Farmers building climate resilience face $151 billion financing gap

Social enterprise One Acre Fund has released new insights detailing that the global farming community would need $153 billion annually to support smallholder farmers across sectors in implementing agricultural methods. These are designed to enable farmers to generate long-term resilience in the face of climate change. The multi-billion dollar amount is based on an annual investment of $300 per farmer.

However, only $2 billion of global finance is currently available to confront the climate crisis. This figure, which comes from both public and private sources, therefore leaves a financial gap of $151 billion.

According to the World Cocoa Foundation (WCF)​, there are between five and six million smallholder cocoa farmers worldwide. Collectively, these farmers produce more than 90% of the world’s cocoa. Furthermore, a total of 40-50 million people around the globe depend on cocoa and its production for their livelihoods.

However, global smallholder farmers are trying to combat the increasingly volatile effects of climate change, including erratic temperatures and weather patterns. These impact crop yields and soil health, destroying harvests and restricting incomes. As these affect their livelihoods and wellbeing, smallholders struggle to build resilience in response to the climate emergency.

However, smallholder farmers play a vital role amid the changing climate. They can implement tools and techniques that help them achieve sustainable and sufficient income for their livelihoods and create collective climate resilience.

Fears for farmers​

Without this investment, there is a significant and ongoing concern for farmers and climate change. “Increased extreme poverty is our number one concern,” says Michelle Kagari, Senior Director of Government Relations and Policy at One Acre Fund. Currently, 8 out of 10 farmers in extreme poverty live in rural Africa. By 2030, One Acre Fund reveals that this will increase to 9 out of 10 based on trends.

Additionally, the anticipated rise is without factoring in the worst impacts of climate change beyond 2030. “We would expect in the long term to see increasing pressure on national-regional-global food security,” says Kagari. In the Global South, smallholder farmers produce 80% of people’s food. Increasing food imports is anticipated to put further pressure on the debt burden in heavily indebted least-developed countries (LDCs).

“Deforestation will likely intensify as farmers clear more land to compensate for degraded soils,” says Kagari. Research ​estimates​ that Africa will lose 28 million hectares of primary forest due to land expansion if maize yields don’t double within the next 20 years.

Boosting value in agriculture​

Plugging the current financing deficit would produce a predicted $403 billion in value for global smallholder farmers. “Investment helps smallholders secure long-term economic prosperity, even in an unpredictable climate,” Kagari states.

Smallholders benefitting from investment are likely to see higher yields long term, increased incomes, reduced soil erosion, increases in soil organic carbon, above-ground biomass/net canopy gain, improved nutrition from crop diversification, increased agrobiodiversity and the protection of primary forest around buffer zones and protected habitats.

“Most of this is already being measured at a representative sample level by One Acre Fund in our areas of operation, but more investment would allow for more in-depth monitoring,” says Kagari.

Poor soils are vulnerable to erosion events, which make recovery even more difficult. “The gap in funding for smallholders means that they lack critical investment necessary to build their climate resilience and secure long-term economic prosperity in the face of the climate crisis,” says Kagari. 

One Acre Fund has developed its Tubura Programme, which is designed to tackle soil erosion. “Our locality has long been a victim of climate change,” says Bukuru Thierry, a smallholder farmer in northern Burundi who is part of the programme. Noting that the main threats have always been erosion, landslides and snow, Theirry expresses that his corn and bean fields were twice washed away by erosion and once by hail and torrential rain. “After applying the right techniques, my harvest increased remarkably,” Thierry shares.

The organisation’s findings come as global leaders and policymakers meet in Baku, Azerbaijan, at UNFCCC COP 29. The organisation calls on the worldwide community to recognise the impact of investing in smallholder farmers and direct a greater proportion of climate finance to smallholder farmers.

Per-farmer investment needed​

One Acre Fund has reached the $300-per-farmer calculation based on providing climate change solutions to more than 4.8 million smallholder farmers across sub-Saharan Africa and preliminary data from early-stage trials in Rwanda. The organisation calculated the cost per farmer for two adaptation scenarios.

“It’s an estimate of the cost of a package of support that would allow smallholders to thrive in the face of intensifying climate impacts,” says Kagari. The $300 investment figure would enable farmers to explore and progress various agricultural methods, including optimised agronomy such as planting date, correct input selection, field-level guidance and intensive agroforestry. It would also provide opportunities for climate-smart crops to enter the market and also support farmers implementing regenerative agricultural techniques.

One Acre Fund also states that the sum would help farmers address other gaps and concerns by providing services such as gender-sensitive training and extensions and full climate insurance to respond to harvest loss.

The $153 billion investment is the cost per farmer multiplied by 511 million—the number of farmers worldwide—who farm on two hectares or less of land.

While numbers don’t look at cocoa farmers specifically, One Acre Fund confirms it’s likely that cocoa farmers’ access to shade and agroforestry species, improved climate-smart inputs such as more drought-tolerant, extension services for more environmentally sound practices, access to insurance and access to finance for improved inputs all suffer from this climate finance gap.

It is also likely that this financial gap indirectly increases overall deforestation and soil health risks. “Long term, it’s possible that the cocoa sector, like staple food crop sectors, will struggle to secure adequate and quality supply and will be unable to guarantee that supply is from sustainable production systems,” says Kagari.

What’s the solution?​

One Acre Fund argues that we must focus on new finance blends for smallholder adaptation and climate-resilient practices. “This will require significantly more publicly-sourced climate finance than currently allocated,” says Kagari.

Furthermore, the wider food and cocoa sector can help global smallholder farmers amid climate change in several ways. One Acre Fund encourages the cocoa industry to support advocacy for increasing public sector finance to smallholder farmers. Additionally, the sector needs to explore pricing models. “Work on new/better premium pricing models traced to improved practices,” says Kagari.

One Acre Fund also highlights the importance of the broader services and factors that enable farmers to earn a living and navigate the industry amid the evolving climate emergency. “Support design-side efforts for better products and services, especially insurance, input credit, and access to finance for regenerative agriculture,” Kagari shares.