The fund manager perspective: Moving the needle on inclusive agribusiness
This briefing note (PDF) by The Initiative For Smallholder Finance describes how different impact-oriented agribusiness funds combine public and private capital to build a more inclusive agricultural market. Agribusiness in emerging markets has seen an increase in private equity and other forms of investment. Still, 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. However, the growth of an inclusive agricultural market is both necessary and can still be good business. In this context, impact-driven agribusiness funds emerge that combine public and private capital to align financing for inclusive agricultural market growth. With an inclusive agricultural market in mind, the authors recognize the inherent convergence of public and private interests and recommend that: 1) Donors can think more strategically and holistically about how they interact with agribusiness funds as a smart subsidy option for leveraging private capital in pursuit of market development and impact; 2) NGOs and technical assistance providers can move from service provider to incubator by looking across their current portfolios to package pipeline or insight that can spark new investment; 3) Fund managers can make long-term bets around trends and impact goals that will drive market development and pay off over time. Notable investment trends in the agriculture and rural development sector include more inclusive market development that incorporates smallholder farmers into supply chains.