Financing sustainable agriculture possible, if terms fit farmers’ needs

2 June 2017 / John C. Cannon

A new briefing by the UK-based Global Canopy Programme outlines the struggles that farmers face in the move from traditional to sustainable farming and how financing tailored to their circumstances can help them make the leap.

Financing sustainable agriculture possible, if terms fit farmers’ needs

  • Worldwide, more deforestation results from the push for farmland than any other cause.
  • The Global Canopy Programme reports that funding aimed at encouraging a move away from deforestation-based agriculture and toward more sustainable methods must be designed to address the needs of farmers.
  • Loans with longer terms and lower interest rates can help farmers who are switching to sustainable agriculture survive the ‘valley of death’ – that is, the first few years of new methods before their production becomes profitable.

Much of the deforestation in the world’s tropical rainforests comes so that we humans have enough to eat. But sustainable agricultural practices exist that help farmers coax more corn and soybeans, coffee and cacao, and a host of other products from the soil, without having to draw on land that’s currently covered with standing forest.

The tricky part is getting those tools and techniques to farmers and finding backers to fund the transition from traditional practices to sustainable farming.

“Farmers don’t have the money they need, and investors don’t know where to put their money,” said Simone Bauch, who directs the Global Canopy Programme in Latin America. The Global Canopy Programme is an Oxford, England-based think tank working at the intersection of tropical forest conservation and economics.

Cocoa pods hang from a tree. Photo by Rhett A. Butler

Bauch and her colleagues have just published a report that outlines how different finance approaches can streamline that shift to more environmentally friendly agriculture for smallholder producers.

Research indicates around 80 percent of recent deforestation in the Peruvian Amazon was small-scale, most of which was likely done to make way for small farms. Conservationists are eager to shrink that statistic, but as Bauch and her coauthors point out, they don’t often have a nuanced understanding of finance. With the report, the team draws on four years of experience with the Unlocking Forest Finance project and illustrates how different financial tools – or “instruments” – farmers get access an assist in shifting their methods.

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