3 Climate-smart agricultural technology and investment: Recommendations
To promote climate-smart agricultural technology and investment donors should:
3.1 Develop investment strategies for climate-related interventions in agribusinesses to help create a viable pipeline of investable businesses at scale (in tandem with international finance institutions).
3.2 Integrate climate expertise into all channels of agri-SME finance to mobilize the required funds and infrastructure and effectively channel climate finance to smallholder farmers and agri-SMEs (in tandem with development finance institutions).
3.3 Drive the merging of both thinking and technical expertise through commercial banks, state banks, non-banking financial institutions, multilateral development banks and climate and impact-oriented funds to create a coherent framework of sources of finance that meet the needs of agri-SMEs as they attempt to scale (in tandem with development finance institutions).
3.4 Support a growing cadre of digital agri-entrepreneurs to develop models and ensure that appropriately priced capital is available to test and scale what works (in tandem with impact investors).
3.5 Work with governments to develop consistent definitions and approaches to classifications, or taxonomies, that are applied to specific agendas, such as agri-SME climate finance (in tandem with development finance institutions). This will help bring greater clarity to the analysis of the performance of investments.
Read the report
State of agri-SME sector – bridging the finance gap [67 pages]
breaks down the market in a comprehensive and holistic way to show where finance is specifically flowing and recommends ways to address the current agri-SME finance gap.
Watch the video
The state of the agri-SME sector – bridging the finance gap [52-minutes] covers the current state of the sector and sets out four key priorities to address the existing finance gap.
Or read: the one-page summary of the video
To promote climate-smart agricultural technology and investment, donors should also:
3.6 Generate reliable systems that collect data in real time and work alongside legacy data to create tamper-proof information that informs decision-making processes.
3.7 Facilitate access to technical assistance for climate-smart agriculture companies to enable them to scale.
3.8 Invest in digital access to create fertile areas for climate-smart agricultural technology innovation and adoption. Leveraging digital technologies is important for increasing market efficiencies, lowering transaction costs and enabling many smart technologies to operate effectively
3.9 Support activities to educate investors on the value propositions, business resilience, profitability, benefits and commercial opportunities of regenerative agriculture and nature-positive agriculture (such as biocontrol products and precision pesticide application technologies). Support should extend to the development of accessible, standardized monitoring, reporting and verification systems and technologies for both climate mitigation and adaptation interventions.
3.10 Work to increase investors’ awareness and uptake of climate-smart technologies and commercial investment models relevant to smallholder contexts.
3.11 Support the formalization of data and benchmarks, thereby lowering the costs of establishing and running impact-focused commercial investment funds and standardized climate risk reporting protocols.
Read the report
Private finance investment opportunities in climate smart agriculture technologies [75 pages] and its executive summary [10 pages] provide an overview of the sector, focusing on the readiness to absorb investment of different technologies.
Watch the video
CASA 4×4: Jonny Casey: Investment in climate smart agriculture [16-minutes]
Or read: the one-page summary of the video.
CASA has conducted research on the climate risk assessment guidance used by financial institutions and identified investment opportunities in emerging climate adaptation technologies.
To promote climate-smart agricultural technology and investment donors should:
3.12 Work with concessional and commercial investors to establish blended finance solutions that can fund upfront investments into smallholder agroforestry (and smallholder nature-based solutions more generally) to be repaid at a later date through carbon credits.
3.13 Ensure that the technical assistance they fund plays an important role in designing smallholder carbon projects, promoting transparency and consistency and long-term impact.
3.14 Consider investing in industry coordination to help agribusinesses to achieve the scale necessary to attract carbon finance into the sector.
3.15 Consider longer-term investments into innovative localized farmer support models that can capture and disseminate the local agroforestry knowledge essential to long-term project success, while reducing the long-term costs of farmer support
3.16 Work with policymakers to support efforts to clarify legal frameworks for carbon finance and initiatives to improve smallholder security of land tenure, such that both smallholder farmers and the private sector can benefit from the associated opportunities
3.17 Incentivize* the mainstreaming of climate change, gender and nutrition in programme design and, crucially, implementation; encourage programmes to set thematic objectives; and facilitate closer collaboration between technical and operational teams to support this.
Read the report
Carbon finance for smallholder farmers and agribusinesses: Analytical Briefing on agroforestry solutions [48 pages] examines the role carbon finance could play in the transition of smallholder agriculture to a more sustainable, productive and resilient future.
Read the report
Commercial agriculture portfolio review 2022 [100 pages] and its executive summary [4 pages] reviews the performance of programmes in FCDO’s Commercial Agriculture Portfolio against 20 general indicators (related to overall reach, productivity, improved income, enterprises, and employment) and thematic indicators related to climate change, women’s economic empowerment, and nutrition.
To reduce food loss donors should fund product research and development and innovation in business models by:
3.18 Continuing to support product developers and manufactures to reduce the cost and improve the reliability of food loss technologies
3.19 Providing funding for agri-SMEs to test new business models which reduce food loss
Read the report
Opportunities and drivers for SME agribusinesses to reduce food loss in Africa and Asia [31 pages]
* The CAPR is specific to FCDO but these issues are applicable to many donors
Updated November 2023
Summary of recommendations for donors