Making agriculture climate resilient: Rising importance of financial literacy and the role of FPOs in its development

One of the primary concerns in agriculture and its sustained development is resilience and adaptability of agricultural processes to climate change. A major impediment in this is the fragmentary financial inclusion of communities susceptible to environmental shocks, especially rural populations dependent upon agriculture and allied industries. That lack of financial facilities and literacy add to the exponentially rising risk towards climate adaptability of farmers and already vulnerable groups is well known. Small and marginal farmers who are generally resource poor, illiterate and vulnerable to climate change cannot get access to appropriate price information and heavily lose the price benefit in regional markets. Amidst this, the role of Farmer Producer Organisations (FPO) in effectuating financial literacy and ultimately providing appropriate prices for agri-products is vital. The objective of this study is to evaluate the role of financial inclusion in building up climate resilience and adaptation in a regional context and discuss how the role of FPOs is central in achieving that. The study adopts a descriptive research methodology in reviewing existing evidence as well as relevant case studies pertaining to several developing and underdeveloped nations and interprets those in context of the State of Assam (India). A comparative static analysis keeping environmental shocks at the centre point, three broad potential components of financial inclusion with regard to climate resilience, namely, insurance, credit and household saving, is undertaken. Findings indicate the need for FPOs to channelise household investments to counteract the risks as well as incorporation of a climate resilience parameter into government policies involving micro and agricultural financial facilities. The study observes a necessity of substantial investment in terms of financial literacy of the people via FPOs which will not only help build economic resilience against environmental change but also augment environmental sustainability in conjunction with societal well-being.