Fintech’s Promise for Equitable and Sustainable Food Systems – orfonline.org

Report on Fintech’s Role in Achieving Sustainable Food Systems

A Multidimensional Crisis Threatening Sustainable Development Goals

Global food systems are facing a multidimensional crisis that directly threatens the achievement of the Sustainable Development Goals (SDGs). The convergence of climate change, systemic inefficiencies, and financial exclusion undermines progress on planetary and human health, with significant implications for several SDGs.

Climate Change and Food Systems: A Challenge to SDG 13 and SDG 2

The agricultural sector is a major contributor to climate change, posing a direct challenge to SDG 13 (Climate Action). Current food systems are responsible for a significant portion of global emissions:

• Agriculture contributes nearly 39 percent of food-system emissions.
• Land-use changes account for 32 percent.
• Supply chain activities add another 29 percent.

Without intervention, these emissions are projected to increase by 67 percent by 2050. Concurrently, climate change impacts are reducing agricultural productivity, jeopardizing SDG 2 (Zero Hunger). Global productivity has already declined by 21 percent since 1961, with tropical regions experiencing losses exceeding 40 percent, thereby intensifying hunger risks.

Systemic Inefficiencies and Food Waste: Contradicting SDG 12

Systemic inefficiencies, particularly food loss and waste (FLW), represent a major obstacle to SDG 12 (Responsible Consumption and Production). Globally, one-third of all food produced is lost or wasted, leading to severe economic and environmental consequences.

• The annual economic cost of FLW is approximately US$1 trillion.
• FLW accounts for 8-10 percent of global greenhouse gas emissions.

This inefficiency creates a paradox where sufficient food is produced, yet over 828 million people face hunger, directly undermining efforts to achieve SDG 2.

Global Hunger and Inequality: The Failure to Achieve SDG 2 and SDG 10

Inequalities in food access are a critical barrier to achieving SDG 2 (Zero Hunger) and SDG 10 (Reduced Inequalities). Over 2.8 billion people cannot afford a healthy diet, and billions suffer from micronutrient deficiencies. This crisis is compounded by gender disparities, which hinder progress on SDG 5 (Gender Equality), as women smallholders face systemic barriers to land, credit, and labor. Macroeconomic shocks have further exacerbated these issues, pushing an estimated 150 million more people into poverty and stalling progress toward global hunger targets.

Fintech as a Catalyst for Sustainable Food Systems and SDG Achievement

Financial technology (Fintech) offers a promising pathway to address these challenges and accelerate progress on the SDGs. By providing digital financial tools, Fintech can bridge chronic gaps in finance, risk management, and market access for smallholder farmers, who operate 84 percent of the world’s farms.

Enhancing Financial Inclusion for Smallholders (SDG 1, SDG 8)

Fintech tools are crucial for advancing SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth) by empowering smallholder farmers.

1. Mobile Banking: Enables farmers to access financial services, receive payments directly, and connect with buyers, increasing their economic stability.
2. Digital Wallets: Provide secure transaction platforms and bundle services like credit and insurance, reducing reliance on exploitative intermediaries.

Key Fintech Innovations and Their Impact on SDGs

Foundational and Advanced Solutions

A range of Fintech solutions is being deployed to transform agricultural value chains and support multiple SDGs.

• InsurTech: Makes insurance accessible and affordable for smallholders, building resilience against climate shocks (supporting SDG 1 and SDG 13). However, only 19 percent of smallholders are currently insured.
• Peer-to-Peer (P2P) Lending: Connects farmers with investors focused on social and environmental impact, providing alternative financing models.
• Blockchain and AI: Enhance value chain transparency, improve land record management, and refine credit scoring, contributing to more efficient and equitable systems (supporting SDG 10 and SDG 12).

The Synergy of Agritech and Fintech for Integrated Solutions

The integration of Fintech with agricultural technology (Agritech) creates powerful platforms that offer comprehensive support to farmers. These digital ecosystems provide access to inputs, credit, insurance, market analytics, and decision-support systems through a single interface, addressing bottlenecks across the entire agri-food chain and advancing goals for sustainable production.

Challenges and the Path Forward for Inclusive Digital Transformation

Overcoming Barriers to Adoption

Despite its potential, the widespread adoption of Fintech in agriculture is hindered by several barriers that must be addressed to ensure an inclusive digital revolution.

• The Digital Divide: Limited rural internet connectivity, low smartphone access, and inadequate digital literacy prevent equitable access.
• Data Governance: Weak regulatory frameworks expose farmers to data privacy risks and cyber threats.
• Financial Barriers: Irregular income streams and a lack of collateral make it difficult for many farmers to utilize digital financial tools.

Bridging the Investment Gap for SDG Alignment

Transforming food systems to align with climate and sustainability goals requires an estimated US$350 billion annually. The convergence of Fintech and agriculture is a critical lever to close this financing gap. Ensuring this digital transformation is inclusive, resilient, and well-governed is essential to building equitable food systems that protect farmers and the planet, thereby making significant strides toward achieving the Sustainable Development Goals.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 2: Zero Hunger

  This is the most central SDG discussed. The article explicitly mentions that global progress toward “SDG 2 (Zero Hunger)” has been impacted. It addresses issues of hunger (828 million people), malnutrition, food access (2.8 billion unable to afford a healthy diet), and the productivity of smallholder farmers.

