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Beyond talk and policy to scaling real success in deploying climate capital to small-scale farmers in underserved regions

Madhyama Subramanian Solidaridad

The livelihoods of 2.5 billion people around the world depend on small-scale agriculture. Yet small-scale farming communities bear the brunt of climate change, with increasingly unpredictable weather patterns, a rising number of extreme weather events and diminishing soil quality, all exerting pressure on food production, farmer incomes and livelihoods.

Whilst there are notable examples of initiatives around the globe that support farmers to adapt to and mitigate climate change, these tend to be supported by public funding and grants, which, by their very nature, are in limited supply. Harnessing private capital, impact investment, has long been touted as a must to resolve the climate crisis facing smallholders. Despite this, small-scale farmers currently receive less than 2% of global climate finance. Impact investing rarely reaches the world’s 500 million farmers, most of whom are in developing countries. The reasons for this are familiar: it’s a costly and risky business to get capital to farmers dispersed across inhospitable territories, never mind get your money back or make a return on it.

This is the topic for this panel discussion: How impact investing and climate finance can transform smallholder livelihoods, securing food production and incomes for the future. The discussion will first narrow the focus to a concrete example of how innovative climate finance is reaching small coffee farmers in one of impact investing’s most underserved markets through the “Climate Heroes” project that Solidaridad is implementing in Nicaragua. Rolled out in 2022, Climate Heroes is working to reach over 100,000 small farmers globally (Nicaragua, Colombia, Kenya, and Uganda) to transition to agroforestry systems and connect them to carbon markets that pay fair prices for the carbon dioxide sequestered on their farms and measured using remote sensing. The lens will then be widened to consider how new partnerships can support small-scale farmers as the protagonists of scalable global climate solutions.

The panel discussion will begin with an exposé of the climate crisis through the eyes of a small coffee farmer in Nicaragua. Solidaridad, a 50+ year global non-profit organization with a long history of program design and implementation in Latin America, will then explain how it is responding to this crisis through its “Climate Heroes” project that supports farmers through strategic alliances across three workstreams: carbon finance, farming and trade. This part of the discussion will focus primarily on innovation in climate finance through carbon finance targeting smallholders. The third panelist, Rabobank, will then discuss how it has created a new financial product to feed its smallholder carbon trading platform, ACORN, that rewards farmers fairly for their environmental stewardship through planting trees. Carbon, a new asset class, requires a new financial product. In this case, the solution includes non-recourse loans that pre-finances carbon farming from small agroforestry producers over the long term, solely ‘secured’ through the sale of high-impact, certified, Carbon Removal Units (CRUs).

We will then move beyond the focus of carbon finance for 3,500 coffee farmers in Nicaragua to the global level. Rabobank is targeting one million farmers through a new Smallholder Agroforestry Finance Facility (to be launched in 2024), enabling them to transition to agroforestry systems by planting trees on their farms and get paid for doing so. Besides the financial engineering of “Climate Heroes”, what learnings can we derive from the dynamic set of partnerships that sit behind this initiative? The farmer, banker and NGO will present their different views on this.

Finally, given the current context of scrutiny and doubts cast on large-scale carbon projects in developing countries, what can we learn from “Climate Heroes” regarding local ownership, transparency and governance to guarantee success in deploying climate finance at scale? How do we ensure that the world’s 500 million small-scale farmers rightly take their place at the centre of solutions to the climate crisis?

Track

Deploying Climate Capital

Format

Panel (3 speakers)

Speakers

  • NameMaría Durán
  • TitleCountry Lead - Nicaragua
  • OrganizationSolidaridad
  • NamePaola López
  • TitleAccount Manager & Financial Specialist
  • OrganizationRabobank
  • NameHéctor Blandón
  • TitleProducer & Manager
  • OrganizationTepeyac Cooperative, Nicaragua

Description

The livelihoods of 2.5 billion people around the world depend on small-scale agriculture. Yet small-scale farming communities bear the brunt of climate change, with increasingly unpredictable weather patterns, a rising number of extreme weather events and diminishing soil quality, all exerting pressure on food production, farmer incomes and livelihoods.

Whilst there are notable examples of initiatives around the globe that support farmers to adapt to and mitigate climate change, these tend to be supported by public funding and grants, which, by their very nature, are in limited supply. Harnessing private capital, impact investment, has long been touted as a must to resolve the climate crisis facing smallholders. Despite this, small-scale farmers currently receive less than 2% of global climate finance. Impact investing rarely reaches the world’s 500 million farmers, most of whom are in developing countries. The reasons for this are familiar: it’s a costly and risky business to get capital to farmers dispersed across inhospitable territories, never mind get your money back or make a return on it.

This is the topic for this panel discussion: How impact investing and climate finance can transform smallholder livelihoods, securing food production and incomes for the future. The discussion will first narrow the focus to a concrete example of how innovative climate finance is reaching small coffee farmers in one of impact investing’s most underserved markets through the “Climate Heroes” project that Solidaridad is implementing in Nicaragua. Rolled out in 2022, Climate Heroes is working to reach over 100,000 small farmers globally (Nicaragua, Colombia, Kenya, and Uganda) to transition to agroforestry systems and connect them to carbon markets that pay fair prices for the carbon dioxide sequestered on their farms and measured using remote sensing. The lens will then be widened to consider how new partnerships can support small-scale farmers as the protagonists of scalable global climate solutions.

The panel discussion will begin with an exposé of the climate crisis through the eyes of a small coffee farmer in Nicaragua. Solidaridad, a 50+ year global non-profit organization with a long history of program design and implementation in Latin America, will then explain how it is responding to this crisis through its “Climate Heroes” project that supports farmers through strategic alliances across three workstreams: carbon finance, farming and trade. This part of the discussion will focus primarily on innovation in climate finance through carbon finance targeting smallholders. The third panelist, Rabobank, will then discuss how it has created a new financial product to feed its smallholder carbon trading platform, ACORN, that rewards farmers fairly for their environmental stewardship through planting trees. Carbon, a new asset class, requires a new financial product. In this case, the solution includes non-recourse loans that pre-finances carbon farming from small agroforestry producers over the long term, solely ‘secured’ through the sale of high-impact, certified, Carbon Removal Units (CRUs).

We will then move beyond the focus of carbon finance for 3,500 coffee farmers in Nicaragua to the global level. Rabobank is targeting one million farmers through a new Smallholder Agroforestry Finance Facility (to be launched in 2024), enabling them to transition to agroforestry systems by planting trees on their farms and get paid for doing so. Besides the financial engineering of “Climate Heroes”, what learnings can we derive from the dynamic set of partnerships that sit behind this initiative? The farmer, banker and NGO will present their different views on this.

Finally, given the current context of scrutiny and doubts cast on large-scale carbon projects in developing countries, what can we learn from “Climate Heroes” regarding local ownership, transparency and governance to guarantee success in deploying climate finance at scale? How do we ensure that the world’s 500 million small-scale farmers rightly take their place at the centre of solutions to the climate crisis?

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