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With any sort of debt product there is a serious risk that we create more harm than good for farmers and we need to be super wary of this. |
Potential ideasIdeas to explore:
Working capital loan for FPOs: See here
Ecosystem Services payments: Go direct to funders and avoid the registries which eliminates complexity and issues like requirement for land records and additionality. Look to Regen Network , KliamDAO, etcas a potential partner or analog for generating credits and in addition to corporate buyers, can look to crypto currencies like KlimaDAO and Celo that want to purchase offsets for their treasuries.
Sustainability finance: Help de-risk transition to sustainable ag adoption of CSA practices by providing capital during a 2-3 year transition “transition” period. Maybe link w a certification standard if we believe that might help with price realization once the transition is complete. Might overlap with (2) above
For reference, Samunnati claims that 11% of its loan book (8624 crore or nearly $1.2bn) is to climate smart initiatives and expects this to double over the next couple years: “Of the 270-odd identified categories, Samunnati’s climate-smart asset compliant value chain activities include lending to initiatives on soil nutrient improvement (organic input and output), water conservation (precision farming, agroforestry, hydroponics, micro-irrigation), wastage reduction in food processing, cold storage, reduced emission (solar equipment, sustainable dairy, bio-fuel and bio-mass) reduced chemicals (precision farming, organic input and hydroponics), among others. Samunnati also has exposure to millet-based activities, afforestation activities — crops that increase the green cover and are also working with the plantation sector that helps preserve it, he said.”
Revenue based financing for farmer groups: Financial sponsors contribute capital; rather than a fixed rate of interest, they get back a % of earnings each season are paid back until 2x the original investment is repaid. This could stretch over multiple seasons and duration to repay informs the % return. Used by cooperatives in the US where access to traditional bank debt is hard and cannot raise equity.