Transforming our agrifood systems holds the key to helping the world’s poorest | FAO News

Rome – Financing designed to make our agrifood systems more efficient, more inclusive, more resilient, & more sustainable can help prevent & mitigate food crises & ensure that much-needed help reaches the world’s poorest, according to the Food & Agriculture Organization of the United Nations (FAO).

FAO Director-General QU Dongyu was invited to participate in a session of the UN Finance for Development Summit, a preparatory meeting held at the Vatican ahead of the 4th International Conference on Financing for Development, scheduled for June 30-July 3 in Seville, Spain.

The Summit, held on 1-2 April, saw politicians, financial experts, philosophers, economists, & Church leaders discuss the topic of “How to Ensure that Financing Reaches the Poorest of the Poor.”

The FAO Director-General reminded the audience that 80 percent of the world’s poorest live in rural areas, & nearly two-thirds are engaged in agrifood systems. Rural poverty & food insecurity are closely linked: according to FAO’s latest figures, around 733 million people globally were affected by hunger in 2023. During his intervention, Qu emphasized that the right to food is a basic human right.

The main challenges that prevent poor & rural farmers from accessing financing include the high risks & costs involved, a lack of guarantees, low profitability, low literacy rates, & a lack of skills.

In this regard, FAO plays a pivotal role in facilitating access to formal financial services for rural poor & farmers, including by working with International Financial Institutions to support the establishment & the strengthening of small financing at the community level. Such initiatives help the poorest farmers graduate into a first form of financing rather than being supported through social interventions such as cash-transfer programs, the Director-General said.

Promoting innovative financing models

For poor farmers who can potentially become bankable, FAO promotes the adoption of innovative financing models, including crop insurance schemes, climate-smart agriculture financing, & digital finance. These models are designed to reduce lenders’ risks & make financing more accessible to smallholder farmers.

Access to finance also involves building capacity & strengthening institutions. This is why a significant part of FAO’s work aims to increase financial literacy in rural communities by educating farmers & empowering them with knowledge about financial tools & services.

FAO also actively fosters partnerships between smallholder farmers & the private sector, including agribusinesses, banks, & other financial institutions. & by connecting farmers with buyers, markets, & financial services, FAO helps create sustainable, profitable value chains that improve farmers’ access to finance. Yet more is needed.

“For a truly inclusive transformation of agrifood systems, we need targeted integrated public policies aimed at removing the barriers & discriminations that prevent marginalized groups from accessing finance & facilitate them to market accessibility,” Qu said.

This implies directing flows of capital towards projects & initiatives that are sensitive to the needs of these groups & that do not widen existing inequalities. Women, for instance, are more impacted by multi-dimensional poverty than men, with gender disparities driven by structural inequalities & discriminatory social norms.

“A larger, more efficient, equitable & innovative financing landscape for agrifood systems transformation is key to address the most pressing global challenges & to reach the poorest of the poor & reduce hunger & malnutrition,” Qu said. “Together, we can build a financial architecture that leaves no one behind & ensures that every investment contributes to a future where food security, economic development, environmental sustainability, & social equity go hand in hand.”

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The State of Food Security & Nutrition in the World 2024