Agriculture plays an essential role in our everyday lives, without many of us even realizing it. According to data from the Global Impact Investing Network, 2.5 billion individuals work in agriculture either formally or informally. Meanwhile, the sector is rapidly growing: in 2018, agriculture contributed $3.3 trillion to the global economy, up 50 percent from 2008. This demand means it is even more important that the sector is given the tools to minimize its environmental impact and overcome associated risks.
Number of individuals that work in agriculture
Amount agriculture sector
contributed to the global economy in 2018
The sector has a history of partaking in unsustainable farming practices, which have led to soil degradation, deforestation, loss of biodiversity, mismanagement of water and greater emissions of greenhouse gases around the world. A third of the planet’s soil has already degraded, and more than 90 percent of the planet’s soil could experience degradation by 2050. As the global population continues to rise, this is a problem that will only get worse.
As a result, impact investing is becoming increasingly common within agriculture as it can play a critical role in building a more sustainable future. For instance, investing to support smallholder farmers, encourage sustainable agricultural practices and integrate value chains will enable farmers to build more resilient and sustainable farms, generate rural employment and, ultimately, improve their productivity, income and sustainability.
Agri Investor has identified seven case studies that demonstrate impact investing in action within the agriculture industry.
India: Supporting smallholder farms, Nuveen
The approach: Despite government support, banks have been reluctant to lend to the Indian agricultural sector. The US asset manager stepped in with its $20 million investment in Samunnati, a non-bank lender to local smallholder collectives. Not only does the company provide finance, but it is also spearheading change by supporting farmers with advice, training – on leadership development, technology and financial literacy, for instance – and connections to the broader agricultural market.
The impact: Samunnati is working with more than 500 farmer producer organizations in 16 Indian states.
Increasing African farmer incomes, SilverStreet Capital
The approach: By tackling issues in the Tanzanian poultry supply chain, Silverlands Tanzania, a poultry business and out-grower project owned by the European investor’s agriculture vehicle, has helped boost the incomes of local smallholders, the vast majority of which are women. The project, which includes a poultry business that sells feed and day-old chicks, soya processing facilities that encourage farmers to diversify away from maize, a feed mill and silo storage, also encourages more sustainable farming practices within this group.
The impact: Since it was established in 2014, Silverlands Tanzania has benefited more than 65,000 farmers, increasing annual income by more than $400 per year.
Tracking Australian farm emissions, Macquarie Infrastructure and Real Assets
The approach: FarmPrint, an emissions efficiency tool developed by Australia’s Energy, Emissions and Efficiency Advisory Committee and backed by institutions including MIRA, allows Australian farmers undertaking large-scale cropping to calculate the intensity of their emissions footprint both on-farm and in the supply chain (for the farm as a whole or per tonne of output).
The impact: Tailored to a specific segment, the method allows farmers to monitor progress as well as benchmark their performance against their peers and to assess the impact of alternative farming methods on reducing emissions.
Focus on ‘fruits of employment’, Nuveen
The approach: Nuveen Natural Capital (formerly Westchester) launched its Fruits of Employment initiative in 2009 to give individuals with disabilities access to competitive employment across custom-farmed properties in California, Oregon and Washington. Fruits of Employment trains and employs workers with disabilities in the same job functions as other employees, promoting inclusive employment and decent work for all. Disability experts train farm managers on how to source, hire, train and support people with disabilities in performing a range of farming tasks.
Applicants are pre-screened for job compatibility and must be able to perform essential job functions. They are then trained to perform standard tasks such as pruning, harvesting and hoeing. Afterwards, they can learn advanced skills, such as tractor driving and irrigation maintenance.
The impact: Since its inception, more than 150 workers have found a job within the program.
Investing in sustainable agtech, Golding Capital Partners
The approach: Golding Capital Partners has launched its first institutional impact fund of funds. The new fund will focus on companies in Europe, North America and emerging markets with transformative business models in the areas of green solutions (35 percent), sustainable agricultural technology (35 percent) and financial services and other sustainable sectors (30 percent). Golding is aiming for a net IRR of 12-14 percent and plans to raise €300 million for the fund.
The impact: Golding is looking to invest in food and agtech solutions as well as digitization, as this can help to make organisational structures in the agriculture industry more efficient by enabling the shared use of capital-intensive machinery, for example, or by modernizing supply chain management.
Road to reducing food waste, AgroFresh
The issue: Around a third of all food produced globally is wasted, accounting for a billion tonnes of waste per year. With demand chains being upended and restaurants and supermarkets scrambling to keep up, the pandemic has exacerbated the issue.
The approach: Backed by US private equity firm Paine Schwartz, Philadelphia-based AgroFresh uses ethylene-based technology to reduce food waste and extend the shelf life of produce by putting the ripening process on hold. It specialises in improving the post-harvest management fruit so that food can be stored fresh for longer, rather than sent to landfill.
The impact: AgroFresh now operates globally with products tackling high-value specialist crops and estimates that is has taken around 10 million metric tonnes of CO2 out of the air in the US.
Offsetting carbon in agri, Ontario Teachers’ Pension Plan
The approach: GreenCollar, a profit-for-purpose organisation working on solutions across carbon, water quality and biodiversity, is now backed by Ontario Teachers’ Pension Plan, one of the world’s largest pension plans. GreenCollar enhances agricultural productivity whilst storing carbon in vegetation and soil, as well as supporting infrastructure upgrades.
The impact: GreenCollar’s projects drive positive impact at scale by creating methodologies that put the environment on the balance sheet. This investment will support international expansion, as well as growth in industries like water and plastics. Future projects include plastic recovery in West Africa, and its first forest protection project in Southeast Asia.