The world is changing fast and to keep up you need local knowledge with global context.
It’s Agriculture and Adaptation Day here at COP27 in Sharm El-Sheikh, Egypt. Agriculture is one of the largest users of water and land globally and farmers are under pressure to adapt to climate change. John Hudson, National Head of Agriculture at Nedbank, joins us to talk about how farmers must adapt in the face of the climate emergency. Ultimately, they need to produce more with less.
Excerpts from the interview with John Hudson
Climate change affecting farmers and the bank
The short answer is yes, very much so. Climate change is not only affecting the farmers, but it’s also affecting the bank. If you look at our farming client base, they make up a fair proportion of our lending. Therefore, it makes absolute sense for the bank to focus on this. What I can say is that I think climate change is probably the biggest risk facing farmers going forward. We do have these short-term hiccups, you know, such as the pandemic, and you could argue sometimes there’s a flood, for example, which makes us focus on the short term. But longer term, climate change is such a big issue that farmers need to tackle. And as banks, we need to help them.
Innovative ways through which Nedbank helps to fund farmers
Farmers tend to lend a lot of money. That is often the cornerstone of their business. And I think through lending, we can drive positive change. Certainly that positive change talks to combating climate change going forward. Much of our support is really about knowing the farmer, understanding his business because there are different solutions for different farmers. It doesn’t mean renewable energy will apply to all farmers, for example. It is really important for us to understand the client’s business first: is it energy, is it water, is it soil health, is it biodiversity?There are a lot of aspects that come into play and all of these have an impact on business risk, of course. If you are addressing business risk, this is where you link up the dots with the farmer and the funding package behind it to support that. It’s to look at renewable energy and say, is it security of supply or a cost issue? We have funding, whether it is for solar panels, water turbines, etc. and our farmers are taking these up. We have really good examples of farmers who are taking up technology. They are looking at energy. We are bringing partners to the game as well. So, whether it’s home energy, which really offers our clients an end-to-end one-stop-shop, if you want to call it that. Home energy will come and do the assessment, take the farmers through the process, look at the best quote and then say to the bank, let’s fund that. It is a really good partnership, if you want to put it that way.
Farmers adapting to climate change
Farmers have been really good at being agile and adaptive because over time, they face numerous challenges, not only climate change. For example, farmers are probably closest to the coalface when we talk about climate change. They are a contributor on one hand, but they are also a recipient of climate change. I have seen this over time because farmers’ margins have been squeezed. There is a continual cost price squeeze and farmers have had to take up new technology and be agile to stay in the game and be competitive. The other thing is that many of our buyers – because we actually export more than 50% of what we produce in this country – are often outside South Africa and are pushing back to say, what are your sustainability credentials? Therefore, for farmers, it’s a mixture… Some of them do it for their own purposes. Surely, they want to save the planet. However, some of them do it because of business risk and because the market really dictates that.
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