Aligning agribanking strategies with trends of the future: Desjardins
Sylvain Morel, Vice President, Agriculture and Agri-Food Markets at Desjardins, spoke with Efma’s Lukas Dzuroska about how adaptability and flexibility are key to their agri banking strategy.
21/09/2021
Perspective
Sylvain Morel
Desjardins
Vice President, Agriculture and Agri-Food Markets
Sylvain Morel, Vice President, Agriculture and Agri-Food Markets at Desjardins, spoke with Efma’s Lukas Dzuroska about how adaptability and flexibility are key to their agri banking strategy.
In your opinion, what role can banks play in the sustainable agriculture movement?
Our members and clients from the agricultural sector have been adopting more and more measures to support their sustainable capabilities. These often require significant investments that consume a growing share of farm revenues, a trend aggravated by the rising cost of farmland. From this viewpoint, sustainable agriculture should be seen not only through the lens of sustainable production but also in terms of the financial health of businesses; sustainable agriculture must have a solid economic foundation.
The adoption of new practices and new production models also depends on how dynamic the ecosystem is in terms of innovation, research, financial incentives, etc.
Taking all these perspectives into account, financial institutions can play several roles:
- Supporting sustainable development projects
- Encouraging and recognizing best environmental practices
- Supporting the development of innovative practices and technologies
Supporting sustainable development projects: Whether the project supports transitioning to organic farming, protecting waterways by establishing buffer strips or purchasing more efficient equipment to reduce waste, profitability gains for businesses often take some time to materialize. By incorporating ESG criteria in their practices, financial institutions can be more flexible when analyzing projects and offer advantageous financing arrangements. However, support from the financial institution should not be limited to financing, but could include assistance with project planning and implementation.
Encouraging and recognizing sustainable development best practices: Financial institutions have a vast array of tools they can use to help achieve this objective. For example, they can set aside funding to support innovative projects, provide an advantageous product offer when a business meets a sustainable performance target, or recognize sustainable projects through grants. For instance, Desjardins has partnered up with a regional foundation to offer a support and recognition program, including grants, aimed at finding effective and sustainable ways to encourage producers to better manage farmland along waterways in order to improve water quality, increase biodiversity and reduce greenhouse gas emissions.
Supporting research on innovative practices: As the last example shows, financial institutions, in addition to supporting best practices, can position themselves as ecosystem players that generate sustainable development solutions for businesses. At Desjardins, we have successfully positioned ourselves as stakeholders that can accelerate the development of this ecosystem, for example, by providing financial support to technological innovation hubs and research groups supporting the agricultural sector.
In your opinion, what role can banks play in the sustainable agriculture movement?
Our members and clients from the agricultural sector have been adopting more and more measures to support their sustainable capabilities. These often require significant investments that consume a growing share of farm revenues, a trend aggravated by the rising cost of farmland. From this viewpoint, sustainable agriculture should be seen not only through the lens of sustainable production but also in terms of the financial health of businesses; sustainable agriculture must have a solid economic foundation.
The adoption of new practices and new production models also depends on how dynamic the ecosystem is in terms of innovation, research, financial incentives, etc.
Taking all these perspectives into account, financial institutions can play several roles:
- Supporting sustainable development projects
- Encouraging and recognizing best environmental practices
- Supporting the development of innovative practices and technologies
Supporting sustainable development projects: Whether the project supports transitioning to organic farming, protecting waterways by establishing buffer strips or purchasing more efficient equipment to reduce waste, profitability gains for businesses often take some time to materialize. By incorporating ESG criteria in their practices, financial institutions can be more flexible when analyzing projects and offer advantageous financing arrangements. However, support from the financial institution should not be limited to financing, but could include assistance with project planning and implementation.
Encouraging and recognizing sustainable development best practices: Financial institutions have a vast array of tools they can use to help achieve this objective. For example, they can set aside funding to support innovative projects, provide an advantageous product offer when a business meets a sustainable performance target, or recognize sustainable projects through grants. For instance, Desjardins has partnered up with a regional foundation to offer a support and recognition program, including grants, aimed at finding effective and sustainable ways to encourage producers to better manage farmland along waterways in order to improve water quality, increase biodiversity and reduce greenhouse gas emissions.
Supporting research on innovative practices: As the last example shows, financial institutions, in addition to supporting best practices, can position themselves as ecosystem players that generate sustainable development solutions for businesses. At Desjardins, we have successfully positioned ourselves as stakeholders that can accelerate the development of this ecosystem, for example, by providing financial support to technological innovation hubs and research groups supporting the agricultural sector.
Can you briefly give us a picture of agricultural banking’s place in your structure/strategy?
Desjardins is the leading cooperative group in North America and the financial institution with the largest presence in Quebec. The agriculture and agri-food sector is a major economic driver in Quebec's regions and the province as a whole. Supporting businesses in those sectors is in line with our commitment to the economic development of communities and Quebec's economy.
