Financing Sustainable Agriculture in the United States: Observations and Innovations

Abstract

Agriculture in the United States is on the whole an industrial enterprise, as reflected by institutional treatment and established practice. Drawing upon the work of agrarian author Wendell Berry, this paper contends that the status quo of an industrial and scientific approach to agriculture is leading to disastrous long-term effects for farming communities, land quality, and end consumers. This trend has been worsened by the loss of local and regional agricultural marketplaces and a lack of external, non-governmental investment in sustainable farms. Moreover, there is substantial evidence which indicates that farms lack appropriate sources of capital because of a persistent information gap created by farmers’ lack of fluency in institutional finance, the inapplicability of traditional financial models to small farming, and the hesitancy of financial institutions to underwrite agricultural investments. Rather than searching for answers in agricultural innovation, this paper examines potential financial innovations to address the issue. This paper advocates for various structural improvements within agricultural finance, using a case study of a berry farm in Hillsboro, Oregon to inductively discuss such solutions. A primary conclusion of this paper is that if appropriately-structured equity capital and technical assistance were made available to small farmers who espouse sustainable farming practices, substantial gains could be achieved in the health and long-term stability of small farming operations and local farming economies.