Agricultural Finance

Reducing greenhouse gas emissions and climate change impacts is a core element of global agrifood system transformation. Yet, while it represents an important opportunity for capital markets and investors, climate finance focused on agrifood systems has thus far been limited. In 2022, $95 billion of global climate finance funding was dedicated to agrifood industries and practices, with 22% coming from private sources.

Agrifood value chains (AVCs) in low- and middle-income countries (LMICs) have been expanding due to a range of factors, including income growth, urbanization, more market-oriented policies, globalization, and technological changes. Integrating smallholder farmers into those growing value chains, particularly for higher-value commodities, is an important path towards reducing poverty and generating employment opportunities, particularly for women and rural youth.

The “Liberation Day” tariffs proposed by the United States on April 2 included a blanket 10% increase for countries with which the U.S. runs bilateral trade surpluses or small deficits, and a range of higher tariffs for 56 economies with which the U.S. runs sizeable trade deficits (excluding Canada and Mexico as partners in the U.S-Canada-Mexico free trade agreement; and Cuba, Russia and North Korea).

In the wake of a series of recent crises that drove up global hunger and food insecurity, the world remains far off track in meeting Sustainable Development Goal 2 (SDG2)—ending hunger and malnutrition by 2030. Now, in a chaotic global environment of still more crises and complications, including cuts in official development assistance, what is the best course forward for governments and development organizations to address these urgent problems?

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.