Minister of Agriculture, Sen. Haynesley Benn (standing), at the opening session of a two-day regional capacity building workshop on??’Factoring/Receivable Discounting:?? A??Financing Tool for Agriculture Sector Development, which began today at the the Savannah Hotel. With him (on the left) is Coordinator – Commodity Finance and Risk Management at the United Nations Conference on Trade and Development,??Frida Youssef.??(Sitting left to right)?? Also at the head table??are: Head of Operations, Delegation of the European??Commission in Barbados and the Eastern Caribbean, Herbert Perr;??Social Director at the Caribbean Development Bank, Yvonne Moses Grant; and Jeanette Sutherland??of the Agribusiness Development Programme of CARICOM. (Image: Trevor Daniel)
Farmers can now have greater access to funding through the use of innovative financial tools.
Minister of Agriculture, Senator Haynesley Benn, told a two-day regional capacity building workshop on ???Factoring/Receivable Discounting – A Financing Tool for Agriculture Sector Development’, that the use of these financial tools could "emerge as an important trade finance mechanism … by helping to minimise risks and facilitate lending".
He made these comments today during the opening session of the seminar at Savannah Hotel, Hastings.
According to Senator Benn, factoring, if properly applied, could help to integrate small scale farmers into the supply chains of the tourist industry and supermarkets, in their respective countries.
This financial instrument allows entities to raise finance based on the value of outstanding invoices. It also provides the opportunity to outsource sales ledger operations and to use more sophisticated credit rating systems. In relation to receivable discounting, in the same way that accounts receivable can be factored, notes can also be converted into cash by selling them to financial institutions at a discount.
"Farmers, especially smallholder producers, are often unable to access adequate and timely finance, primarily because of the high risks associated with agricultural products and lack of suitable collateral.?? In this context, factoring and discount receivables can emerge as an important trade finance mechanism which can help address this problem, by helping to minimise risks and facilitate lending activities," Senator Benn explained.
Minister Benn pledged Government’s support of these fiscal mechanisms through the provision of an enabling economic, policy and regulatory environment.??
The workshop, hosted by the United Nations Conference on Trade and Development and the Caribbean Development Bank, was designed to allow participants to assess the feasibility and appropriateness of factoring and receivable discounting.?? It also discussed best practices, including the role of government, farmers associations, regional institutions, financiers and multilateral organisations.