• SDG 12: Responsible Consumption and Production

  The article highlights the problem of food loss and waste (FLW), stating that “one-third of all food (1.3 billion tons) produced is lost or wasted.” This directly connects to the goal of ensuring sustainable consumption and production patterns.

• SDG 13: Climate Action

  The article opens by linking climate change to the crisis in food systems. It quantifies the environmental impact, noting that agriculture contributes “nearly 39 percent of food-system emissions” and that climate change has already reduced “global agricultural productivity by 21 percent since 1961.”

• SDG 1: No Poverty

  The article connects macroeconomic shocks to poverty, stating they pushed “an estimated 150 million additional people into poverty.” The focus on improving the financial inclusion and income of smallholder farmers through Fintech is a direct strategy for poverty alleviation.

• SDG 5: Gender Equality

  The article points out that inequalities in the food system are “gendered,” with “women smallholders routinely producing less than their male counterparts, due to systemic barriers involving land, credit, and labour.” This highlights the need for gender equality to achieve food security.

• SDG 8: Decent Work and Economic Growth

  The discussion on using Fintech to provide smallholder farmers with access to finance, credit, and insurance relates to promoting sustained, inclusive, and sustainable economic growth by strengthening the financial capacity and productivity of a major economic sector.

• SDG 9: Industry, Innovation, and Infrastructure

  The article’s core theme is the application of innovation (Fintech, Agritech, blockchain, AI) to solve problems in the agricultural industry. It also identifies infrastructural barriers like the “digital divide, rural internet connectivity,” and an “underdeveloped telecom infrastructure” that need to be addressed.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 2: Zero Hunger

   • Target 2.1: End hunger and ensure access to safe, nutritious, and sufficient food. The article directly supports this by citing that “828 million people go to bed hungry” and “over 2.8 billion people unable to afford a healthy diet.”
   • Target 2.2: End all forms of malnutrition. This is identified through the statement that “one in three suffers from some form of malnutrition” and the mention of the “dual burden of undernutrition and overnutrition.”
   • Target 2.3: Double the agricultural productivity and incomes of small-scale food producers. The article focuses on how Fintech can help smallholder farmers, who operate 84% of farms, by addressing “chronic gaps in finance, risk-sharing, and market access.”

2. SDG 12: Responsible Consumption and Production

   • Target 12.3: Halve per capita global food waste and reduce food losses. The article directly addresses this by stating, “Globally, one-third of all food (1.3 billion tons) produced is lost or wasted,” and noting that “developing countries lose nearly 13 percent of food post-harvest.”

3. SDG 13: Climate Action

   • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards. The article discusses how Fintech tools like InsurTech can make insurance “accessible and affordable for smallholders,” thereby enhancing their resilience to climate shocks that impact productivity.

4. SDG 1: No Poverty

   • Target 1.4: Ensure equal rights to economic resources and access to financial services. The entire premise of using Fintech, including “mobile payments, digital wallets to blockchain,” is to provide financial services to vulnerable populations like smallholder farmers who traditional banking models cannot serve.

5. SDG 5: Gender Equality

   • Target 5.a: Give women equal rights to economic resources, including financial services and control over land. This is relevant as the article identifies “systemic barriers involving land, credit, and labour” that cause women smallholders to produce less than men.

6. SDG 8: Decent Work and Economic Growth

   • Target 8.10: Strengthen the capacity of domestic financial institutions to expand access to banking, insurance, and financial services for all. The article details how digital financial tools are expanding these services to millions of farmers, addressing a key component of this target.

7. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.c: Significantly increase access to information and communications technology (ICT). The article implies this target by highlighting the “digital divide,” “rural internet connectivity,” and “low digital literacy” as major barriers to the adoption of Fintech solutions in agriculture.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For SDG 2 (Zero Hunger)

   • Prevalence of undernourishment: Implied by the statistic of “828 million people go to bed hungry each night.”
   • Prevalence of malnutrition: Indicated by the statement that “one in three suffers from some form of malnutrition.”
   • Affordability of a healthy diet: Measured by the figure that “over 2.8 billion people unable to afford a healthy diet.”

2. For SDG 12 (Responsible Consumption and Production)

   • Global Food Loss Index: Progress can be measured against the baseline mentioned in the article: “one-third of all food (1.3 billion tons) produced is lost or wasted,” and “developing countries lose nearly 13 percent of food post-harvest.”

3. For SDG 13 (Climate Action)

   • Total greenhouse gas emissions from the food system: The article provides a baseline, stating agriculture contributes “39 percent of food-system emissions,” with land-use and supply chains adding “32 and 29 percent.”
   • Impact of climate change on agricultural productivity: Measured by the statistic that climate change has “reduced global agricultural productivity by 21 percent since 1961.”

4. For SDG 1 & 8 (No Poverty & Decent Work/Economic Growth)

   • Proportion of population with access to financial services/insurance: The article provides a specific indicator for a key group, stating that only “19 percent of the world’s 268 million smallholder farmers insured.”

4. Summary Table of SDGs, Targets, and Indicators

Source: orfonline.org