Almost every conversation surrounding the agricultural industry has the term “sustainable agriculture” in it. This is because it concerns everyone, from the farmers to the middle men and the consumers. However, there are five things you should know which will help you understand why people are having conversations on this topic:
What Sustainable Agriculture Means
Sustainable agriculture can be defined in many ways but one common denominator in all its definition is carrying out agricultural practices which provide long term crops and livestock and has as little negative effect on the environment as possible.
The concept tries to understand the relationship between organisms and their environment and find a balance between the need for food production and the preservation of the environment. Its key focus are – a healthy environment, economic profitability, and social and economic equity. The practice also supports less use of chemicals, energy and water conservation, biodiversity and ecology, as well as local food production
Why We Need Sustainable Agriculture
There are 7 billion people in the world, and that gives us 7 billion reasons why we need sustainable agriculture. Aside from the fact that sustainable agriculture seeks to provide food for everyone, here are some other reasons why we need to consciously practice sustainable agriculture:
- To Conserve Energy:
When agricultural products are moved from one point to another by any means of transport, energy is used. One of the main focuses of sustainable agriculture is to grow and sell agricultural products locally, thus reducing the need for transportation.
Other activities which require energy in their production are fertilizers, pesticides, and insecticides.The agricultural industry relies heavily on fossil fuels for producing fertilizers, packaging, and others. Sustainable agricultural practices seek to reduce the dependence of the industry on unsustainable energy sources which could be damaging to the natural environment.
Sustainable agriculture adapts methods which makes soil healthier and protects other natural resources such as air and water. Conserving these resources are necessary for future food production. It also embraces farming practices which require less energy and thus, eliminates the need for fossil fuels and greenhouse gas emissions which are produced by the agricultural sector.
To Promote Biodiversity:
Sustainable agriculture seeks to understand the relationship between organisms and their environments to make for better food production. This could lead to a healthier ecosystem and create a balance. It also encourages diverse farming systems which includes incorporating variety of crops.
- To Produce Healthy Food:
Crops grown using sustainable agriculture do not contain residues of harmful chemicals and pesticides, thus they’re considered healthier. These healthy crops are used to feed livestock, which ultimately leads to nutritious food for people.
To Reduce Pollution:
Sometimes chemicals in pesticides and fertilizers wash away and become land and water pollutants, causing harm and ruining the environment. Adopting sustainable agricultural practices can help reduce pollution with its use of organic methods of fertilizers and pest control.
Sustainable Agriculture Practices
When crops are planted, they use up the soil nutrients. One of the ways to replace those nutrients is through crop rotation. This involved planting a particular crop to replace the nutrients a previous crop used up.
For instance, planting a heavy nitrogen depositing plant such as soyabeans after a heavy nitrogen using plant such as corn, can help maintain the nutrients in the soil. Crop rotation helps keep the soil healthy and conserve the nutrients in it as well as prevent diseases and allow the soil to fallow after planting, which is good for the health of the soil.
We need to start growing food closer to home and there’s no better way to do that than through urban agriculture. So many people already live in the cities and to bridge that gap between where food is produced and where it’s mostly consumed, urban agriculture comes to play. We can grow our own farms in backyards, gardens, and rooftop gardens.
When livestock grazes on a particular field, without allowing that land to fallow and regain its nutrients, it becomes dangerous. Rotational grazing is similar to crop rotation but it applies to livestock. The livestock grazes on different fields and is exposed to nutrients. The land also fallows and regains its nutrients.
The excreta of those animals can also serve as manure for the soil and fosters the growth of plants. Also, when overgrazing occurs, the soil is exposed and trampled upon, which can easily be eroded but rotational grazing helps reduce this.
Water management is a big issue in agriculture. Irrigation systems that are planned will help in channel water where it is needed. Luckily, technological advancements have made it possible to apply precision to agriculture and help conserve resources such as water. For instance, agricultural drones can be used to track plants and spray the exact amount of water needed for growth.
Natural Pest Management:
Overuse of pesticides could result in environmental damage. Sustainable agriculture entails using biological and mechanical pest control methods to eliminate pests. For instance, some insects such as birds and bats can serve as predators of beetles and weeds.
Some countries are already adapting this method. For instance, in Japan, farmers are using ducks instead of pesticides to control weeds in their rice farms. The ducks are specially trained. The farmers release the ducks into the paddy fields and the ducks eat insects, weeds, and even the weed’s seeds. They eat everything except the rice.
Planting trees around the farm can attract birds, who will not only nest there but feed on the insects and control pest.
What Happens if There’s no Sustainable Agriculture?
Based on the reasons why we need sustainable agriculture, it is easy to see all the things that could go wrong if we don’t adapt it. The practice gives balance to the environmental, social, and economic needs of agriculture, and to the society at large.
