Actualidad Colombia

Changes regarding the definition of small-scale farmer

Regulatory Circular P-23

The Colombian Ministry of Agriculture and Rural Development and the Fund for Financing the Agricultural Sector (Finagro, introduced in Progreso 4) have issued a set of rules that seeks to redefine the category of small farmer used in the systems to provide financial support to the agricultural sector. The legislation in question comprises Decree 2179/2015, 11th November, issued by the Ministry and Finagro’s current Regulatory Circular P/23/2015. The main change consists of increasing the asset cap for the classification of small-scale farmer.

Thus, for the purposes of lines of funding and discounts administered by Finagro, a small-scale farmer is considered to be somebody whose total assets do not exceed the equivalent of 284 minimum legal salaries in force (SMMLV, as it is known in Colombia), approximately USD 61,000, including the assets of the spouse or common-law partner; provided that at least 75% of their total assets are invested in the agricultural sector, or that no less than two thirds (2/3) of their income comes from agricultural activities. The maximum sum of loans for small-scale farmers is the equivalent to 70% of his/her assets (198.8 SMMLV = Approx. USD 43,000).

This new definition of small farmer manages to include a larger number of farmers that were previously classified as medium-sized farmers, hence loosing benefits that were solely for small farmers.  It also makes more people eligible for microcredit from the point of view of microfinance entities.

In this issue, we analyse other Finagro's iniciatives, that foster the use of microcredit agroinsurance and introduce new concepts about agricultural microcredit .