Senior Writer, Forum Agenda
- Farmers need financial support to speed up the move to sustainable food production.
- In a new report, the World Economic Forum identified 5 key steps to achieving this.
- Over $300 billion a year needs to be spent on the global food system by 2030 to make it sustainable.
Farmers play a critical role in producing food sustainably.
But they face financial and technical barriers, partly because it can take time to see the payback from investing in more sustainable equipment and processes.
Between $300 billion and $350 billion a year needs to be spent on our food system by 2030 to make it sustainable, according to 100 Million Farmers: Breakthrough Models for Financing a Sustainability Transition, a new report from the World Economic Forum.
More than 30% of global greenhouse gas emissions, over 80% of tropical deforestation and biodiversity loss and 70% of freshwater withdrawals globally came from the food industry in 2020.
More investment is needed to accelerate progress on climate, water and nature goals. Image: 100 Million Farmers
Regenerative agriculture, the focus of the report, could help to reduce the environmental cost of farming.
It’s a way of farming that improves soil health, reduces water use, boosts biodiversity – species richness – and removes more carbon from the atmosphere. People and economies benefit in turn, for example, by healthier soil producing more food.
The report identifies five actions to accelerate and scale up the move to sustainable food production.
Sustainable farming practices like regenerative agriculture have multiple benefits for the environment and communities. Image: 100 Million Farmers
Step 1: Develop breakthrough models for financing and collaboration
Farmers need a full set of financial and non-financial services to help them overcome barriers to sustainable practices. This might include favourable lending and insurance terms, up-front payments or guarantees to reduce financial risk – and help with verifying and reporting progress.
There are already good examples of programmes to help farmers adopt regenerative agriculture. For example, In the US – which is one of the world’s biggest growers of corn, soy and wheat – private sector organizations lead at least 50 farmer support programmes.
Successful regenerative agriculture programmes need to be expanded and replicated, the Forum says. This includes expanding them into new geographic areas or “white labelling” the model – providing a template that other users can make their own.
The Soil and Water Outcomes Fund, based in Iowa in the US, is a good example of a breakthrough model of financing and collaboration. The fund provides financial incentives to farmers who adopt conservation practices with positive environmental benefits, such as reduced water use or carbon emissions.
Step 2: Engage more finance providers in regenerative agriculture adoption
Only a few leading finance firms in farming are focused on regenerative agriculture. This misses an opportunity.
When finance firms help farmers adopt sustainable practices, everyone wins.
Farmers, their suppliers and customers have better financial health. The finance firm benefits from new revenue streams and a boost to its own climate and nature footprint.
Finance firms may have to learn more about food systems and how farmers use regenerative agriculture to help them design new products.
For example, how best to develop the eligibility and terms for loans and insurance. Finance firms can also coordinate investment from other public and private capital providers.
Farmers face financial, technical and social barriers to adopting regenerative agriculture. Image: 100 Million Farmers
Step 3: Involve the whole food supply chain in environmental improvements
When a farm adopts regenerative agriculture, everyone who benefits should pay for the improvements this brings.
For food processors and buyers, these benefits could include better continuity of supply from the farm being more resilient and reduced water use or greenhouse gas emissions in their supply chains.
Farm suppliers like fertilizer, seed and equipment providers benefit in similar ways.
Grower associations, finance firms or agricultural technology companies can help to coordinate these efforts and scale up existing programmes.
Step 4: Create government policy that’s consistent and supportive
Governments play a crucial role in speeding up sustainable farming adoption.
“Policies can help make the business case for private sector companies, investors and farmers to pursue regenerative agriculture,” the Forum says.
This might include expanding conservation programmes or tax incentives, or creating finance or risk management programmes.
Policymakers can also remove barriers to farmers adopting regenerative agriculture practices. For example, by making it easier for farmers to apply for funding opportunities.
Step 5: Build data standards to define, measure and report on regenerative farming
Data on the take-up and impact of regenerative farming needs to be more available and better defined, standardized, measured, verified and reported on.
These metrics will help evaluate the environmental and financial benefits of every regenerative farming improvement, such as better biodiversity, lower water use and reduced carbon emissions.
Governments and private firms can then collaborate on using these data insights and processes to accelerate research on the benefits of regenerative farming in different contexts.
By improving collaboration and coordination among everyone in the food system, particularly on financing, these five steps will give farmers the flexible financial and technical support they need to “adopt sustainable production practices confidently,” the Forum says.
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The views expressed in this article are those of the author alone and not the World Economic Forum.