To support the development of profitable, sustainable agriculture, farmers around the world need greater access to financial services. Climate-smart, resilient agriculture often requires significant up-front investments, expensive inputs, and higher implementation costs – additional expenses that many farmers, particularly smallholder farmers, cannot afford without additional financial support. Additionally, some practices can also have long payback periods, requiring farmers to wait for initial returns on their investments. However, the tightness of credit conditions often inhibits access to finance, particularly for smallholders. For example, the share of small and medium enterprises required to provide collateral on their last bank loan in Brazil, a country with high rates of deforestation driven by agricultural expansion and low levels of farm productivity, is over 40%.
To support the development of profitable, sustainable agriculture, farmers around the world need greater access to financial services. Climate-smart, resilient agriculture often requires significant up-front investments, expensive inputs, and higher implementation costs – additional expenses that many farmers, particularly smallholder farmers, cannot afford without additional financial support. Additionally, some practices can also have long payback periods, requiring farmers to wait for initial returns on their investments. However, the tightness of credit conditions often inhibits access to finance, particularly for smallholders. For example, the share of small and medium enterprises required to provide collateral on their last bank loan in Brazil, a country with high rates of deforestation driven by agricultural expansion and low levels of farm productivity, is over 40%.