Managing Currency Risk in Agricultural Finance : Interview with Toph Cottle
Toph Cottle works as a Senior FX Hedging Strategist at MFX Solutions. Before his current role, he worked at the Federal Reserve monitoring global capital flows and liquidity swap lines. He holds a Masters of Arts in International Affairs from Johns Hopkins University and a Masters of Science from University of London SOAS. He has held several board positions at microfinance non-profits and piloted a microfinance program in Kiribati.
À propos de l'expert
Toph Cottle works as a Senior FX Hedging Strategist at MFX Solutions. Before his current role, he worked at the Federal Reserve monitoring global capital flows and liquidity swap lines.
He holds a Masters of Arts in International Affairs from Johns Hopkins University and a Masters of Science from University of London SOAS. He has held several board positions at microfinance non-profits and piloted a microfinance program in Kiribati.
What is currency risk in agricultural finance and how does it typically arise?
Currency risk arises in agricultural finance when revenues and liabilities are denominated in different currencies.
For example, a cocoa exporter earns money in USD, but their costs for labor and materials are in the local currency. In this case, any appreciation of the local currency would reduce the exporter’s profitability.
Similarly, a rice processing company may borrow working capital from international investors in EUR while generating revenue in the local currency. If the local currency depreciates, it becomes more difficult for the company to repay its euro-denominated debt.
Why is it important for agricultural finance professionals to manage this risk?
Ignoring outstanding currency risk creates uncertainty for future cash flows and can deteriorate profitability.
In 2025, we observed large swings in exchange rates across Africa, which could significantly increase or decrease debt servicing costs and affect the financial stability of businesses. Amid the current growing geopolitical uncertainty, currency risk is becoming ever more significant.
By reducing the risks linked to changes in exchange rates, agricultural finance professionals can gain clear visibility over cash flows in local currency terms. This reduces uncertainty and allows them to focus on their core business operations rather than actively managing exchange rate fluctuations.
What solutions exist to mitigate currency risk in agricultural financing?
There are services which consist of locking in exchange rates in advance, so that businesses know how much local currency they will need to pay or receive in the future regardless of exchange-rate movements.
At MFX, we offer a range of flexible services to hedge currency risk, tailored to the specific needs and cash flow structures of each business. This ensures that companies can choose the most appropriate approach to manage their exposure effectively.
How successful have these solutions been so far?
These solutions have been highly successful. MFX has supported over USD $8 billion in loans over the last 17 years across the microfinance, housing, agriculture, and healthcare sectors.
Reducing currency risk across Africa is key to agricultural sector development and allows businesses to scale by tapping into international capital markets while safeguarding their balance sheets from increased exchange-rate volatility.