Putting finance to work for climate-smart farming
In a nutshell
|Sustainable Development Goal||Zero Hunger|
There are more than 120 million smallholder farmers in India, most living in poverty and all increasingly exposed to climate risk. Current agricultural practices harm the environment by overusing land, water and fertilisers and producing high CO2 emissions. Around 40% of India’s agricultural land is facing degradation, wind and soil erosion, and agriculture consumes 90% of groundwater.
With climate-smart agriculture interventions, smallholder farmers can increase their yields, reduce post-harvest losses and diversify their crops for nutritional security, while building their resilience against climate change impacts and reducing greenhouse gas emissions. Undertaking climate-smart agriculture at scale requires that climate-smart technologies are affordable and accessible. Therefore, creating pathways to credit and implementing risk management tools such as insurance would be key to delivering climate-smart agriculture solutions at scale.
The Farmers as Micro-Entrepreneurs (FaME) programe aims to sustainably scale climate-smart agriculture technologies and innovations among smallholder farmers. Specifically, it leverages market-based financing mechanisms such as affordable loans in an integrated set-up that includes market access for agricultural outputs.
The approach consists of four pillars:
- Pathways to finance: FaME program will develop new financing pathways and tools which will accelerate finance to village level agri entrepreneurs and small farmers. Focus will be on developing innovative products which will foster faster adoption of climate smart technologies.
- Climate-smart technology adaptation to small farmers’ situation:In partnership with Start-up Ecosystems in Israel and India, climate-smart technologies will be tested and validated both on technical and financial aspects from a small farmer perspective.
- Risk mitigation. With support from the Swiss Re Foundation, FaME will explore five insurance packages with the aim of reducing risk both for smallholder farmers and for finance providers. Finance providers will also benefit from structured financial instruments such as first-loss guarantees.
- Ecosystem support. FaMe will coordinate with Syngenta Foundation India and AEGF to connect agribusinesses to agriculture entrepreneurs and smallholder farmers.
Goals and Expected Impact
The project goals are to:
- Enable 400 000 farmers and their families (a total of 2 million people) to improve their income and resilience by adopting climate-smart technologies.
- Measure the impact of climate-smart technologies on income and resilience in a subgroup of 50 000 farmers (250 000 people total).
- Reduce CO2 emissions by 100 000 tonnes and document positive impacts on water use and soil health.
- Leverage USD 25 million in financing from the financial institutions for agri entrepreneurs and small farmers.