Sla links over

Improve financial tools for local farming

Improving financial tools for local farming means creating better access to credit, grants, and insurance for farmers, fishers, and small agri-businesses. These tools reduce financial risks and help producers invest in sustainable practices like water-efficient systems, climate-smart crops, and resilient infrastructure. Examples include low-interest loans, microfinance, blended finance models, and risk-sharing instruments such as crop insurance. These measures strengthen food security and reduce dependence on imports, which is critical for Small Island States facing climate shocks.

The following strategies can improve financial access for local farmers and producers:

  • Improving Market Access
    Strengthen connections between local producers and consumers by creating reliable supply chains and marketing channels. This includes partnerships with retailers, hotels, restaurants, and catering services (the horeca sector) to ensure consistent demand for locally grown products. Digital platforms and farmers’ markets can also help producers reach a wider audience.
  • Mobilizing Funding and Financial Support
    Develop a clear strategy to identify existing and potential sources of financing, such as banks, microfinance institutions, and impact investors. Establish mechanisms that link farmers to these financiers and insurers. Support applicants by providing training and guidance to prepare strong business plans, improving their chances of qualifying for loans, grants, or equity investments.
  • Access to Micro-Loans and Grants
    Offer small-scale loans and grants tailored to the needs of emerging farmers and agri-businesses. These financial tools help cover start-up costs, purchase equipment, and adopt climate-smart practices without creating heavy debt burdens.
  • Fiscal Incentives and Subsidies
    Introduce financial aid programs, tax exemptions, and targeted subsidies to reduce operational costs for local producers. These measures can make sustainable farming more affordable and competitive, encouraging long-term investment in local food systems.

Feasibility & Local Applicability

This option is feasible because it builds on existing programs and partnerships with local governments, microfinance institutions, and NGOs. However, lack of financial resources with island governments will be a persisting challenge. 

Co-benefits

Beyond climate resilience, improved financial tools stimulate local economies, create jobs, and encourage entrepreneurship. They also promote healthier diets by increasing access to fresh local produce and reduce greenhouse gas emissions linked to food imports. Education components, such as those in Aruba’s Agri-Business Academy, build long-term skills and innovation capacity.

Equity & Vulnerability Considerations

Financial support mechanisms should be well tailored to the needs of all different kinds of local producers, ranging from small household or family farms to small or medium sized agricultural entrepreneurs. Benefits of financial support systems should be equitably distributed. 

Costs

Medium | Costs vary depending on the type of intervention and strategy. External funding from development banks and blended finance models can further reduce the burden on local governments.

Case studies & Examples

Literature

Adaptation Options Overzicht