For Maximino Ramírez Flores, farming is more than just a job. “We’re continuing the heritage left to us by our grandparents and our parents, to carry out such an important activity as Mexicans: producing food for our fellow people,” says Maximino. “It’s a very difficult task but very satisfying when we manage to produce food for our country and crops to produce other products.”
Maximino and neighboring farmers in Hidalgo, Mexico, primarily grow barley, which is purchased by major beer companies in Mexico. “We’ve dedicated ourselves to growing barley, along with a little maize and oats and a bit of beans. Some crops are for personal consumption, and some are for commercialization,” says Maximino. While farmers play an essential role in growing our food supply and driving Mexico’s economy, they face complex challenges, from climate-related shocks to land disputes to unstable crop prices. Financial products and services — like credit to purchase seeds and fertilizers, and climate insurance to endure unpredictable weather challenges — can alleviate some of these burdens, but more than 90 percent of Mexico’s farmers can’t access formal financing, according to INEGI. Verqor, an agri-fintech company digitalizing Mexico’s agricultural sector, is working to change that.
Unlocking credit access for farmers
Verqor, an Accion Venture Lab portfolio company, seeks to improve farmers’ livelihoods through access to formal credit. Verqor provides cashless credits to farmers to purchase high-quality inputs for planting and growing crops, covering up to 90 percent of the up-front costs for products like seeds, fertilizers, agrochemicals, and organic products. Farmers then repay the credit after the harvest once they’ve received payment from their buyers.
Farmers in Mexico often struggle to access financial resources, particularly those who work small and medium size farms who typically don’t qualify for formal credit from traditional financial providers because they are considered too high risk. “There aren’t many financial institutions that bet on agriculture,” says Maximino. Before working with Verqor, he remembers, “We were left completely without capital, in debt, and we looked for support from a financial institution that could give us encouragement and the resources to continue doing what we love, and what we know how to do.”
Verqor works to make credit accessible to every farmer in Mexico, no matter the size of their farm, using a unique underwriting process that leverages productive data, including normalized difference vegetation index (NDVI) factors, supply chain trends, weather trends, yield information, and produce price fluctuation, to assessing credit viability. The Verqor team also understands the seasonality of their farmers’ crops, leading them to assess farmers at the right time during harvest. By creating a more comprehensive credit profile for farmers, they can pre-approve farmers for tailored credit products. Unlike most financial institutions that ask farmers to pledge assets against their loans, Verqor doesn’t require collateral from their farmer customers. “With other lenders, there were too many procedures, too many requirements, and they wouldn’t lend what you actually needed. But with Verqor, we haven’t had that problem,” says Maximino. “They ask how many hectares we’re going to plant and what we need, and there’s no issue.”
Furthermore, Verqor uses a digital platform allowing farmers to apply for and receive credit from their phones – a particularly useful solution for those in hard-to-reach parts of rural Mexico. Farmers can also find buyers for their crops on the platform, solving another pain point for those who struggle to access new markets.
Teaming up with trusted local partners to reach farmers
Because most of their customers have never worked with a formal financial provider before — with 55 percent of Verqor’s users accessing credit for the first time — Verqor takes a unique approach to reaching farming communities. They partner with trusted local retailers that sell high-quality agricultural products to farmers, allowing Verqor to attract new customers to their platform and extend the credit needed to purchase supplies from retailers.
Freedy Mesa Cruz is an agronomist and technical commercial manager of Servitec Agro, a family-run agricultural retail business and one of Verqor’s agri-retailer partners. “Our main business is the commercialization of agricultural supplies, insecticides, fungicides, and foliar nutrition, which is basically what allows producers in the area to be profitable,” says Freddy. Working closely with their farmer customers, Servitec Agro conducts field inspections so that their technicians can recommend the exact products that farmers need to succeed. “We’ve gained the trust of both small and large farmers,” says Freedy.
To purchase necessary supplies, the farmers need financing to cover the upfront costs. That’s where Verqor comes in: Servitec Agro’s customers can easily apply for and quickly receive the credit they need from Verqor. When farmers are struggling, Freedy notes, “It’s a chain reaction. It doesn’t just affect the input stores, but the entire sector because the economy here is mainly agricultural, and the agricultural economy drives all the businesses.” By helping farmers get the credit they need to purchase high-quality inputs from retailers, and connecting them to buyers, we believe Verqor improves the whole ecosystem.
With Verqor’s support, Maximino can focus on tending to the fields he loves. “It’s an activity that one enjoys, from the moment you plant the seed, bury it, and watch it emerge. Day by day, you see how the seed grows, how it goes through different stages, until it reaches harvest. For me, being a farmer is very important, because I realize how wonderful nature is.”
As farmers face mounting difficulties, there’s a clear need for financial solutions that enable them to succeed. From India to Brazil to Kenya to Indonesia, Accion Venture Lab invests in and helps scale financial solutions in the agritech space to drive impact for underserved populations who are being left behind. Learn more about Accion Venture Lab here and follow us on LinkedIn for updates on our work to grow and scale responsible fintech solutions for underserved people around the world.
