Agricultural Finance

The complex challenge of increasing food production while mitigating carbon dioxide emissions, building resilience to climate change, and reducing the burden of agriculture on natural resources requires innovative approaches. Promising strategies include increasing access to mechanization and adopting modern fertilization processes that contribute to climate change adaptation efforts, or the use of improved seeds.

As the world edges closer to the 2030 Sustainable Development Goal deadline, progress on achieving Zero Hunger has stalled, according to the FAO’s 2024 flagship report, The State of Food Security and Nutrition in the World.

As many as 757 million people may have experienced hunger in 2023, while 2.33 billion experienced moderate or severe food insecurity. In 2022, as many as 2.8 billion were not able to afford a nutritious diet. The situation is particularly dire in low-income countries, especially for rural populations, women, youth, and Indigenous Peoples.

Several constraints limit the ability of smallholder farmers in low and middle income countries (LMICs) to reach their production potential. One such constraint is access to formal finance; smallholders and other agricultural value chain participants frequently cannot access credit necessary to invest in new crops or technologies and deal with risks and shocks and/or savings products necessary to safely carry wealth from harvest to planting.

Despite tremendous progress made in the last decade to produce enough food to meet the demands of the growing population, around 811 million people lived in hunger in 2020 and nearly half of the world’s population lacked year-round access to adequate food due to climate change, poverty, and the COVID-19 pandemic, according to the 2021 State of Food Security and Nutrition in the World (SOFI) report.

The Ceres2030 project has shown the urgent need for additional investments—a yearly average of $14 billion from donors and $19 billion from low-income countries for the next decade—to meet Sustainable Development Goal 2, ending hunger by 2030, and to build more sustainable food security. 

But how should that money be spent?