Conquering the ‘Valley of Death:’ overcoming pitfalls in financing sustainable agriculture

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Cocoa is an internationally traded commodity traditionally linked to small holder production. Many farmers in developing countries see this crop as an opportunity to move out of poverty and provide a better future for their families. Nonetheless, the expansion of this crop has been linked to deforestation, partly due to low productivity and poor management. More sustainable production systems are possible, delivering higher yields while preserving the forest and ecosystem services. However, farmers will struggle to make this transition without adequate financial resources and support.

Finance is a major block to smallholders changing production methods. Only by overcoming these obstacles will farmers survive what we call the ‘Valley of Death’ – a period of initial high costs and reduced returns. Our research suggest that better designed credit products could provide much needed support to overcome this problem.

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