Pursuing Sustainability in the Euro-Mediterranean Area: The Role of Agricultural Finance

This paper deals with sustainability issues that call for unprecedented attention in the financial industry, as well as in other market segments. Focusing on how it can support agriculture and food systems in the Euro-Mediterranean area may prove rewarding; lessons learned are likely to turn useful elsewhere, due to widely shared challenges. The agribusiness has been confronted with unexpected difficulties since 2007, such as agflation and its socio-economic effects, the subprime crisis, and environmental degradation. Meanwhile deep-rooted problems have mostly remained unsolved: many farms are still undersized; land is seldom used efficiently, and firms tend to be owned and operated by families; as such, managerial criteria do not fully display their potential and the flight to quality depends on the role of finance to a significant extent.To make it more and more appealing, the financial sphere of the economy looks like a huge laboratory with both physical and virtual features. Sorting out the most fruitful advancements and replicating them will help to promote sustainable finance, to the benefit not only of local markets, due to increasing globalization: upgrading the supply of financial services to rural areas is a vital part of addressing issues that pervade our globalized economy, such as those pertaining to food security and poverty reduction, thus contributing to sustainable development. All in all, expansion of agricultural finance can generate a win-win situation that may foster growth even where financial inclusion is by itself a challenging task. Furthermore, positive synergies can be exploited by promoting clusters, such as industrial and technological districts that specialize in agricultural commodities and that may take advantage of economies of scale while getting access to finance. Building capacity, pursuing innovation and enriching knowledge sound like promising goals in the area under investigation, as well as in our global village as a whole.