Rome – Financing designed to make our agrifood systems more efficient, more inclusive, more resilient, and more sustainable can help prevent and mitigate food crises and ensure that much-needed help reaches the world’s poorest, according to the Food and 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, and 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, and nearly two-thirds are engaged in agrifood systems. Rural poverty and 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 and rural farmers from accessing financing include the high risks and costs involved, a lack of guarantees, low profitability, low literacy rates, and a lack of skills.

In this regard, FAO plays a pivotal role in facilitating access to formal financial services for rural poor and farmers, including by working with International Financial Institutions to support the establishment and 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, and digital finance. These models are designed to reduce lenders' risks and make financing more accessible to smallholder farmers.

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

FAO also actively fosters partnerships between smallholder farmers and the private sector, including agribusinesses, banks, and other financial institutions. And by connecting farmers with buyers, markets, and 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 and discriminations that prevent marginalized groups from accessing finance and facilitate them to market accessibility,” Qu said.

This implies directing flows of capital towards projects and initiatives that are sensitive to the needs of these groups and 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 and discriminatory social norms.

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