Panel on Financing Stable Agriculture

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On November 2, 2017, World Affairs Council, Global Washington and JPMorgan Chase & Co. hosted a panel discussion on financing stable agriculture at the Rainier Club. The panelists included Matthew Arnold, Managing Director and Global Head of Sustainable Finance at JPMorgan Chase & Co., Steve Hollingworth, CEO of the Grameen Foundation, and Paul Moseley from the Bill and Melinda Gates Foundation. The discussion considered how innovative financing mechanisms can address global issues such as climate change that affect farmers all over the world.

While many wealthy countries consider sustainable agriculture primarily as an environmental issue, for small farmers in developing countries farming is a survival mechanism. However, these farmers often have trouble securing financing due to vulnerability to droughts and natural disasters as well as price variation. Thus, even though so much of the world is dependent on such farmers for food, a perception of high credit risk and a longer time frame for yields limit these individuals’ abilities to maintain their farms, let alone expand.

In order to address these problems, the panelists emphasized the importance of understanding the different types of smallholder farming. One group of smallholders includes relatively small groups that are integrated into a global supply chain. Another group consists of farmers producing crops for local markets. A third group involves communities that rely on rain-fed agriculture, where declining soil quality and climate change poses a very real threat to those communities’ lives. All these groups, though, are incredibly vulnerable.

In an effort to combat these problems, the panel discussed possible solutions, like JPMorgan Chase’s commitment of $200 billion to sustainable goals like renewable energy and clean financing. These projects could help improve the standard of living for small agricultural holders by improving their economic conditions, ensuring asset bases for the families of the farmers and increasing food security.

Financial services, such as offering credit to women and microloans to farms, have proved to be successful. In addition, the widespread use of mobile money platforms, even in third world countries where farmers are especially vulnerable to climate change and lack access to financial support, creates new opportunities to reach these individuals. Digital information platforms also helped create personalized and individual understandings of the impoverished people producing the world’s food. These lending mechanisms have become helpful in formulating farm management plans as well.

In its approach to helping smallholder farmers, the Gates Foundation focuses on increasing availability. Applying digital finance strategies to farming fails to recognize the underlying mechanisms of the business, such as crop cycles. Products need to be not only relevant to crops, but also affordable. In order to keep these services affordable, it is crucial to reduce the risk generated from capital flowing all the way down to the small holder.

While JPMorgan Chase is not often thought of a common partner to NGO’s or nonprofits, commercial banks need to form partnerships with these intermediaries in order to distribute capital to farmers on the ground-level.