This report identifies existing investments in climate adaptation and nature-based solutions in agriculture, explores the motivations of existing investors, and highlights some of the challenges preventing more investment.
The report identifies the opportunities emerging for these types of investment, as well as the partnerships required and the evidence needed to help drive capital towards these areas of investment.
To incentivize the flow of agricultural investments into climate adaptation, the report recommends building a short- to medium-term business case for national or regional commercial investors, and promoting communication between agricultural companies and the banks that provide them with corporate loans to increase awareness of the benefits of investing in climate adaptation practices and climate-smart agriculture technologies. Improving the quality of impact measurements by developing better definitions and standard measurement approaches will also help better engage with impact investors. Increasing the engagement with governments is also needed to establish appropriate subsidy schemes and introduce regulations for production that support the establishment of adaptation and nature-based solutions in key agricultural value chains.
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This investor-focused study analyses the role of private finance in climate-smart agriculture (CSA) technology innovation and deployment in Africa and Asia. It focuses in on the perspectives of investors, identifies technologies and areas that demonstrate commercial viability and investment potential, profiles existing investments in CSA technologies, explores the motives and incentives that may attract investors to financing CSA technology companies, and provides a more nuanced understanding of the barriers and bottlenecks that exist for mobilizing greater investment for CSA technology. The findings are based on evidence from 28 interviews with investors and other CSA technology stakeholders, and a review of more than 100 relevant reports and publications.
Most investors tend to approach climate challenges from the perspective of environmental, social, and corporate governance (ESG) screening, looking first at risk, and building from a ‘do no harm’ perspective, rather than seeking to identify solution oriented technology investments. Less than 1% of private climate finance is currently directed towards CSA, with enterprises struggling to find appropriately costed investment capital. Increasing private financial flows to emerging and developing economies needs to be supported by proactively connecting available capital with investable opportunities and encouraging new market structures and business models.
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Information and Communication Technologies for Improving Investment Readiness of Small and Medium Agribusinesses
Commercial Agriculture for Smallholders and Agribusiness (CASA) is a flagship programme financed by the UK
Foreign, Commonwealth & Development Office (FCDO, previously DFID), which seeks to increase economic opportunities for smallholders to step and trade into growing commercial markets. The programme aims to increase investments in agribusinesses which source from smallholder farmers and to generate new evidence and research that amplifies the case for doing business with smallholders.
This study analyses the factors behind successful deployment of mobile technologies to improve agribusiness productivity and investment readiness. It aims to analyse agricultural value-added services (agri-VAS) that have SME agribusinesses as their main clients, as they are more likely to positively impact the investment readiness of SME agribusinesses than agri-VAS with smallholder farmers as their only clients, which are also the most evaluated type of agri-VAS.
Commercial Agriculture for Smallholders and Agribusiness (CASA) is a flagship programme financed by the UK Department for International Development (DFID), which seeks to increase economic opportunities for smallholders to step and trade into growing commercial markets. The programme aims to increase investments in agribusinesses which source from smallholder farmers and to generate new evidence and research that amplifies the case for doing business with smallholders.
During the inception phase, CASA conducted a survey of 25 investors and investing support stakeholders, to determine key constraints, opportunities and evidence needs for unlocking investment opportunities in agribusinesses and smallholder farmers globally, and to identify information needs and seeking behaviours. The three top constraints identified were: limited availability of investable agribusinesses; low productivity of smallholder farmers; and existing gaps in infrastructure and value chains. The main opportunities for increased investment are: investing and improving infrastructure; incubating and supporting early stage businesses with donor funding and technical assistance; and supporting shareholder services like aggregation and mechanisation initiatives. The main evidence gaps identified through the survey are: case studies and examples of profitable and impactful business models; a mapping of actors involved in agricultural finance; and crop and country specific data on productivity and impact.
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