Food security’s large need for small doses of sustainable finance

Access to finance a challenge for scaling up smallholder projects

Globally, one in nine people suffers from hunger or malnutrition, according to the 2020 Global Nutrition Report. Axel Fassio, CIFOR
23 June 2020
Sandra Cordon
23 June 2020
Sandra Cordon

From applying traditional land-use systems in the Indonesian home of the Komodo dragon to planting vegetable gardens in Fiji, smallholder landowners are finding ways to produce food, earn a livelihood, and protect and restore landscapes in tandem.

But, even when able to do so, scale is often a problem, hindered by challenges in both obtaining and utilizing financing, according to speakers at the recent digital conference of the Global Landscapes Forum (GLF).

A significant portion of the online event focused on sustainable finance, exploring areas of global food production in need of more financial support, as well as another, less-obvious issue: ensuring small-scale projects are able to utilize what financing they do receive. Often, the projects most in need of financial support also have the least capacity or infrastructure to use it.

What’s the cost?

An annual average of USD 579 billion is flowing for climate change mitigation and adaptation alone, according to the Climate Policy Initiative (CPI), which is not nearly enough. The Intergovernmental Panel on Climate Change (IPCC) calls for an annual amount of at least USD 1.6 trillion to support a transition to sustainable energy alone.

On top of this pervasive lack of funding, smallholders often also face “a very systemic financing gap and fall into the missing middle where they are too small for institutional investors and too large for micro-finance,” said Sofia Faruqi, who manages the World Resources Institute’s New Restoration Economy project.

This, coupled with the risks inherent to agriculture, can restrict investor appetite, she said. To address that, a Land Accelerator Bond being developed through CPI’s Global Innovation Lab for Climate Finance will serve to back credit for smallholder farmers, upping their purchasing power for needed products and supplies. The participating supply-side enterprises will then be bundled into a portfolio, in turn drawing more investor interest with its reduced risks and greater returns on investment. The Land Accelerator platform will also provide financial capacity-building for entrepreneurs and help connect smallholder farmers to markets.

“We need to mobilize much more private finance and investments for achieving the goals that we have for climate change and sustainable development,” said Tatiana Alves, a CPI senior analyst and leader of the Lab.

“Alongside the COVID-19 pandemic…that is disrupting food value chains, extreme climate events would also lead to broader threats to nutritional security worldwide,” Alves warned, noting that crises hit the poorest and most vulnerable populations the hardest.

Sizing up solutions

“Small investments are making a difference in the lives of Pacific people,” said Judith Ann Francis, who described the success of planting programs in Fiji, where home vegetable gardens are changing dietary behaviors and boosting nutrition, especially among children.

The Pacific island nation has had a high dependence on food imports and a crisis of non-communicable diseases – 84 percent of deaths are attributed to cardiovascular and diabetes, said Francis, who leads Innov4agPacific, a platform that seeks to enhance value chains and agribusiness in the Pacific.

Meanwhile, in one of Brazil’s poorest areas, a series of small “islands” of forest are being squeezed among cattle ranches and sugarcane plantations, as local people struggle to protect the forest patches in conjunction with their livelihoods. SAVE Brasil, an organization led by Alice Reisfeld, is working to improve connectivity between these forest fragments, and is seeking USD 700,000 over three years in order to do so.

“We want to see small landowners restoring their land, using agroforestry, while also making profits from producing sustainable food commodities,” said Reisfeld in a session hosted by BirdLife International that examined the gap between the scale of green finance and positive impacts on the ground.

Women at work

Access to finance for women managing family farms is critically important, said Joky Francois, global lead for gender at the Rainforest Alliance. Such farms produce up to 80 percent of the world’s food, and though women supply much of the labor on cash-crop farms, they usually cannot access support.

Gender equality and sustainable landscapes are often treated as separate issues, “but we cannot achieve one without the other,” said Francois. “(Women) have little access to finance and land, which makes it difficult for them to do long-term investments.

“So gender inequalities lead to lack of uptake of sustainable agricultural techniques by half the farming population. This is a huge bottleneck for sustainable food production.”

Leave a Reply