Agricultural Finance

The AGree Coalition is exploring opportunities for banks and investors to finance farmers and landowners who want to invest in conservation practices that increase profitability, enhance property values, and reduce producers’ long-term risk.

The Coalition’s work on conservation and agricultural finance is a direct extension of our work on agricultural data, risk management, and conservation practices. Although improving soil health through conservation practices is an important tool for reducing on farm risk, the agricultural finance system generally fails to recognize and capture the economic benefits of conservation practice adoption. Currently, banks and other lenders do not explicitly recognize soil health in their ratings of their borrowers (producers). We believe that re-aligning financial signals and incentives throughout the agriculture financial system is a necessary step to communicate the long-term financial and risk reduction benefits of improving soil health through conservation practices.

COLLABORATION AND POLICY

In February 2020, we hosted a Finance for Conservation Agriculture meeting, where we brought together experts working on conservation banking and finance to take stock of current initiatives and identify opportunities to accelerate change in the farm finance system.

As a trusted food and agriculture convener on policy issues, AGree plans to continue supporting the conservation banking and finance community by:

  • Fostering coordination and collaboration among NGOs, producers, private companies, economists, and USDA agency representatives on strategic opportunities to advance finance for conservation agriculture.
  • Identifying key policies and government programs that can unlock finance.
  • Convening stakeholders to develop solutions to drive positive change in the agricultural finance sector.
BANKING AND FINANCE FRAMEWORK

In addition to our policy work, we are working with ag data experts, economists, finance experts, and other technical partners to develop a scalable banking and finance framework to help lenders and investors convert the environmental and economic benefits of conservation practices into relevant metrics such as reduced cash flow risk, improvements in efficiency or asset value, and price premiums. To make the framework actionable, the AGree Coalition will support a pilot project to apply the framework to a financial product for farmers and landowners who want to invest in conservation practices that increase profitability, enhance property values, and reduce producers’ long-term risk.

Through this data framework pilot project with commercial lenders, the Coalition will take the important step of demonstrating how conservation investments impact the bottom line and reduce risk.