By Dana Drugmand
Addressing obstacles to rural and agricultural finance was the focus of a two-day conference held June 20-21 in Washington D.C. The Cracking the Nut Conference brought together private sector professionals, policymakers, educators, funders, researchers and others working in the rural and agricultural finance sector. The conference included presentations and workshops centered around five main themes, including making markets work for rural and agricultural finance, forging agricultural finance innovations, reducing the cost of rural outreach, managing risk effectively, and attracting private investment.
Image credit: Cracking the Nut
“The rural sector has long housed the majority of the poor who have been largely ignored by the financial sector,” said Kurt Focke in the conference’s opening remarks. Focke, who works in Chief Capital Markets and Financial Institutions Division for the Inter-American Development Bank, talked about four global crises we are currently facing – a food crisis, an energy crisis, a water crisis, and a climate change adaptation and mitigation crisis. In highlighting each of these four issues, Focke emphasized why the financing of agricultural developments and innovations is critical. Financing irrigation technologies, for example, is an integral part of improving agricultural productivity. “Finance will be needed to support irrigation and water conservation practices,” Focke said.
The afternoon plenary session, titled “How Can Rural and Agricultural Finance Be Used to Improve Food Security?” featured panelists Margaret Enis from USAID, John Coonrod, Executive Vice President of The Hunger Project, and Mark Cackler from the World Bank. Coonrod highlighted an initiative implemented by The Hunger Project that is using finance to address gender inequality. This microfinance initiative has empowered women by encouraging rural farmers in Africa to create women-owned credit unions. “The women who participate in the microcredit program in this system now have a real voice in society,” said Coonrod. Cackler talked about the role banks play in addressing three aspects of food security, including availability of food, access to food, and better nutrition and utilization of food. “Without improving incomes, and particularly farm incomes, we won’t be able to improve the kind of access to food that is needed to address the challenge of food security,” he remarked. Coonrod also emphasized the need for better financial services, including loans and credit, and putting it all together in an integrated system to address the three pillars of better food security. Finally, Enis highlighted the issue of risk, which is very costly in low-income rural economies. USAID has been working on developing effective and appropriate insurance products as part of a broader framework for risk management and reduction. USAID’s Bureau for Food Security is promoting improved agricultural practices, and, according to Enis, “many times implementing these improvements requires investments made possible through financial services.”
Dana Drugmand is a research intern with the Nourishing the Planet project.