Sustainable agriculture reduces the release of toxic chemicals into the environment and encourages the growth of nutritional food for humans. It also encourages practices which will ensure sufficient supply of food.
How You Can Contribute to Sustainable Agriculture
Creating Awareness: Farmers need to understand the implications of their farming practices. Some farmers practice harmful farming activities. These activities could be detrimental to the environment in the long run. With your knowledge of sustainable agriculture, you can spread the word.
By Providing Appropriate Technology:There are tools which can help reduce the use of harmful practices. For instance, proper irrigation systems which supply plants with the exact amount of water they need can help reduce water wastage. The right planting and harvesting technology can also prevent wastage.
Purchase Locally: When we buy and sell locally, it helps. Food sold locally requires less packaging, and less fuel in transport, It also keeps the food in the economy, and takes less time to move from farm to consumption than other foods, it fosters good community relationships.
AFEX Raises $50Million for Agri-SMEs, Africa’s First Warehouse Receipt Backed Commercial Paper
AFEX CEO, Ayodeji Balogun (Source: AFEX)
AFEX Commodities Exchange Limited (AFEX), Nigeria’s leading private commodities exchange company, has announced the first Warehouse Receipt Backed Commercial Paper in Africa, with tech-enabled operations and a 24-hour fast cash turnaround for borrowers. With over $50 million raised for Agri-SMEs, this bridges the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time.
The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the Food and Beverage, Trading Poultry and Animal Feed segments in Nigeria. The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices.
“With our vision to reach a cumulative total of over $5 Billion in investment to the agriculture sector over the next five years, this financing deal is right on track to achieve this goal’’ – said Ayodeji Balogun, CEO, AFEX Commodities Exchange. “As we move towards building a derivatives market in Africa, we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives.”
The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the Nigerian agricultural sector. With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.
“Our mission is to provide low-risk working capital facility for stakeholders in the Agro sector, in a way that is transparent and has a very high viable investment return’’ – said Akinyinka Akintunde, VP Financial Markets at AFEX. “As a licensed commodities exchange and warehouse receipt system operator, we deploy a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrower.”With AFEX’s goal to support Africa’s food security while promoting a fair exchange of value among players in commodity value chains, this deal’s social impact is delivered through market access for farmers and reduced post-harvest losses. AFEX continues to contribute to the United Nations Sustainable Development Goals 1, 2, 5 and 8; no
poverty, zero hunger, gender equality, decent work, and economic growth.
SunCulture secures $11m debt facility from SunFunder syndicate to expand solar irrigation in Africa
SunCulture CEO and co-Founder, Samir Ibrahim (Source: YouTube)
SunCulture, a solar irrigation company headquartered in Nairobi, Kenya, today received the first disbursement from a new $11m syndicated debt facility to expand its operations in sub-Saharan Africa.
The new loan is groundbreaking for the “productive use” solar sector due to its size and its innovative combination of working capital and end-user financing.
Arranged by SunFunder, the co-investors in the facility are Nordic Development Fund; Triodos Investment Management, through its Hivos-Triodos Fund; SunFunder through its Solar Energy Transformation Fund; AlphaMundi through both its SocialAlpha and AlphaJiri Investment Funds; and the AfDB’s FEI OGEF managed by Lion’s Head.
This will enable SunCulture to scale up renewable energy installations at smallholder farms and households that will mitigate over 20,000 tons of CO2 annually – as farmers replace diesel pumps with solar ones – whilst facilitating income growth and job opportunities in rural communities.
SunCulture has pioneered a “Pay-As-You-Grow” business model to make solar-powered irrigation affordable for smallholder farmers in sub-Saharan Africa, combining end-user finance, value-added services, modern climate technology, and access to improve productivity. A recent report developed by Dalberg Research shows that irrigation systems and solar-powered water pumps can increase farmers’ production between 2 and 4 times, and their income between 2 and 6 times.
Samir Ibrahim, Chief Executive Officer at SunCulture, said, “The past year was devastating for the millions of smallholder farmers in Kenya; 87% are in a worse financial position due to the pandemic. 81% of SunCulture farmers, however, were able to increase their revenue from farming in 2020. Solar irrigation helps create food security and sovereignty, and it also helps lift people out of poverty. This facility further enables our efforts to support farmers by
providing them with more of our solar solutions, and faster.”
Jemimah Kwakye-Fosu, Investment Officer, who led the transaction for SunFunder, said: “We are delighted to have led this syndicate of proactive lenders who worked well together for a common goal: to help SunCulture reach many more farmers. It shows how working capital can be combined with end user financing, which is essential for making productive use technologies affordable.”
