The changing nature of farm financialization - Safaa

Description

Agricultural Finance – Financing of agriculture-related activities, from production to market. ... Contract Farming – An agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products at a specified time in the future, frequently at predetermined prices. Agriculture finance empowers poor farmers to increase their wealth and food production to be able to feed 9 billion people by 2050. The work in agriculture finance helps clients provide market-based safety nets, and fund long-term investments to support sustainable economic growth. Demand for food will increase by 70% by 2050; at least $80 billion annual investments will be needed to meet this demand. There is an ever increasing need to invest in agriculture due to a drastic rise in global population and changing dietary preferences of the growing middle class in emerging markets towards higher value agricultural products. In addition, climate risks increase the need for investments to make agriculture more resilient to such risks. Financial sector institutions in developing countries lend a disproportionately lower share of their loan portfolios to agriculture compared to the agriculture sector’s share of GDP. To scale all of the financialization up, we have three components in financialization of agriculture: - Farming of subsidies:Payments by the federal government to producers of agricultural products for the purpose of stabilising food prices, ensuring plentiful food production, guaranteeing farmers' basic incomes, and generally strengthening the agricultural segment of the national economy. - Direct to consumer sales:Refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, ... - Growth of carbon accounting:processes used to measure how much carbon dioxide equivalents an organization emits. It is used by states, corporations, and individuals to create the carbon credit commodity traded on carbon markets (or to establish the demand for carbon credits). Examples of products based on forms of carbon accounting may be found in national inventories, corporate environmental reports, and carbon footprint calculators.

Enablers

Financing models that promote agricultural transformation centred around the development of human capacity. The investment in human capital, particularly in rural areas is important for knowledge dissemination to other community members, which ultimately improves the general standard of living overtime so all of this can considered to be enhancing the strength factor of the nature of farm financialization: 1. Increase productivity is a priority if global’s agricultural sector needs to be transformed from mere production for local consumption to mass production for both consumption and export [3]. This can only be possible if the requisite authorities adopt policies that encourage agro-industrial farming and the growth of agribusiness nationally. 2. An increase in agricultural production is relevant for the globe if food security needs to be guaranteed by 2030. There is a need for the government to speed up investment into activities to add and fully realize production value. The government also needs to create and support market mechanisms to facilitate overall value chain control. 3. Increasing the accessibility of finance for investment into hard infrastructure that encourages the probability and cost competitiveness of scaling agricultural production and agribusiness. 4. Develop organised finance amenities which increase the flow of private capital into the agribusiness sector so as to provide adequate financial resources to measure agribusiness

Inhibitors

On the other side, the growth and deepening of agriculture finance markets is constrained by a variety of factors which include: 1. inadequate or ineffective policies 2. high transaction costs to reach remote rural populations 3. covariance of production, market, and price risks 4. absence of adequate instruments to manage risks 5. low levels of demand due to fragmentation and incipient development of value chains 6. lack of expertise of financial institutions in managing agricultural loan portfolios

Paradigms

- It creates a lack of transparency of land ownership and production units. - It makes it possible to circumvent existing regulations. - It undermines farmers’ independence - It impedes the generational transition - It fosters the development of farm corporations operating solely on the basis of salaried work

Experts

- Bruno Larue: Agricultural economics, agricultural policies: bruno.larue@eac.ulaval.ca - John Reilly: Agriculture economics. Air pollution and emissions Biofuels Climate change policy

Timing

- 1800-1870: Level of carbon dioxide gas (CO2) in the atmosphere, as later measured in ancient ice, is about 290 ppm (parts per million). - 1960: Mitchell reports downturn of global temperatures since the early 1940s.=>Modern temp's

Keeling accurately measures CO2 in the Earth's atmosphere and detects an annual rise. =>CO2 greenhouse

- 1985: Ramanathan and collaborators announce that global warming may come twice as fast as expected, from rise of methane and other trace greenhouse gases. - 2000: Global Climate Coalition dissolves as many corporations grapple with threat of warming, but oil lobby convinces US administration to ignore the problem. - 2019: Increasing disasters (tropical cyclones, wildfires, etc.) join scientists' warnings to spur public demonstrations and civil disobedience

Web Resources

- https://www.worldbank.org/en/topic/financialsector/brief/agriculture-finance - https://legal-dictionary.thefreedictionary.com/Agriculture+Subsidies - https://history.aip.org/climate/timeline.htm - https://reliefweb.int/sites/reliefweb.int/files/resources/UNDP_NP-Impact-of-Climate-Change-Finance-in-Agriculture-on-the-Poor.pdf - https://www.arc2020.eu/combating-the-financialisation-of-agriculture-your-land-my-land-our-land/