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Small farms are just as important as big agriculture in the fight against climate change

Just four days before the US elections, the Paris Agreement officially became international law after receiving formal sign-off from 55 countries that contribute 55% of global greenhouse-gas emissions. This landmark deal marked a pivotal moment in the fight against climate change, particularly given its ratification by a majority of the world’s largest emitters of greenhouse gases, including India, China, the United States, and the European Union.

However, the election of Donald Trump has ushered in a new administration that has vocalized opposition to the agreement, leaving a wake of uncertainty. Now, more than ever, it’s important that we make every dollar and every action count in the fight against climate change.

To make this happen, the Paris Agreement needs to include one key group that has been largely left out of the most prominent plans to combat climate change: smallholder farmers. Smallholder farms are defined as single-plot farms that are often run by families, not by large corporations, such as those behind the cashier at farmers markets and farmers who supply small food chains. The world’s 450 million smallholder farmers are critical to addressing climate change and meeting the world’s food-security needs. New research from the Initiative for Smallholder Finance (ISF), “The climate conundrum: Financing smallholder productivity and resilience in the age of climate change,” suggests that achieving zero poverty, improving food security, and combating climate change can only be made possible with substantial efforts to help smallholder farmers adapt to climate change and reduce their emissions.

Thinking about the little guy

Of the $148 billion in public financing dedicated to combating climate change as of 2014, only $6 billion (4%) went to efforts in the agricultural sector. This investment is shocking when compared to the fact that the agriculture sector accounts for almost a quarter of annual global greenhouse gas emissions (GHGs).

More alarming still, while smallholder farmers’ contributions to GHGs is concentrated and limited, they are the population most affected by the consequences of climate change. The frequency and severity of extreme weather events, crop pests, and plagues are expected to increase despite the best mitigation efforts, which puts small farms at more risk as they have less crops to fall back on in tough times. Africa, for example, is expected to face average crop losses between 10-50% by 2055.

Without measures to help the world’s smallholder farmers adapt to climate change, many will struggle to maintain current levels of productivity. This is in spite of the fact that global markets are expecting smallholder farmers to play a major role in meeting the 70% increase in global food production required to feed the estimated 9 billion people who will be alive in 2050.

Developing a framework

Climate change represents an unprecedented challenge to agricultural production in developing countries, but governments and the development community can use existing frameworks and policies to address it while also pursuing rural poverty and food security goals. Climate-smart agriculture provides one such framework of practices and interventions that enables smallholders to improve their productivity and adapt to climate change while, in many cases, also mitigating their GHGs. Here are three factors that will help:

Governments can set national agendas: While the Paris agreement is legally binding, the way in which each country goes about executing the agreement is not. With global leaders meeting at the COP22 climate-change meeting and each government bearing the responsibility of developing climate-action plans of their own, we see an immense opportunity for governments to begin integrating smallholder farmers into the picture. Governments can then form partnerships with a variety of actors including NGOs, impact investors, and local banks to allow climate-smart agriculture activities to grow more rapidly.

Institutions and donors can subsidize funding: Development-finance institutions (DFIs) and donors can drive the adoption of climate-smart agricultural practices through subsidized funding. These funds can decrease the risk financial institutions face in providing loans to farmers, provide more training through technical assistance to farmers, and help test and scale local programs. Going forward, blended public and private finance should be incorporated into smartly designed subsidy programs that incentivize farmers to adopt resilient and productive practices.

Multinational companies can promote sustainable supply chains: A number of multinational companies have made commitments to improve the sustainability of their supply chains, and several are beginning to fulfill their commitments by making direct investments. A combination of factors drives this movement: most notably, increasing pressure from consumers in developed countries. Companies are realizing that the $7 trillion global food and beverage industry will not continue to deliver the financial returns it expects without investing in improved smallholder productivity in the face of climate change.

Collaboration is key

To combat climate change we will need significant investments in climate smart agricultural practices for smallholders. Going forward, our research suggests that a number of crosscutting actions are particularly important if programming and investments aim to make optimal use of climate-smart agriculture funding:

Funders need to become better communicators. Climate finance and agricultural development specialists must start communicating and collaborating more effectively. This requires multi-disciplinary teams, inter-departmental working groups, and dedicated knowledge networks that bring these two sets of professionals together for knowledge sharing opportunities.

Helping farmers deal with the effects of climate change needs to be a priority. Climate change has already started to affect smallholder farmers’ livelihoods and will do so increasingly over the coming decades regardless of the success of mitigation efforts. When developing financing and technical assistance packages for smallholder farmers, more emphasis should be put on helping smallholder adapt to climate change and creating more resilient supply chains.

Funders and investors need to use innovative finance structures to catalyze markets. More patient design funds (e.g., grants) should be allocated towards creation and experimentation with blended-investment structures that combine market-based returns with subsidies and monetization of natural assets.

The ratification of the Paris Agreement represents a pivotal moment in the fight against climate change. Although the political landscape of the US presents many unanswered questions for the climate finance space, we must continue to push forward and evaluate how to best address climate change. Our research suggests that to truly make a difference, we will need a concerted effort from stakeholders across the value chain—including governments, development finance institutions, multi-nationals, and investors—to unlock finance for smallholders and foster opportunities for them to build resilience in the age of climate change.

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