Female-led agribusinesses are less likely to experience significant revenue dips and more likely to find new sources of capital than traditional counterparts, according to research conducted by ag-focused debt provider Root Capital.
In a December report titled Inclusion Pays, the Cambridge, Massachusetts-headquartered firm examined the results of a Women in Agriculture initiative conducted between 2012 and 2020.
It presents analyses of $545 million in Root Capital investments in the form of loans to 130 women-led and 260 gender-inclusive enterprises active across nine agricultural value chains in South and Central America, West and East Africa and Indonesia. Coffee producers accounted for a slight majority of the 1,226 loans to 552 borrowers active in 54 agricultural industries, of the 31 countries examined in the report.
Director Leonor Gutierrez said Root Capital’s decision to focus on gender came after about a decade of work that demonstrated how women’s lack of ownership positions in many countries excluded them from decision making in the developing world agribusinesses and cooperatives that were the firm’s focus.
She described the report as part of an effort to address a “data gap” that helps keep donors and investors from devoting more effort to the gender finance gap that sees female-led ag business attract less than 7 percent of capital despite women making up 45 percent of the agricultural workforce.
Root Capital found that a 10 percent increase in the average share of women is associated with 2 percent lesser likelihood of a 25 percent revenue dip. It wrote that female-led business are more stable and profitable, with loans that yield dramatically higher profits and are more likely to attract new sources of capital.
“In rural communities, women have a lot to lose. They are the ones that are traditionally in charge of taking care of their children, their elders and of things going on around their domestic life and the domestic life of their loved ones and communities,” Gutierrez told Agri Investor.
“This caution that women have; very connected to taking care of their ‘others’ is something that has been hypothesized as one of the reasons why they are more stable in their businesses. They have more confidence when they make a decision because they have done a lot of research and they have taken the time to really consider all of the different aspects of their decision so when they make the decision it’s the right one.”
An early stage in the Women in Agriculture initiative, Gutierrez said, focused on locating businesses led by women and others open to increasing female leadership. Through training that included basic accounting, inventory and governance management as well as application of agricultural technology, she said, the firm gradually increased female participation among its portfolio companies.
The importance of such gradual progress, she said, was demonstrated by the experience of a female-owned coffee company in a remote part of Guatemala that has garnered a $2 per bag premium over competitors. Gutierrez described how the company was established by a group of women who organized to fundraise from foundations and investors already active in the area with an appeal to support female-focused investments that eventually grew into a coffee brand.
“These things happen over time; building on governance is important but it doesn’t necessarily have to be a women-led business. What’s more important than anything is inclusion and giving women a voice and giving women leadership space,” she said.
Gender-lens investing has started to join climate as a common area of focus among the development finance institutions, endowments and foundations Root Capital draws on for its own fundraising, Gutierrez added.
“Definitely there is more awareness of the need to start including this kind of perspective just to get to the goals that we all want to reach,” she said. “The goal is not only just to elevate women, but to make a more prosperous agricultural system for everybody.”