Farmers need credit to do business and feed the world

LATELY, FOOD WASTE HAS been a feed-the-world target in developed nations. It’s something we have an opportunity to change, whether we’re university students, mid-career wage and salary earners, or seniors.

Typically, we waste food because we don’t know how to prepare it, or don’t have time. We buy it, take it home, then it sits. And goes bad.

The food chain begins with farmers. Value Chain Management International, an Oakville-based consultancy group, says any waste in the food chain is bad for farmers, no matter where they grow crops or raise livestock.

If some part of the food production line – processors, truckers, retailers and distributors, among them – is lacking, profitability suffers. And farmers have to make a profit to stay in business.

Over the past few weeks, I’ve talked to experts from two underdeveloped nations, Africa and Cuba, about what farmers need to be profitable.

Certainly, many of the

world’s hungry people live in Africa, and on a relative scale, their problems are much bigger than Cuba’s.

But both nations are struggling. And their representatives – one, a farmers’ union leader, and the other, a government official – told me they need the same thing: that is, access to credit.

Not that it all comes down to money. And not that aid, grants and bailouts aren’t helpful – if you’re in a jam, they can be a difference maker.

But you can’t run a business on aid and grants. And farming is a business.

This is an easy concept to understand in credit-dependent North America. Just think about credit in consumer terms, and imagine trying to run your household purely on cash. If you need things – a new car, new appliances, home renovations, for example – most of us need credit.

And so do farmers in Africa and Cuba.

But they have no equity. They don’t own their land. So creditors have nothing to seize if a loan goes bad, and are reluctant to give loans without security.

The African farmers’ union official I spoke with said it would help if developed countries helped facilitate loans to farmers there – not to the countries, where it could very well end up as nothing more than a ledger entry, but rather, to the farmers themselves. Perhaps this could be done through the farmers’ unions.

“We don’t want grants,” he said. “We want loans. We need credit so we have some purchasing power.”

The situation in Cuba is a little different. Not only can farmers not get credit, neither can others in the ag sector, because of the U.S. embargo (Cubans describe it as a blockade).

The embargo calls for any transactions with the US, for items such as machinery and inputs, to be paid in cash up front.

But where is a Cuban farmer or machinery dealer or fertilizer supplier who’s been subject to an embargo for 60 years supposed to get cash?

Bankers, financiers and economic policy makers are not typically those we look to for helping to eradicate hunger. Rather, it’s considered a job for researchers, to help create new crop varieties and keep livestock healthy. Then, it’s up to those who actually grow the food, process it and distribute it.

However, in some countries, those who control credit are standing in the way of meaningful food production.

Farmers can feed people if they can buy seed, fertilizer and machinery to produce food.

But where they need credit the most, they can’t get it. And if the world hunger situation is going to change, this limiting approach must change too.