Grant Signing Ceremony: Agriculture Development Fund Remarks: Government of the Islamic Republic of Afghanistan Minister of Agriculture, Irrigation and Livestock Asif Rahimi
July 21, 2010
Dr. Shah, Ambassador Eikenberry, honoured guests and friends, ladies and gentlemen...
...thank you for coming here to our experimental farm, on an historic day for Afghan farmers and the Afghan economy.
The Afghan Government has long recognised the need of farmers for affordable credit, and now USAID is providing $150 million dollars to help us take the first steps along that long road.
Everywhere in the world, farmers lead economically unpredictable lives affected by weather, changing commodity prices and more. Everywhere they need credit to borrow against the next harvest.
Virtually every country that is economically successful has government-assisted agricultural credit.
With credit, Afghan farmers will be able to invest in better seed or fertiliser. Some will borrow to rent more farmland or to help their family through a short-term crisis.
With credit, farmers can afford to modernize via new technology, improved irrigation, mechanization, storage and processing and, finally, deliver goods to markets.
The new Agricultural Development Fund will be supplied with initial finance and technical expertise by USAID, that will help the Afghan Government design credit products.
Commercial banks, and similar financial institutions, will provide loans to farm co-operatives, farmers and agribusinesses.
Then Afghan Government experts will regulate the process to protect borrowers and lenders alike.
In the first year the ADF plans to distribute US$ 18-to-24 million to 12,000 borrowers. By the end of second year, the ADF expects to lend an additional US$ 30 million to 18,000 new clients.
The ADF will also support seed enterprises by providing them with credit to help them purchase and distribute certified seed nationwide.
Today, banks are unwilling to take the risk of lending to farmers. Soon, government will assume most of the risk.
Secondly, our plan is flexible, to accommodate the needs of a farmer or a business.
An agribusiness may borrow and pass along that money to its suppliers so that they can invest in better packaging. A co-op may borrow to buy equipment for its members, or lend to individual members to lease or rent equipment.
The contract that we sign today, for US support to Afghan farm credit, is worth US$ 100 million for the Agricultural Development Fund, plus US$ 50 million for technical support.
The $ 50 million will help MAIL administer the fund and also help build agricultural value chains that cover every step in the economic process from the farm to the factory to the airport or the trucks full of exports.
This will get the process started, and test the results before lending institutions are expanded and services are increased. Soon, Afghan farmers will have an economic advantage that they never had before.
Administrator Shah and Ambassador Eikenberry, please convey our thanks to the American people.