The widespread adoption of regenerative agriculture practices in Europe could strengthen crop resilience to extreme weather and support the long-term sustainability of farms, communities and ecosystems – an urgent need as the region faces record-breaking heatwaves. Despite the benefits of adopting cover cropping, no-till, nutrient management, alternative manure management and other regenerative practices, many farmers are hindered by financial barriers, including high up-front costs and risks.
In conversations with farmers in recent months, one word keeps coming up to describe their economic reality: “squeeze.” High farm input costs and loan interest rates are making it more expensive for farmers to grow crops. At the same time, low commodity prices mean they earn less money for the crops they grow. Farmers are caught in the middle of a bad deal with many asking whether it is even worth it to farm this year.
Farmers are facing this dilemma while also navigating additional disruptions and uncertainty. Federal funds have been frozen or canceled, putting farmers with existing contracts at risk after they’ve already invested their own money with the expectation that government funding would cover the remaining cost of farm improvements. Tariffs create another layer of price uncertainty and open the door for other countries to gain a competitive advantage in global markets. On top of this, farmers in several regions have experienced damage from extreme weather events, making their financial situation even more fraught.
Farmers are getting squeezed, and this makes it harder or even impossible for them to position their businesses for long-term success. But it doesn’t have to be this way.
A large field of soybean crop.
The Regenerative Agriculture Finance Program, also known as RAF, was launched in January 2022 by Farmers Business Network in collaboration with Environmental Defense Fund. The pilot year of the RAF program included 48 corn, wheat and soybean farmers seeking access to lower interest rates on operating loans by achieving standards for soil health and nitrogen fertilizer management practices.
When launched, the RAF program quickly became Farmers Business Network’s fastest selling financial product ever. Of the participating growers who completed data collection, 83% met the environmental standards and received a rebate payment equal to 0.5% of their loan interest rate.
The success of the pilot year of the RAF encouraged Farmers Business Network to expand the program. Learn more about the 2023 program results, as well as new opportunities and challenges for the RAF.
Establishing a cover crop during the cool season.
In early December, the EDF climate-smart agriculture team will join hundreds of farmers, food and agriculture companies, university experts and other conservation organizations at the 2023 Sustainable Agriculture Summit, “Scaling Collective Impact: Collaborating to Accelerate Agricultural Sustainability.” This conference is one of the largest annual gatherings of people working to improve sustainability in U.S. agriculture, and the discussions held in the conference sessions and hallways reflect the major trends, opportunities and challenges facing those who share this goal.
Here are some expected “hot topic” discussions at the conference and throughout the agricultural sustainability movement as we approach 2024.
Maggie Monast as a panelist at the The Federal Reserve Bank of Kansas City’s 2023 Agricultural Symposium, “The Changing Geography of Agricultural Production.”
The Federal Reserve Bank of Kansas City’s 2023 Agricultural Symposium, “The Changing Geography of Agricultural Production,” explored the factors driving changes in where and how agricultural commodities are produced, disruptions that are leading to further geographical differences, and the role of investments and farm policy in the years ahead.
I had the honor of joining as a panelist with representatives from Farmer Mac and Rabo AgriFinance, where I shared EDF’s perspective on how climate change affects agricultural production and finance. Climate impacts on agriculture, from catastrophic weather events to temperature and rainfall variability, increase risks for farmers and their financial partners. This pattern of increasing disruption directly affects food availability, prices, and ultimately, what ends up on our plates. As one of my fellow panelists noted, “The one certainty in agriculture today is volatility.” Read More
In January 2022, global farmer-to-farmer network and ag tech company Farmers Business Network®, launched a new rebate program for farm operating loans. The Regenerative Agriculture Finance Operating Line program includes a 0.5% interest rate rebate for farmers who achieve climate and water quality benchmarks established by Environmental Defense Fund. Both farmers who already meet the benchmarks, as well as farmers who improve practices to do so, are eligible.
The $25-million pilot fund filled up quickly, with 48 farmers enrolled and a growing waitlist to participate in an expanded fund. With the initial pilot underway, FBN plans to scale the fund to $500 million over the next three years and access public markets to securitize and sell these loans to investors seeking liquid, environmentally friendly investments.
Over the first year of the program, we are sharing what we are learning with others in the agriculture sector. EDF had the chance to sit down with two participating farmers about their experiences — Joel Uthe, operator of Uthe Farm in Chariton, Iowa, and David Iverson, operator of Iverson Farm in Astoria, South Dakota. Read More
Earlier this week, the Federation of Southern Cooperatives/Land Assistance Fund hosted a listening session for its Black farmer-members in Georgia in collaboration with Environmental Defense Fund. The federation is a nonprofit cooperative association of Black farmers, landowners and cooperatives based primarily in the Southern states. In the listening session, 15 farmers discussed their ongoing concerns about access to credit and climate change impacts, as well as how coalition building and advocacy can support them in continuing to farm. Read More
Companies throughout the agriculture value chain have set commitments to reduce the environmental impacts of agricultural production. They’re now engaged in the hard work to achieve those goals by developing programs to increase farmer adoption of conservation practices.
As value chain sustainability programs mature, there is increasing attention on the financial barriers to the implementation of sustainable agriculture at scale — and questions about how financial innovation can overcome those barriers.
A recently released report, Financial Innovations to Accelerate Sustainable Agriculture: Blueprints for the Value Chain, provides companies throughout the food and agriculture sector with 12 tangible innovative finance mechanisms and value-added incentive strategies to support U.S. farmers in scaling conservation practices and delivering sustainable outcomes. The blueprints encompass innovations for transition risk sharing, pay for performance, leasing incentives and more.
Here are three key insights for those looking to take action. Read More
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.
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
