[CASE STUDY] How to effectively increase farmersí income?

  • Thelma BRENES, FMO
  • Adriana GARCIA, Groningen University
  • Oscar PAMMO, Sembrar Sartawi


MFIs have shown increased efforts to offer additional non-financial services to their clients, such as business training and technical assistance. However, despite the extensive research on microfinance, there is limited evidence on the impact of access to microfinance in combination with technical assistance on income, especially in rural contexts. To gain more insights into this, Thelma BRENES explained, FMO contracted Groningen University to evaluate the outcomes of a FMO investment made in 2013 to the Bolivian lender Sembrar Sartawi.

Sartawi currently supports about 30,000 clients, of which about 62% are women. An estimated 45% only work with Sartawi, and 48% live in rural areas. Some 34% of Sartawi’s clients live on less than the international poverty line of USD 3.20 a day. At the time of the investment, Sartawi was launching its triangle business model through its three branches, mainly to dairy farmers. This triangle business model consists of providing microloans alongside technical assistance and market access. The aim is that it improves the production processes and animal husbandry practices of dairy farmers.

The particular focus of the impact evaluation was on testing the impact of microloans targeted at rural areas and combined with technical assistance and market access support. The Groningen research team conducted the study between 2015 and 2019 and was led by Adriana GARCIA. She stressed that these evaluations are important as it contributes to the non-conclusive scientific evidence on the impact of non-financial services from MFIs. Also, it serves as a decision-making guide for MFIs that want to create impact using financial and non-financial services.

The impact evaluation was done in two parts, Garcia explained; first the impact of microcredit on income of clients was evaluated, followed by the microcredit’s impact when combined with technical assistance and market access. One of the results of the study on the impact of microcredit was that in regions with higher microcredit penetration, it was found that microcredit had no impact on household income. On the other hand, larger impacts of microcredit came from poorer areas with less microcredit penetration and less investment opportunities. In those regions, farmers registered losses in their agricultural business but increased their income through other-business activities by 85 USD/month. This led the researchers to the conclusion that in absence of non-financial services, farmers prefer to invest in non-agricultural business.

The study on the impact of providing microcredit alongside technical assistance and market access provided different results. It was found that daily milk production increased by 11% (compared to those farmers who did not receive non-financial services), while the monthly income from milk increased by 16%. No loss in agricultural business was noted.

Garcia finished her presentation by concluding that offering non-financial services and microcredit reduces vulnerability of clients and benefits MFIs. The technical assistance and market access support from Sartawi increased production, income, repayment, and the loyalty of clients. She shared some recommendations for Sartawi and other MFIs to replicate this model. First, she said, expand the triangle mode in regions with specific characteristics (market proximity, homogenous clients and low microcredit penetration). Second, it is recommended to improve relationships with companies that provide market access to clients.

Oscar PAMMO then took the floor and laid out the next steps that Sartawi wants to make to continue to create impact. He said Sartawi wants to expand the range of rural branches where the triangle business model can have the greatest effect. In addition, they are looking into ways to provide mitigating solutions to climate risk factors and natural events through agricultural microinsurance. This product is based on information provided by the environmental and agroclimatic risk management systems they have. Third, Sartawi wants to continue to include their rural clients in the technology integration processes, so that they can benefit from the efficiencies achieved through digitisation of financial channels and products.


A participant from the audience asked how Sartawi provides knowledge to their clients. Pammo explained that they work with specifically trained people in the field, often sharing best practices. The technical assistance includes, for instance, veterinarian services, advice on nutrition, breeding, and forage production for dairy farmers.

The technical assistance and market access services are financed by Sartawi’s business model, with no extra cost for the end beneficiaries. However, Pammo added that, he believes that clients are willing to pay for services once they see that it increases their productivity and profitability. The same holds true for local governments, he added. Once they see that locals prosper, the local government and investors will put additional money to cover the costs from the technical assistance.

Another question from the audience was how Sartawi would recommend designing efficient market access programmes. Pammo explained that to obtain the Sartawi loan, the dairy farmers sign a contract with one of two milk-buying companies, which commits them to daily milk deliveries. These loans are low risk since the farmers receive bi-weekly payments from the milk companies, and Sartawi collects the repayments directly from those companies rather than from the farmers. Finding a company that can aggregate and buy products can be challenging, however.

Pammo continued that, in case there is not a big company willing to buy the produce, there is an alternative way. That is by giving farmers access to market information on prices, so farmers know where to find the best market with the best prices for their products. Also, it could be interesting to look into ways to improve the quality of a product. Pammo concluded that the main aim of the programme is to provide opportunities to farmers, and that he has seen that Sartawi’s business model and microinsurance programme can provide some stability to farmers’ life and income.