Agricultural small- and medium-sized enterprises (agri-SMEs) are critical to the development of more inclusive and sustainable food systems. These businesses are responsible for much of the sale of inputs, food production, collection and distribution, and processing and retail of food products. However, the absence of a widely shared definition and comprehensive taxonomy of agri-SMEs stymies our view of their role in food systems. With a shared framework and language, we could more comprehensively consider the role of different types of agri-SMEs in food systems, as well as the specific types of support that would unlock their growth potential.

SAFIN commissioned ISF Advisors to develop a framework for more comprehensively considering agri-SMEs, with the goal of creating a common language that:

Fosters a shared understanding among actors concerned with agri-SMEs (including, but not limited to, financial service providers) about the shared features of different types of enterprises that fall under this label.
Proposes a new taxonomy and language to establish agri-SME segments—drawing on existing case studies and literature to illustrate how these might apply in different markets.
Provides a solid grounding for the assessment of different financial needs of agri-SMEs, which can inform SAFIN’s work, as well as that of other relevant actors in the agri-SME finance space.

ISF Advisors conducted a literature review of more than 80 publications, as well as consultations with key experts, including SAFIN members. This research highlights the importance of agri-SMEs in the food system, building off of current classifications of agri-SMEs to create a more comprehensive taxonomy based on key profiling dimensions. It also shows the applicability of the taxonomy across value chains and various food systems priority areas. Finally, this research presents a growth profile classification to link the agri-SME taxonomy to investability criteria and needs, allowing for a more nuanced understanding of how best to support specific segments of agri-SMEs.