Imagine driving along a rural road and seeing many small farms, all growing flourishing crops. Would you know how the farmers obtained the funds to plant these crops, enhance their productivity, and deliver them to market?

The story of Coopervoltapinho, an agricultural cooperative located in Santa Catarina State in southern Brazil, illustrates the important role played by financing in supporting smallholder agriculture. Coopervoltapinho, whose 180 members are served by approximately 3 full time employees using equipment owned by the cooperative and working out of the cooperative’s own facilities, serves an attractive niche market for rice, faces more demand than it can supply, and has room to grow.

These characteristics normally would make it very attractive for investors and lending institutions. But Coopervoltapinho has a problem: it is not a firm, but a cooperative... —