It takes more than dedication for farmers to adopt responsible practices; they need capital to buy new equipment, boost productivity, and make other changes that will allow them to meet credible sustainability guidelines and practices. While financial institutions are increasingly investing in agricultural businesses that commit to sustainability, they categorize farmers, and particularly smallholders, as high risk because they often lack credit history and collateral.
Complying with certification standards is not an ironclad guarantee of higher prices or better market access. When this fact is coupled with the costs associated with compliance, it’s easy to understand how a farmer’s profit margin can be further eroded by unfavorable loans or credit terms, sinking them into debt. In the absence of suitable financial support, smallholders are often left with little incentive or means to invest in sustainability.