Redefining Finance for Agriculture: Green Agricultural Credit for Smallholders in Peru

Peru as a country has committed to reduce its greenhouse gas emissions by 30% by 2030. Most of Peru’s greenhouse gas emissions comes from land use change, primarily caused by agricultural expansion into native Amazon forest. This occurs mostly in small patches and has historically been associated with smallholder agriculture. It is critical to find ways to incentivize smallholder farmers who are contributing to deforestation to switch from an extensive strategy of land expansion to using their existing parcels more intensively. This shift could improve food security, reduce poverty, increase equality and enhance climate change mitigation. However, intensifying land use to increase productivity requires farmers to make significant investments that generally exceed their available capital and capacity.

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