New World Bank Program to Support 400,000 Farmers in India’s Kerala State, Raise up to $9 Million Capital for Agribusinesses

WASHINGTON, Oct. 31, 2024 - The World Bank's Board of Executive Directors today approved a new program to support farmers in Kerala adapt to climate change and promote agri-entrepreneurs to market value-added products. It will also leverage at least $9 million of commercial finance including for agri-food small and medium enterprises (SMEs), especially for women.

As the leading producer of spices such as cardamom, vanilla and nutmeg, Kerala accounts for about 20 percent of the India's total agri-food exports. However, climate change is impeding these achievements. Natural disasters like floods and forest fires, as well as challenges to reach broader markets, have been impacting farmer households.

The $200 million Kerala Climate Resilient Agri-Value Chain Modernization (KERA) Project will help strengthen the resilience of the state's agricultural sector to climate change. About 400,000 farmers will benefit through better access to climate-smart practices. These include replanting of climate-resilient varieties of coffee, cardamom and rubber and help expand Kerala's "food parks" into rural areas. These parks will have essential infrastructure such as water, power, and waste management to support agribusinesses in food processing and value-added products.

"This project will further infuseprivate sector investment and integrate agricultural value chains for the benefit of farmers and SMEs," said Auguste Tano Kouamé, the World Bank's Country Director for India. "Moreover, it will support agri-based SMEs-especially women who currently own only 23 percent of MSMEs in the state-to gain access to commercial finance by providing training for business plans and to strengthen their commercial viability."

The project also aims to form productive alliances between farmer groups and agribusinesses. The alliances will help strengthen the linkages between producers and buyers, with the public sector playing a facilitating role. In addition, it will incubate agri-tech startups.

"This Project will help to increase productivity for staple food crops such as rice while reducing GHG emissions," said Chris Jackson, Azeb Mekonnen, and Amadou Dem, the Task Team Leaders for the project. "The increase in productivity and strengthening of agricultural value chains will help maintain the competitiveness of Kerala's agricultural sector and will help create jobs and increase incomes."

The $200 million loan from the International Bank of Reconstruction and Development (IBRD) has a final maturity of 23.5 years, including a grace period of 6 years.