Location
Global emerging and developing market scope with existing portfolios in sub-Saharan Africa and Latin America
Stakeholders involved
Private investors (including ASN Bank and Ceniarth), Conservation International as accredited entity to the Global Environment Facility (GEF), private companies, US Development Finance Corporation, Convergence, Good Energies, Sall Family Foundation, EU Climate KIC, WWF US, Vistra, Citi and Clarmondial, with funding from the Smallholder Safety Net Upscaling Programme
Lead organization
Scale
The FSF is an open-ended investment vehicle that addresses the USD $2.5 trillion finance gap by channeling finance to sustainable and smallholder-inclusive agriculture and supply chains. It targets borrowers that source from over smallholder farmers, including in sub–Saharan Africa, Latin America and the Caribbean, and the Asia-Pacific.
trillion (USD) finance gap
Co-investment model
This blended finance vehicle transforms agrifood systems by providing pre-harvest working capital loans to aggregators – companies that work with smallholder farmers. It supports sustainable production and equitable livelihoods by enabling access to responsible business partners, appropriate inputs, organic certifications and technical support for smallholder farmers. The FSF de-risks lending through partnerships with businesses to address collateral constraints. Its working capital loans align with the agricultural cycle – especially pre-harvest – to address a known market gap. Loans are conditional on the implementation of sustainable practices. Tying capital to measurable sustainability outcomes enables brands and corporate partners to comply with both sourcing and sustainability objectives.
Impact
smallholder farmers
hectares
The FSF has benefitted over 95,000 smallholder farmers working on 220,000 hectares, where 16% of these farmers are women. Farmers benefit from responsible business partnerships, training and access to inputs and premium (certified) markets, increasing incomes and resilience to climate shocks. The total sourcing area impacted to date is 377,000 hectares; borrowers have contributed to 215,000 tCO2e of sequestration through reforestation and restoration activities. The FSF’s borrowers have also created 2,600 local jobs (49% women).
Levers and enablers
The primary levers are targeted, limited public sector contributions – primarily private capital and using de-risking from private sector companies for a long-term, commercially viable solution to financing smallholder-inclusive supply chains in emerging markets; catalytic investment from GEF with Conservation International, foundations and a blended finance platform; market and policy momentum for more resilient and sustainable sourcing; and technological levers such as traceability and certification tools. This partnership-driven model connects smallholders with global businesses, aligns incentives and ensures sustainability performance. The vehicle ensures attractiveness for long-term institutional capital through its open-ended format, with quarterly liquidity. By partnering with businesses to reduce risk and bypass conventional collateral demands, it unlocks capital where and when it's most needed.
Barriers
Fragmented regulatory environments, gender inclusion gaps, limited digital infrastructure and capacity constraints among aggregators are relevant barriers. There also continues to be a shortage of appropriate capital and investment processes to support such innovative vehicles.
Lessons for scaling
- Unlock private resource at scale through the careful use of concessional capital and risk capital (including guarantees) through knowledge of, and alignment of interest with, different stakeholder groups and their incentives;
- Think about the timing of outflows and inflows to optimally design development financing solutions, as environmental changes, including impacts on crops and resulting changes due to policies, impact businesses and their partners (e.g., farmers), especially cash flow and costs;
- Navigate the disconnect between the expectations, understanding and timing of public and development funders, and the needs of businesses through diverse backgrounds, networks and long-term commercial interests in the success of a solution;
- Extend the scale and depth of impact technical assistance funding by tailoring it to local contexts and aligning it with business interests to be sustainable.
