FND Termination Will Impact Small Producers: FIRA
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FND Termination Will Impact Small Producers: FIRA

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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Thu, 05/11/2023 - 16:20

According to the Trust Fund for Rural Development (FIRA), the elimination of the National Agricultural, Rural, Forestry and Fisheries Development Fund (FND), also known as Financiera Rural, will have a negative impact on rural financing, especially among small producers. 

Elizondo Flores, Director General, FIRA, recognized that small farmers who have not yet been able to connect with markets need immediate support to obtain financing through new sources. "It would be wrong to point out that there will be no impact on financing, particularly on small producers. Financiera Rural has played a very important role in financing the countryside," the director said.

During a conference regarding the collocation of green resilience bonds, Flores pointed out that  FIRA has been aware of the disappearance of FND since April 2022. Therefore, the trust has taken over the needs of rural financing in the market through alliances with different states, such as Sonora, and a network of 110 intermediaries. Currently, 29,000 producers have migrated to the FIRA financing scheme for an estimated amount of MX$6 million (US$340,608). 

Flores explained that rural financing can be divided into two models. The first one, which was how FND operated, is through branches that serve specialized food production regions. The second one consists in occupying the available infrastructure of intermediaries in the countryside to provide credit to the most vulnerable producers.

On April 8, 2023, the Senate approved a reform package presented by the government of President López Obrador. Among the priority initiatives, the senate approved the elimination of the FND. "We are going to eliminate this institution epitomized by corruption," said María Clemente García, Congresswoman, MORENA. Benjamín Robles, Congressman, MORENA, pointed out that FND’s deplorable state is a reflection of the neoliberalism’s predatory ideology. 

The opposition, however, claims that flaws in the organization were inflicted by López Obrador’s own administration. According to data collected by Luis Ortiz, Senator, Movimiento Ciudadano, FND’s portfolio fell 49% between 2018 and 2023, while the expired portfolio increased 67% and the coverage rate of the expired portfolio deteriorated from 103% to 78%.

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