Basic foods production

Loans will be channeled to target groups via the Bolivian Central Bank"s Agricultural Rediscount Fund (FRA) through intermediate commercial and quasi-commercial credit institutions. Loans will be provided to 10,000-13,000 small farmers in the Departments of Chuquisaca, Cochabamba, Santa Cruz, Tarija, and La Paz, as well as to small farmer cooperative organizations. Three types of credit (production, capital goods procurement, and processing/marketing) will be offered, with 75% of project funds being used for production credit. Only farmers who are capable of expanding production rapidly through use of credit for farm inputs or improvements will be eligible for loans. Eligible farmers will possess less than 20 ha of land in traditional areas (Altiplano and valleys) and 50 ha in the lowlands. In addition, the number of hectares financed for production under the project will be restricted to 10 or less. Capital goods and processing/marketing credit will be available to processor/storers who can ensure that the investment will primarily and directly benefit small farmers, as well as to small farmers and cooperatives. Maximum loan size will be $2,000 for short-term production credit and $3,000 for medium and long-term credit. By shifting the focus of the FRA (which currently serves mainly large farmers) the project will help institutionalize a credit mechanism oriented toward small farmers and will encourage Government of Bolivia/Central Bank policies that will result in larger amounts of credit from the domestic banking system going into the production of foodstuffs.