In our Business Services segment, Desjardins identifies agriculture and agri-food as priority markets for business development. To date, nearly 50% of agricultural businesses in Quebec are Desjardins borrowing members. At each Desjardins Business center, agricultural businesses are served by a team of account managers and other professionals specialized in agriculture.
Agriculture is made up of so much more than just farms. How does your bank approach the ag supply chain and ag tech companies (digital agriculture ecosystem)?
In our offer to the agricultural sector, we strive to maintain a broad vision of the entire supply chain, including agricultural suppliers, producers, manufacturers and distributors, as well as more and more new players from emerging technology sectors. Over the years, we have also joined multiple initiatives supporting the supply chain and technology in the agricultural sector.
Our approach encourages collaboration between internal agriculture and IT specialists in order to provide a well-structured financing and support offer. We then leverage our developed tools and expertise aimed at the IT sector, including expertise in financing for tech companies, development capital to support growth, and specialized FinTech investment funds to support ag tech companies.
Could you briefly describe your top best practices/projects in agri banking amid technological revolution (digitization, AI, data)?
Technological change that affects our entrepreneurs is a central theme in our strategic planning. Since they often need to make investments that take some time to materialize in terms of profitability, we need to be more patient and offer more flexible products suited to their reality, particularly the rising cost of farmland and development. Besides the financing offer, our agriculture and technology experts increasingly work side by side to optimize support for members' projects through advisory services and personalized financing arrangements. Our various funds also enable us to offer financial support for initiatives that involve the adoption of new technologies in agriculture.
Also, a great example of our success in this area is our Cooperathon, currently the largest open innovation challenge in Canada, where participants tackle real-life industry challenges and winners receive grants to continue development. Several topics related to innovative farming practices have been addressed in recent years, including the development of an innovative food production project that supports the circular economy.
What are the key priorities in your agriculture value proposition in the upcoming 2-3 years?
In order to help our members better face the increasingly complex economic and environmental realities, we aim to offer more adapted and flexible financing solutions, while intensifying our capability to support them in the planning and implementation of their projects to better achieve their business outcomes. We will also grow our contribution to the agriculture ecosystem and projects that support agriculture in the adoption of new practices or innovative technologies.
Desjardins is the leading cooperative group in North America and the financial institution with the largest presence in Quebec. The agriculture and agri-food sector is a major economic driver in Quebec's regions and the province as a whole. Supporting businesses in those sectors is in line with our commitment to the economic development of communities and Quebec's economy.
In our Business Services segment, Desjardins identifies agriculture and agri-food as priority markets for business development. To date, nearly 50% of agricultural businesses in Quebec are Desjardins borrowing members. At each Desjardins Business center, agricultural businesses are served by a team of account managers and other professionals specialized in agriculture.
Agriculture is made up of so much more than just farms. How does your bank approach the ag supply chain and ag tech companies (digital agriculture ecosystem)?
In our offer to the agricultural sector, we strive to maintain a broad vision of the entire supply chain, including agricultural suppliers, producers, manufacturers and distributors, as well as more and more new players from emerging technology sectors. Over the years, we have also joined multiple initiatives supporting the supply chain and technology in the agricultural sector.
Our approach encourages collaboration between internal agriculture and IT specialists in order to provide a well-structured financing and support offer. We then leverage our developed tools and expertise aimed at the IT sector, including expertise in financing for tech companies, development capital to support growth, and specialized FinTech investment funds to support ag tech companies.
Could you briefly describe your top best practices/projects in agri banking amid technological revolution (digitization, AI, data)?
Technological change that affects our entrepreneurs is a central theme in our strategic planning. Since they often need to make investments that take some time to materialize in terms of profitability, we need to be more patient and offer more flexible products suited to their reality, particularly the rising cost of farmland and development. Besides the financing offer, our agriculture and technology experts increasingly work side by side to optimize support for members' projects through advisory services and personalized financing arrangements. Our various funds also enable us to offer financial support for initiatives that involve the adoption of new technologies in agriculture.
Also, a great example of our success in this area is our Cooperathon, currently the largest open innovation challenge in Canada, where participants tackle real-life industry challenges and winners receive grants to continue development. Several topics related to innovative farming practices have been addressed in recent years, including the development of an innovative food production project that supports the circular economy.
What are the key priorities in your agriculture value proposition in the upcoming 2-3 years?
In order to help our members better face the increasingly complex economic and environmental realities, we aim to offer more adapted and flexible financing solutions, while intensifying our capability to support them in the planning and implementation of their projects to better achieve their business outcomes. We will also grow our contribution to the agriculture ecosystem and projects that support agriculture in the adoption of new practices or innovative technologies.
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