Agricultural Loans to Tackle Food Insecurity

In 2022, the world is facing an unprecedented year of hunger. High food prices have triggered a global crisis driving millions more people into extreme poverty and magnifying hunger and malnutrition. 828 million people were facing hunger in 2021 – 46 million more than in 2020 and 150 million more than in 2019, and numbers are projected to increase this year, according to a FAO-WFP report.

There are three main contributors to the world food crisis. The main driver being conflict such as the war in Ukraine, which has decreased grain exports and supplies of fertilizer from Russia. 60 percent of the worlds hungry live in areas afflicted by war and violence. A clear example is Haiti, where 45 percent of the population, or 4.5 million people, are facing acute hunger due to hyperinflation of imported foods and gang violence. A second factor is economic downturns, with COVID-19 and associated food supply disruptions being one of the major reasons most poor countries are facing significant food shortages. A third factor is climate change, such as significant floods and heatwaves in 2021, which destroyed key crops in the Americas and Europe and the more recent flooding in Pakistan, which has destroyed over $3 billion dollars of crops.

With the increasing food insecurity also comes a worsening gender disparity in food access. Of the estimated 828 million people globally who were affected by hunger in 2021, approximately two-thirds are women.

FINCA is Increasing Food Security with Agricultural Loans

To address these issues, FINCA has created a number of products to support small-scale farmers, increasing food security for their families and community with a particular focus on women. FINCA knows that investing in women results in better results as land managed by women, on average, are 20% more productive and therefore contributes towards food security. This is supported by a 2021 study from Burundi that found that investing in gender equality in agriculture brought a $5 return for every $1 invested, compared to a $2 return for every $1 invested in agriculture programs that ignored gender equality.

A successful example can be seen in Haiti, where an agriculture loan product was launched in 2021 based on input from an agricultural expert from Oxford University. Since its launch, it has continued to be very successful, especially among women. Of the 1,822 beneficiaries, 82% are women, which surpassed the target of 1,400 clients (60% women).  To support these special loans, FINCA Haiti recruited 32 hybrid loan officers specifically trained in the agriculture loan product. It provided technical assistance to clients on business development, natural resource management, and climate change adaptation. The agricultural loan product is available at every FINCA branch in Haiti, with the regions of Pétionville, Saint-Marc, Leogane, Jacmel and Gonaives having the greatest clientele. In recent months this support has been critical as Haiti has one of the highest levels of food insecurity in the world. While the international community is mobilizing to address the security concerns in the country, FINCA is actively helping families and communities increase local crop production.