Growing Returns

Breakthrough agricultural loan rewards farmers for environmental stewardship

Quantifying the long-term financial benefits of conservation practices that build farm resilience and recognizing that value in the financing offered to farmers would be transformative for farms, lenders and the environment.

That idea received a major boost when Farmers Business Network, a global farmer-to-farmer network and ag tech company, launched a new farm operating loan that includes a lower interest rate incentive for farmers who achieve climate and water quality benchmarks.

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Banks take major step to turn climate commitments into action for global agriculture sector

Today at COP26, the World Business Council for Sustainable Development announced the Banking for Impact on Climate in Agriculture (B4ICA) initiative in partnership with EDF, the United Nations Environment Programme Finance Initiative and the Partnership for Carbon Accounting Financials.

Banks representing over 40% of global banking assets have already committed to aligning their portfolios with net zero emissions by 2050.

A major theme of this COP — the international climate change conference — is the urgent need to transition from commitments to action.

Action is needed to protect the agriculture sector from climate change, as farmers around the world are exposed to increasingly volatile weather that threatens global food security and rural livelihoods. At the same time, the sector must reduce its own greenhouse gas emissions, particularly potent methane and nitrous oxide emissions.

Fortunately, farms have the potential to reduce emissions, sequester carbon and build resilience — but farmers need support to make change at the scale and pace required to avoid major losses. Read More »

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What agricultural lenders need to know about emerging carbon market opportunities

Carbon markets have captured the attention of the agriculture sector, and agricultural lenders are no exception. I recently heard from a lender that their number one question from their farmer borrowers is about carbon credit opportunities.

As trusted advisors to farmers, here’s what lenders need to know to navigate these conversations. Read More »

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What does the executive order on climate-related risk mean for agricultural finance?

The recent federal executive order on climate-related financial risk institutes a whole-of-government approach to assessing and mitigating climate-related financial risk, with the goal of bolstering the resilience of financial institutions and the communities they serve.

As a sector dependent on natural resources and predictable weather conditions, agriculture is particularly vulnerable to climate change. Maintaining U.S. agriculture’s position as a global leader long into the future will require the sector to address climate risk head-on, and soon, with innovative financial solutions that move beyond managing risk and move toward financing resilience.

Here are some of the implications of the executive order for agricultural finance institutions, and opportunities for these institutions for support a more resilient and prosperous food system. Read More »

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Farm Credit CEOs discuss emerging opportunities to finance resilient agriculture

Climate change is already impacting farmers, both through extreme weather events and more variability in temperature, rainfall and pests. At the same time, farmers and the broader agricultural system can provide climate solutions and build resilience to reduce climate-related risk.

This dual opportunity has implications for the entire agricultural system, including the agricultural lenders who finance farms. Read More »

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3 takeaways from my testimony to Congress on climate-related financial risks to U.S. agriculture

Highlight: EDF’s Maggie Monast testified at a hearing of the House Select Committee on the Climate Crisis, “Creating a Climate Resilient America: Strengthening the U.S. Financial System and Expanding Economic Opportunity.” Watch here.

It’s becoming impossible to ignore the risks that climate change poses to financial markets, including those that support U.S. agriculture.

Increased temperatures and more frequent droughts and extreme precipitation events threaten crop productivity across the nation. In 2020 alone, we have seen ample evidence of these impacts, including destructive storms in the Midwest, hurricanes along our coasts, and wildfires and smoke in the West.

These physical risks of climate change create risks to the U.S. financial system, which was the topic of last week’s hearing held by the House Select Committee on the Climate Crisis, entitled “Creating a Climate Resilient America: Strengthening the U.S. Financial System and Expanding Economic Opportunity.”

I testified to the committee on climate risks to the agriculture finance system — and opportunities to build resilience. Read More »

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Financial leaders release climate risk report calling for agricultural resilience

A report released today by a subcommittee of the U.S. Commodity Futures Trading Commission, Managing Climate Risk in the U.S. Financial System, examines the threat that increasingly extreme and volatile weather poses to the stability of financial markets, including U.S. agricultural markets. Representatives from EDF served on the 35-member panel.

The report found climate risks pose a wide range of threats to U.S. agriculture — including heat stress on farmworkers, livestock and crops, soil and water quality degradation, more frequent supply chain disruptions and productivity declines. Read More »

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3 steps for agricultural lenders to mitigate climate risk and finance resilience

Farmers in the U.S. are facing severe challenges including poor economic conditions, extreme weather and disruptions from the COVID-19 pandemic. These risks also impact farmers’ financial partners, including agricultural lenders.

While some of these risks are difficult to anticipate and plan for, there are growing opportunities and resources available for farmers and their lenders to better understand their vulnerabilities related to climate change — and take steps to build resilience.

A new report, Financing Resilient Agriculture: How Agricultural Lenders Can Reduce Climate Risk and Help Farmers Build Resilience, finds that lenders can reduce risk by supporting farmer investments in conservation practices like no-till and cover crops that are known to build climate resilience.

This report provides a path forward for lenders to support a more productive, profitable and resilient agricultural system.

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3 ways agricultural lenders can help farmers reap millions in savings from conservation

The U.S. farm economy is in its worst condition in decades due to several years of low crop prices, ongoing trade disputes, natural disasters and other variable weather. But many farmers are adapting and innovating – implementing conservation practices that build soil health and resilience, such as nutrient optimization, cover crops and no-till.

Still, there is a growing need for farmers to understand the full financial benefits of these practices and prove their value to ag lenders and other financial partners.

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A new guide for farmers to boost profits through conservation

As the struggling U.S. farm economy continues to make the news, agricultural organizations, government agencies and conservation groups are rightly focusing their attention on the affordability of conservation adoption.

A 2018 report from EDF and agricultural accounting firm K·Coe Isom, Farm Finance and Conservation, found that farmers who adopt conservation practices such as no-till, nutrient optimization, cover crops and diverse rotations improved their profitability and were more resilient.

Despite these benefits, the costs of transitioning to conservation management practices can be a barrier to adoption. In addition, any change carries some risk, and farmers are likely to be reluctant to take on additional risk in the current economic climate.

For these reasons, it is more important than ever to provide farmers with practical guidance on how to minimize the costs and risks of conservation adoption. Fortunately, a new technical bulletin from the Sustainable Agriculture Research and Education (SARE) program at the U.S. Department of Agriculture does just that.

Cover Crop Economics: Opportunities to Improve Your Bottom Line in Row Crops [PDF] describes seven different management scenarios in which farmers can speed their transition to cover crops and achieve profitability more quickly — in some cases within the first year of adoption. Read More »

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