The global food system (GFS), currently dominated by a top-down industrial model, is fraught with serious risks that threaten the health of both people and the planet. While this system has the ability to scale up production massively, it has failed to resolve hunger and malnutrition, and instead contributes to chronic illnesses such as autoimmune disorders, diabetes, and heart disease. The GFS prioritizes volume over value, resulting in monocultures, excessive use of synthetic chemicals, and the destruction of biodiversity—all of which severely harm the environment.
The World Bank estimates that these unaddressed negative impacts cost the world approximately $12 trillion annually, while the GFS itself is valued at only $8 trillion. This is like saying $100 in food purchases results in $150 in medical bills and environmental loss. This reveals a significant imbalance and highlights the urgent need to transition from industrial agriculture to something more healthy and easier on the environment such as smaller-scale, regenerative, and sustainable farming models.
The Role of Finance in Food Systems
Finance plays a central role in shaping food systems, influencing how they operate and evolve. Unfortunately, traditional financial models often favor large-scale industrial farms, overlooking smaller, more sustainable operations that focus on environmental and social outcomes. To drive meaningful change, finance must be leveraged to support enterprises that prioritize regenerative agricultural practices.
Social enterprises—businesses that combine profit with social and environmental missions—are key players in this shift but often struggle to access capital. Traditional banks and financial institutions typically view these smaller, mission-driven enterprises as high-risk investments, which stifles their ability to grow and scale.
How NGOs Can Bridge the Gap
This is where non-governmental organizations (NGOs) like Rotary International’s Environmental Sustainability Rotary Action Group (ESRAG) can step in. NGOs can play a critical role in connecting social enterprises with financial institutions and advocating for financing that supports sustainable food systems (SFS). Here are some practical steps NGOs can take to create a bridge between social enterprises and financial systems:
1. Creating Collaborative Platforms
NGOs can facilitate partnerships between financial institutions, social enterprises, and local communities, acting as trusted intermediaries. By doing so, they can help financial institutions commit to “impact finance with profit” by investing in smaller, climate-friendly agricultural enterprises. These collaborative platforms build trust and allow for the development of financing models tailored to the unique needs of SFS.
2. Launching Pilot Projects with Impact Metrics
NGOs can support small-scale SFS pilot projects that showcase how sustainable farming practices can be profitable. These pilots should track key metrics such as improvements in soil health, reduced greenhouse gas emissions, shorter food supply chains, enhanced nutrition, and returns on investment. Demonstrating tangible results can help convince financial institutions to support similar initiatives at a larger scale.
3. Incentivizing Financial Support for Regenerative Agriculture
NGOs can collaborate with financial institutions to create incentive programs that make it more attractive to finance social enterprises focused on regenerative practices. This could include developing low-interest loan programs for farmers adopting climate-resilient, organic, and regenerative techniques. These incentives align financial gains with environmental and social benefits, creating a win-win scenario for all involved.
4. Promoting Local Value Chains
By advocating for financing models that prioritize local agricultural value chains, NGOs can help shift the focus from volume to value. Connecting financial institutions with small- and medium-sized enterprises that produce high-quality, sustainable food and wellness products creates new economic opportunities. These products can be marketed to high-net-worth individuals, while also addressing public health and environmental objectives.
5. Raising Awareness and Educating Stakeholders
Education is key to driving long-term change. NGOs can lead workshops, webinars, and campaigns that highlight the financial and environmental benefits of regenerative agriculture. Sharing case studies and proof-of-concept projects can help financial institutions understand the viability of sustainable food systems, and encourage them to invest in initiatives that improve food security, nutrition, biodiversity, and public health.
A New Financial Model for a Healthier Future
The existing links between the GFS and finance must be restructured to support a more sustainable, equitable future. By advocating for and facilitating changes in how finance is directed toward food systems, NGOs can play a pivotal role in fostering innovative and responsible financial models that benefit people and the planet. The time for a radical, yet incremental shift in this relationship is now.
This collaborative effort between NGOs, social enterprises, and financial institutions can transform food systems into powerful drivers of environmental sustainability and human well-being.
Pramod Kumar Panda
References
Making Finance Work for Food: Financing the Transition to a Sustainable Food System (September, 2021), Report prepared in collaboration with the Food System Economics Commission
Rabobank, The Sustainable Finance Feeding a Growing Food System, Financial Times, July 2023, Issue No. 2345.
Gelles, David, How Banks Can Help Feed the Planet Sustainably, The New York Times, September 15, 2023, Section B, p.3.
Monroe, Rachel, Financing the Food Systems of the Future, The Washington Post, August 20, 2023, Section A, p.10.
FT Channels, What is the True Price of the Food We Eat?, Financial Times, June 2022,Issue No. 2301.
