NEW YORK – Rabobank has launched a US$1 billion fund with the United Nations to finance farmers as they transition to more sustainable practices.
Rabobank plans to offer a mix of grants, loans with lower interest rates and insurance products with the three-year programme, a move that came after food companies and consumers were demanding more supply chain transparency.
According to executives for the Dutch bank, Rabobank and the United Nations had agreed to split the cost of the programme, which is designed to push farmers to consider more sustainable practices despite higher costs and potentially lower yields at the outset.
“We have to incentivise farmers to change their practices,” said Berry Marttin, a member of Rabobank’s managing board.
Marttin also said the bank had done a project in Brazil to curb deforestation and encourage farmers to extend their crop rotations to boost soil productivity.
The bank however, did not provide a full range of specific criteria for sustainability but said that farmers are regularly measured, and would provide updates on the programme’s progress.
Large food manufacturers like Mars Inc and Mondelez Internatonal Inc have also made public commitments to boosting sustainability in their supply chains.
The industry has been under pressure from consumers to increase transparency and provide healthier products, reducing demand growth for conventional packaged foods.