• International Fund Agriculture Development report is an international financial institution and a specialised agency of United Nations dedicated to eradicating poverty and hunger in rural areas of developing countries.
• Small-scale farmers operating on less than 5 hectares of land represent around 95% of world’s farms and a cumulated area equivalent to 20% of the global farmland.
Barriers to small-scale agriculture finance includes:
• Limited capacity of national governments to comply with international climate funds’ procedures.
• National governments ‘capacity to develop climate adaptation and mitigation programs. Financial markets are not providing services adapted to farmers’ needs.
As the agriculture sector is seen as risky there is limited capital available for those involved in small-scale agriculture.
Recommendations to channel climate finance to small- scale agriculture:
• Enhance collaboration between public and private sectors to mitigate risk associated with investments in agricultural sector.
• Subsidized loans based on implementation of climate-smart agricultural practices and technologies.
• Subsidies for weather insurance bundled with loans (Similar to India’s National Crop Insurance Program).
• Transition of agribusinesses and finance service providers towards low emission supply chains.
Mains Paper 3: Economy
Prelims level: International Fund Agriculture Development report
Mains level: Recommendations to channel climate finance to small- scale agriculture