Friday, 17 April 2015

Agricultural & Rural Finance

Rural finance comprises the full range of financial services - loans, savings, insurance, and payment and money transfer services - needed, offered, or used in rural areas by household and enterprises. The term encompasses agricultural finance.

Agricultural finance refers to financial services ranging from short-, medium- and long-term loans, to leasing, to crop and livestock insurance, covering the entire agricultural value chain - input supply, production and distribution, wholesaling, processing and marketing.

Rural and agricultural financial services are provided by formal and informal financial institutions as well as through financial arrangements within the agricultural value chain.

While the majority of Africa's population lives in rural areas and depends on agricultural production, the supply of financial services to the sector is inadequate, with, on average, a mere 5 percent of domestic resources being allocated to the agricultural sector.

Reasons for the lack of access to finance in rural areas and in the agricultural value chains are numerous. They can be found in the slow and uneven entry of formal financial institutions into rural areas, which leads to rural clients often remaining beyond the reach of financial outlets, to the reluctance of financial institutions to provide financial services to agricultural and rural activities, whose risk profile is frequently not fully understood and which are often informal in nature.

Factors such as poor infrastructure and widely dispersed populations in rural areas raise transaction and information costs, thus further hindering the spread of financial services. In addition, title and property rights can be difficult to verify in rural areas, posing problems in the use of collateral. Subsidized lending programs for rural recipients have also contributed to obstructing the development of a sustainable rural banking sector in Africa.

Farmers and agricultural companies typically face seasonal income and long maturation periods and are exposed to considerable risks. Seasonality requires specifically tailored financial services and conditions, such as longer repayment and grace periods, less frequent repayments, or leasing products. Agricultural risks to be considered include price fluctuations for inputs and products or crop failure due to pests and diseases, temperature or variable rainfall.

Despite these difficulties, formal rural and agricultural finance has been making advances in the continent, with innovative financial services and improved risk management on both the client and institution sides. The most promising approaches include flexible credit schemes, value-chain finance, insurance products, promotion of financial literacy and the use of new technologies.


Agricultural Education

Agricultural Education is the teaching of agriculture, natural resources, and land management through hands on experience and guidance to prepare students for entry level jobs of to further education to prepare them for advanced agricultural jobs. Classes that may be taught in an agricultural education curriculum include horticulture, land management, turf grass management, agricultural science, small animal care, machine and shop classes, health and nutrition, livestock management, biology courses, etc. Agricultural education can be taught at the elementary level, middle school level, secondary, post secondary and adult levels. Elementary agriculture is taught in public schools and private schools, and deals with such subjects as how plants and animals grow and how soil is farmed and conserved. Vocational agriculture trains people for jobs in such areas as production, marketing, and conservation. College agriculture involves training of people to teach, conduct research, or provide information to advance the field of agriculture and food science in other ways. General education agriculture informs the public

Monday, 13 April 2015

Energy and Agriculture

Energy has always been essential for the production of food. Prior to the industrial revolution, the primary energy input for agriculture was the sun; photosynthesis enabled plants to grow, and plants served as food for livestock, which provided fertilizer (manure) and muscle power for farming. However, as a result of the industrialization and consolidation of agriculture, food production has become increasingly dependent on energy derived from fossil fuels.

Agricultural Energy Inputs
Today, industrial agriculture consumes fossil fuels for several purposes:

Fertilizer Production
Industrial farms  G use huge quantities of synthetic fertilizers, which require significant energy inputs (primarily natural gas) to be produced. Other fertilizing agents (e.g., potassium and phosphorus) are mined, consuming even more energy.

Water Consumption
Industrial agriculture is incredibly water intensive. The scarce resource is used for crop irrigation, which accounts for 31 percent of all water withdrawals in the US, waste management (i.e., for flushing manure out of industrial livestock facilities) and as drinking water for animals. This overuse of water has implications in the energy sector as well. As described in our Energy-Water Nexus page, pumping, treating and moving such large volumes of water require a great deal of energy.

Farm Equipment
Modern agriculture relies upon machinery that runs on gasoline and diesel fuel (e.g., tractors and combines), and equipment that uses electricity (e.g., lights, pumps, fans, etc.).

Processing, Packaging & Transportation:
Much of the food produced today is highly processed and heavily packaged, which further increases its energy footprint. As a result of consolidation and centralization of production, foods are often transported long distances, requiring additional energy inputs.

Factory Farms and Energy Use
Most meat, eggs and dairy products are now produced on factory farms, huge industrial livestock operations that raise thousands of animals in confined conditions without access to pasture. Since the animals are unable to graze, factory farms require tremendous quantities of feed produced by industrial crop farms using the energy-intensive processes described above. Factory farms are also potential sources of ground and surface water pollution, which ultimately requires municipalities and private landowners to expend additional energy on water treatment.
Some factory farms use methane digesters to generate energy (digesters capture methane released during the decomposition of the huge quantities of manure generated onsite, and then burn the gas to produce electricity). Although this reduces emissions of methane (a potent greenhouse gas), the technology doesn’t eliminate solid waste, fails to address other environmental, human health, social and animal welfare problems created by factory farms, and typically requires large subsidies to remain economically viable. Thus, despite being touted as a “green” energy source, methane digesters ultimately serve to subsidize and further entrench the environmentally and socially destructive model of industrial livestock production.

Impact of Energy Policy
Energy policy also affects agriculture. For instance, congressional mandates now require the production of billions of gallons of ethanol, which is primarily—and controversially—derived from corn. Corn grown for ethanol takes land away from food production and, in states where corn is irrigated, uses a significant amount of water.

Toward Energy-Sustainable Agriculture
Given the growing population’s food requirements, the world’s finite supply of fossil fuels and the adverse environmental impacts of using this nonrenewable resource, the existing relationship between agriculture and energy must be dramatically altered. Among the most obvious solutions is to simply improve the energy efficiency of food production and distribution. This can be accomplished by shifting from energy-intensive industrial agricultural techniques to less intensive methods (e.g., pasture-raised livestock, drip irrigation, non-synthetic fertilizers, no-till crop management, etc.), using more efficient machinery and equipment, reducing food processing and packaging, promoting decentralization of food production and improving the efficiency of food transportation.
Farms can also generate their own clean electricity. While houses, barns and other buildings provide ample roof space for the installation of solar panels, farms with large swaths of land in windy areas are ideal sites for wind turbines. By leasing property for wind power production, these farms can earn an additional source of revenue while continuing to grow crops on surrounding land.
Despite the challenges posed by the energy-intensive nature of agriculture, the prudent use of resources and judicious application of technology has the capacity to significantly improve the long-term sustainability of food production.