Surabhi Mathur Visser, Head of Investments at SunFunder, said: “This is a pioneering transaction that demonstrates how productive use technologies like solar irrigation can be scaled up. SunFunder arranged this facility with a similar-minded group of lenders to support an innovative product and business model. We look forward to seeing SunCulture grow in Kenya and new markets.”
Karin Isaksson, Managing Director at NDF, said: “This loan to SunCulture is the second e[tended to a company graduating from the EEP Trust Fund managed by NDF. It is a clear demonstration that we can deliver on the new NDF Strategy and its commitment to provide flexible and scalable financing as well as catalytic impact. It has all the ingredients that define NDF’s added value in the climate financing landscape. It demonstrates our capability to convene and mobilise additional financing, as well as our unique mix of financing instruments to match the needs of our partners, public or private. We are proud to be standing with our partners and supporting the emergence of a greener economy, precisely at this time of COVID-19.”
“Since our first investment in 2019, SunCulture has made huge strides to unlock the potential of smallholder agriculture through innovative products and consumer credit. FEI-OGEF is happy to be able to refinance our inventory loan into this new working capital facility and continue that growth alongside a committed and constructive group of lenders,´ noted Harry Guinness from Lion’s Head.
Judith Santbergen, Senior Investment Manager at AlphaMundi, said: “Since 2018, AlphaMundi has successively provided support to SunCulture through a combination of technical assistance and debt investment. We are e[cited to continue and increase our investment in the company via this new, innovative working capital facility.”
Sjoerd Melsert, Senior Investment Manager at Triodos Investment Management, said: “SunCulture is a great e[ample of an innovative company that is active on the nexus of renewable energy and agriculture, using solar energy to increase farmers’ incomes. Our facility supports the further growth of SunCulture’s pay-as-you-go solar portfolio, leading to a more sustainable and higher production for smallholder farmers, which is fully aligned with the
mission, ambition and activities of Hivos-Triodos Fund.”
Cocoa Pricing: Why Public-Private Sector Partnerships are Key to Sustaining the Livelihood of Smallholders Farmers in Africa
Pricing is a debating point in the cocoa sector, dominating contemporary stakeholder conversations; especially African cocoa producers. This is a result of the historically low cocoa prices that do not provide a fair income to farmers involved in cocoa production. Despite the announcement of the Living Income Differential (LID) by both Cote d’Ivoire and the Ghana Cocoa Boards, there still exist questions on the sustainability of this intervention – to take farmers out of poverty. Stakeholders in the African Cocoa industry need to rethink its strategy to improving farmers’ livelihood, by increasing their earning potential through value chain efficiency, facilitated by public-private sector partnership.
Interventions aimed at income enhancement and lifting farmers out of poverty are often based on the assumption that the said interventions, alone, are enough for the solution being pursued. On the surface, the decision to increase the farmgate price of cocoa and LID by an additional $400 a tonne on all cocoa contracts, appear to be a solution to lifting farmers out of poverty. However, even if farmers’ incomes were to increase – through increased farm gate prices – other structural issues like small farm sizes and low productivity levels will still keep these farmers below the poverty line.
For Cocoa farmers to earn a fair wage from their input, issues like ageing plantations, lack of adequate training and financing as well as direct access to the market, need to be addressed. These structural issues pose a more significant threat on the livelihood of cocoa producers in Africa. Price increases on their own are not enough to lift the poorest farmers out of poverty. Price interventions like the LID must go hand in hand with other policies and programme, implemented to increase the volume and quality of beans produced. Achieving this will require a multi-stakeholder collaboration involving both the private and public sector aimed at not only improving the quality of lives of farmers but ensuring that the cocoa value chain is optimized.
To enable smallholder farmers benefit in an egalitarian way from the cocoa industry, the focus should be towards improving value chain efficiency while addressing structural challenges in the sector. This is achievable through a public-private collaboration that will drive private sector operations to deepen financial markets, scale-up infrastructure investments and enhance productivity and quality through training and input supply.
Through collaborating with Cocoa Cooperative Societies –providing training, input financing and market access, AFEX has enabled smallholder farmers to increase their productivity, while producing to international standards. With technology like AFEX Workbench – a value chain management platform which facilitates input sourcing, loan administration, sales, a transparent and efficiently executed cocoa process is achieved.
A public-private sector-driven model will create a sustainable approach which will revitalize and boost cocoa production in Africa – creating jobs and improving the living standard of the farmers. While the government takes the driver seat to develop policies and the infrastructure to catalyze this growth across the cocoa ecosystem, private sector organizations will ensure value chain efficiency – increasing the benefits stakeholders gain from the industry.
AFEX is committed to providing the support and technology to improve the quality of life for African cocoa farmers and their communities.
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