Growing Returns

Selected tag(s): farm finance

Lenders want to support farmers’ conservation efforts. Here’s how their executives can help.

corn plants in a conservation practice field in the midwest

Low angle view of young corn plants in a field after the rain


A new survey of agricultural lenders in the upper Midwest reveals important insights about their perceptions and support for farmers’ conservation efforts. As the first of its kind, the survey can inform agricultural lending institutions’ climate and sustainability strategy development.

Farmers rely on agricultural lending institutions for loans to cover equipment, land and operating expenses. In particular, loan officers at these institutions hold relationships with farmers and are often seen as trusted advisers and sources of information. Their perspectives and knowledge of conservation agriculture can significantly influence farmers’ progress in adopting conservation practices.

179 loan officers participated in this survey across the states of Minnesota, Wisconsin, Iowa and Illinois. Fifty-one percent of the surveyed loan officers said that agricultural conservation is very or extremely important to them personally, and 59% believe it is very or extremely environmentally beneficial. Despite this, many loan officers face challenges supporting their farmer clients’ conservation investments. This is where the support of executives at agricultural financial institutions becomes essential.

Drawing from the firsthand insights obtained from the survey of loan officers conducted by EDF, University of Wisconsin-Madison Division of Extension, University of Minnesota Water Resources Center and Compeer Financial, here are the specific actions executives at agricultural finance institutions can take to support conservation investments.

Provide educational opportunities on conservation for loan officers.

A key challenge hindering loan officers in supporting their clients’ conservation efforts is a lack of knowledge about the financial implications of conservation practices. Forty-two percent of the respondents identified a lack of knowledge about the financial costs and benefits of conservation investments as a significant barrier in supporting clients who want to include conservation practices in their loan proposals. Only 15% of the surveyed loan officers consider themselves very or extremely knowledgeable about the financial impacts of conservation practices, and 44% feel moderately knowledgeable.

To address loan officers’ knowledge gaps, leadership at agricultural finance institutions should provide targeted education and training on the financial impacts of conservation. These programs can be developed by engaging with trusted partners such as local producers with first-hand experience implementing conservation practices, university extension services and researchers, conservation professionals and relevant government agencies. The Conservation Economics & Finance Resource Hub developed by the authors of this survey offers a valuable resource for creating these training programs.

Support financial data analysis efforts on conservation practices.

Eighty-six percent of the survey respondents believe that having information on the financial implications of conservation practices would enable them to better support their farmer borrowers interested in these practices. Agricultural finance institutions should support projects that collect and analyze financial data on conservation practices and share the results with their staff.

One example of such initiatives is EDF’s collaboration with the Center for Farm Financial Management at the University of Minnesota, the Minnesota Farm Business Management program and other partners to gather and analyze cover crop financial data from 121 Minnesota farms across four crops and five cover crop types. The detailed farm financial data and insights from this project over the next few years will help answer questions about the profitability of cover crops and inform loan officers who engage with farmer clients implementing cover crops.

Develop an internal strategy that supports conservation investments.

When asked about practices that reduce the agriculture sector’s contribution to climate change, only 17% of the respondents feel increased pressure from their institution’s leadership to support these mitigation practices. This aligns with research from EDF and Deloitte indicating that only 8% of agricultural finance institutions in the United States are significantly factoring climate change into their decision-making.

These gaps reflect a lack of a comprehensive internal strategy to support conservation investments. To address them, leadership at agricultural finance institutions should proactively develop conservation strategies and integrate them into a broader climate or sustainability strategy to help their farmer borrowers take advantage of conservation opportunities. Leaders can learn from the climate strategies guide for agricultural finance institutions, published by EDF and Deloitte in 2023. It presents five strategies agricultural finance institutions can implement to address climate-related risks and opportunities for their business and borrowers. 

Help loan officers help farmers achieve conservation success.

It is evident that loan officers believe in the importance of conservation practices and are motivated to support their farmer borrowers, but they lack the necessary tools to do so effectively. It is critical for leadership to support them with well-defined strategies, comprehensive education and access to relevant data. By empowering loan officers, agricultural finance institutions can unlock substantial opportunities for farmer borrowers to invest in conservation practices.

Want more information?

On March 19 at 2 p.m. ET and March 20 at 11 a.m. ET, EDF will host a 30-minute webinar to inform partners about agricultural lenders’ perceptions and actions in supporting conservation practices.

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Increasing extreme heat is hurting Kansas farmers’ bottom line

Grain silo over a golden wheat field

During the summer of 2023, Kansas endured a historic heat wave with temperatures soaring above 110°F in some areas. As climate change continues to intensify, the frequency and severity of extreme heat are projected to increase. Are Kansas farmers at risk of losing money in the face of these extreme growing conditions? A new study by EDF, Kansas State University and Cornell University aimed to answer this question by examining the impacts of extreme heat over the last four decades.

Read More »

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Trends to scale collective impact at the 2023 Sustainable Agriculture Summit and beyond

hand in soil showcasing cover crop growth.

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.

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Farmers see value in agriculture loans that reward stewardship

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 »

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Small North Carolina farms find profitability in climate resilience

Farms across North Carolina are experiencing more variable and extreme weather associated with climate change, including hotter nights and more frequent and severe rainfall. Small farms are adapting to these changes by adopting climate-resilient practices that help buffer weather extremes and improve soil health.

Measuring and communicating the financial costs and benefits of these practices is important to help more farmers adopt them profitably and find financial support for the transition. Cooperative extension agents — small farms’ closest technical advisers — will increasingly need to inform farmers about climate-resilient practices and their financial impacts.

Environmental Defense Fund and North Carolina Agricultural and Technical State University Cooperative Extension collaborated with three small North Carolina farms to measure the financial impacts of adopting reduced tillage, high tunnels and cover crops. The results are summarized in a new report and set of case studies. Read More »

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Fostering innovative finance in the agriculture value chain

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 »

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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.

Read More »

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New program sheds light on cover crop financials with big data

This post was co-authored by Katherine Wilts Johnson, extension economist at the University of Minnesota’s Center for Farm Financial Management.

Farmers’ interest in cover crops is growing rapidly along with increased focus on soil health. But one of the most important questions farmers continue to ask is how cover crops will impact their finances.

A new program launched by Environmental Defense Fund and the University of Minnesota’s Center for Farm Financial Management (CFFM) aims to answer the economic questions farmers have about cover crops by developing a new farm financial benchmarking program within the FINBIN database — the largest publicly available farm financial database in the country.

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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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