Sustainable agriculture is essential for ensuring food security, combating climate change, and preserving natural resources. 

• However, financing sustainable agriculture remains a challenge as highlighted by RBI in a recently held international conference on Sustainable Financing for Food Security and Farm Income.

Issues with Agro-Financing in India

• Regional imbalances: Share of Southern Region is 47.13% whereas that of Northeast Region is 0.76% (2021-22).
• Issues in access of Credit: ~23% of credit is from non-institutional sources (2021-22).
• Non-integrated value chain financing due to issues such as fragmentation of land holdings
• Other Issues: High cost of finance, lack of collateral, complicated procedures etc.

Solutions Suggested for Sustainable financing

• Increased role of Collectives such as FPOs and FPCs in enhancing bargaining power, access to technology and assured marketing.
• Value Chain Financing by integrating various stakeholders such as farmers, aggregators, traders, processors into a coordinated system.
• Warehouse Financing to stabilize prices of agricultural commodities.
• Adoption of Financing Technology to expand irrigation infrastructure, promote micro-irrigation systems, and farm mechanization.
• Capital formation through convergence with Government Schemes and interest subventions
• Leveraging technology and data-driven insights to enhance financing models. E.g. Collaboration with digital platforms to track crop yields