A recent review by the Initiative for Smallholder Finance (ISF) of investments in smallholder agriculture shows a maturing market with clear investment opportunities at different stages of the agricultural value chain and varying stages of financing. The review, which collated transactions appearing in ImpactAlpha’s #Dealflow, highlights the need for more capital, more developed market intermediaries, and improved transparency and intelligence gathering related to impact investments targeting inclusive agriculture sector growth.
Research from ISF and ImpactAlpha found that investors have been slow to embrace the agriculture market because of high risks and uncertain returns, and relatively few funds focus on small rural enterprises and smallholder farmers. Additionally, if sector-shaping initiatives can take hold, the team’s research suggests an emergence of impact-driven agribusiness funds combined with public and private capital could align financing for inclusive agricultural market growth.
The proliferation of technology as a key enabler in inclusive agriculture emerges as a key trend from the review of international capital flows within the impact investing sector.