to engage and what are the things to look out for?

Harjan Kuiper 

I think what you’ve seen so far whereby there was really success, is getting out there on the ground. I mean there’s a lot of talk about how we can further improve things, but truly test it out and get through where the real problem is, which is actually on the ground and not in the studio here, as we all know. So doing that and try it out, I mean, there’s nothing wrong with trying itself, but with a means of support from technical and also who to contact, so the connectivity, how you’re going to make sure that you’re going to talk to the right people that give you access to smallholder farmers, but also who believe in the true value you can deliver to the smallholder farmers. And it’s easier said than done. Because I mean, how many aggregators are there? Each individual aggregator has their own mindset about how he or she would like to run the business. So what’s in it for them? How we can pull that together? That’s, I think, ultimately, for example, how GrowAsia or other institutions can help out to make sure that the message is delivered, they see the benefits, and ultimately food input providers, how they ultimately also see the alignment of partnering up and deploying their kind of value chain to the smallholder farmer.

Teymoor Nabili  

The other side of that same question, I guess, is what are the biggest pitfalls? In your experience along the way, doing this kind of work, what are the biggest mistakes that people make? The easily avoidable ones?

Harjan Kuiper 

What I said earlier about smallholder farmers, they need to believe in it. If they don’t see the value and benefit of it, and they’re being swarmed by so many NGOs and so many institutions, they’re almost paralyzed in their approach, about okay I don’t know what to do anymore. Who to believe here? In that sense, making sure that there is this trust building again, and you can prove there is this ultimate benefit in there for them as well.

Teymoor Nabili  

Is the tech connectivity, the digitalization, whether it be simply for communication or data gathering or knowledge sharing, is that at a level where you think it can begin to really have a major impact? Or are we still dealing with the initial stages of engagement through tech?

Harjan Kuiper 

Definitely the tools are there to be able to benefit from what you gather in terms of data. I think it’s also in the benefit of a farm input provider, for example. What is the yield? If there are certain kinds of inputs being delivered to the smallholder farmers, they are interested to have the feedback loop. Nowadays, there is no insight whatsoever, in terms of what the crop is doing that a smallholder farmer is growing.

Teymoor Nabili  

So the tech is there, but the deployment and the interaction and the collection of data…

Harjan Kuiper 

Exactly, there is no feedback loop, if you will, from the data that we can gather through means of tooling. But that will be beneficial, again, also to understand from the farm input provider hey, this is a way that’s actually smallholders should do or should utilize my produce in a better fashion. Because we can capture that now, because the data proves this is the way to do that, because of improving the quality. There’s improvement in quantity. So that feedback loop is not there.

Teymoor Nabili  

Is the absence of that loop because of the inadequacy of technology? Is it because of the failure of the parties involved?

Harjan Kuiper 

It is because there is no link, from a smallholder’s perspective, to provide that feedback through the aggregator for example, or ultimately through the farm input provider. Again, what is in there for the smallholder farmer to deliver that data back to the chain? There’s nothing really in there for them. But if you already convinced them by doing that, that will reduce ultimately, the credit, the interest rate they need to pay on the loans to purchase those farm inputs, then they perhaps see the benefits. Oh, hang on a sec, that’s probably something that has true value which I can leverage from in providing back because in return for that, next time around when I buy seeds, I get a reduction because I provided feedback back to the chain.

Teymoor Nabili  

Fascinating. So while while a lot of people talk about the absence of money, a lot of people talk about the absence of systems, of delivery, and coordination and collaboration, what you’re talking about is perhaps an absence of knowledge and understanding and proper communication to solve some of these problems, particularly between the smallholder farmer themselves and the systems with which they should be engaging.

Harjan Kuiper 

Yeah exactly. And ultimately, the feedback loop and the connectivity. The chain is so complex and multifaceted and lacks transparency. We need to improve that. I think that feedback loop needs to improve, whereby the farm input provider sees the benefit as well, engaging to the aggregator, through to the smallholder farmer, and the farmer ultimately going back to that value chain again as well.

Teymoor Nabili  

Fascinating stuff. Harjan thanks very much, indeed.

Harjan Kuiper 

Great to be here. Thanks again. Thank you.

Share this article

Share on linkedin
Share on facebook
Share on twitter

Harjan Kuiper

CEO, Rabobank Singapore

Recommended Reads

Welcome to the Tech For Impact community

Let's get acquainted

What is your name?

email list sign up form

You may unsubscribe at any time using the link in our newsletter.

Check your inbox regularly for a newsletter keeping you up to date with the stories, ideas and good news that your community is talking about.