The changing nature of farm financialization - Safaa

Description

Financing of agriculture has some certain activities, from production to market to contracting Farming: It is an agreement between farmers and processing and/or marketing firms for the production and supply of agricultural products at a specified time in the future, frequently at predetermined prices. Agriculture finance empowers poor farmers to increase their wealth and food production to be able to feed 9 billion people by 2050.The work in agriculture finance helps clients provide market-based safety nets, and fund long-term investments to support sustainable economic growth. Demand for food will increase by 70% by 2050; at least $80 billion annual investments will be needed to meet this demand.To scale all of the financialization up, we have three components in financialization of agriculture:

- Farming of subsidies:Payments by the federal government to producers of agricultural products for the purpose of stabilising food prices, ensuring plentiful food production, guaranteeing farmers' basic incomes, and generally strengthening the agricultural segment of the national economy.

- Direct to consumer sales:Refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, ...etc.

- Growth of carbon accounting:processes used to measure how much carbon dioxide equivalents an organisation emits. It is used by states, corporations, and individuals to create the carbon credit commodity traded on carbon markets (or to establish the demand for carbon credits). Examples of products based on forms of carbon accounting may be found in national inventories, corporate environmental reports, and carbon footprint calculators.

Enablers

The investment in human capital, particularly in rural areas is important for knowledge dissemination to other community members, which ultimately improves the general standard of living overtime so all of this can considered to be enhancing the strength factor of the nature of farm financialization:

1. Increased productivity was done through transforming from mere production for local consumption to mass production for both consumption.

2. Increased the accessibility of finance for investment into hard infrastructure that encourages the probability and cost competitiveness of scaling agricultural production and agribusiness.

3. Developed organised finance amenities which increase the flow of private capital into the agribusiness sector so as to provide adequate financial resources to measure agribusiness.

Inhibitors

On the other side, the growth and deepening of agriculture finance markets is constrained by a variety of weak factors:

1. Inadequate or ineffective policies.

2. High transaction costs to reach remote rural populations.

3. Covariance of production, market, and price risks.

4. Absence of adequate instruments to manage risks.

5. Low levels of demand due to fragmentation and incipient development of value chains.

6. Lack of expertise of financial institutions in managing agricultural loan portfolios.

Paradigms

- It creates a lack of transparency of land ownership and production units.

- It makes it possible to circumvent existing regulations.

- It undermines farmers’ independence.

- It impedes the generational transition.

- It sometimes hinders the development of farm corporations operating solely on the basis of salaried work.

Experts

- Bruno Larue: Agricultural economics, agricultural policies: bruno.larue@eac.ulaval.ca.

- John Reilly: Agriculture economics. Air pollution and emissions Biofuels Climate change policy.

Timing

- 1800-1870: Level of carbon dioxide gas (CO2) in the atmosphere, as later measured in ancient ice, is about 290 ppm (parts per million). They failed to do because lack of budget ( Finance).

- 1960: Mitchell reports downturn of global temperatures since the early 1940s.=>Modern temp's Keeling inaccurately measures CO2 in the Earth's atmosphere and was not Abel to detect an annual rise. =>CO2 greenhouse. Also due to lack of financial support to buy the right equipments for the process.

- 1985: Ramanathan and collaborators announce that global warming may come twice as fast as expected, from rise of methane and other trace greenhouse gases. Unless there will be assigned funding to support projects to hinder the whole problem.

- 2000: Global Climate Coalition dissolves as many corporations grapple with threat of warming, but oil lobby persuades US administration to ignore the problem, ( Persuading was with paying depts and give financial grants too support the Oil Industry).

- 2019: Increasing disasters (tropical cyclones, wildfires, etc.) join scientists' warnings to spur public demonstrations and civil disobedience. Again lack of Finance fostered the problem.