Bridging financial gap between smallholder farmers

A new partnership was recently announced between the IDH Farmfit Fund and social impact investor Oikocredit, aimed at reducing the financing gap for smallholder farmers

The two organisations have signed a collaborative agreement, committing to creating synergies in their sourcing and investment transactions. By aligning their approach and intensifying their collaboration, the Farmfit Fund and Oikocredit will create efficiencies that accelerate impact for smallholder farmers. 

While developing economies have a total available amount of US$9bn, the actual financial need of smallholder farmers is US$450bn. In order to bridge this financial gap, Farmfit Fund and Oikocredit are providing loans to cooperatives and other small and medium enterprises (SMEs) in the smallholder farming sector, thereby enabling cooperatives to export directly and sell their products at improved conditions, while also investing in climate smart agriculture practices. 

Through their collaboration, the two organisations will streamline their interventions, allowing both to accelerate impact. Aligning investment processes and criteria, and utilising each other's unique and extensive network and knowledge in producing countries, will enable the two organisations to source, structure and monitor deals. Additionally, the partnership will also share risks and provide technical assistance where necessary, thereby ensuring the success and sustainability of their interventions. 

“Smallholder agriculture is the backbone of many emerging economies. The collaboration with IDH enables Oikocredit to invest more in smallholder farmers who are important in providing safe and affordable food for local communities and play a crucial role in the fight against climate change,” said director of Specialised Finance and Community Building at Oikocredit, Hans Perk. 

Roel Messie CEO of IDH Investment Management and IDH Farmfit Fund also highlighted the previous partnership between the two organisations to provide loans to smallholder-focused Agri SMEs in Guatemala and Nicaragua. "This experience has revealed how aligned our strategies are and how much we can achieve if we bundle our knowledge and networks. By formalising our collaboration in this broader framework, we can build on our complementarity to further improve the livelihoods of smallholders.”