IDH Farmfit Fund and Oikocredit partner to finance smallholders
The IDH Farmfit Fund has partnered with social impact investor Oikocredit to reduce the financing gap for smallholder farmers.
The two organisations have signed a collaboration agreement, committing to creating synergies in their sourcing and investment transactions.
Globally, the estimated financing need of smallholders is $450bn (£352bn), while the total amount available to farmers in developing economies is thought to be just $9bn.
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“Smallholder agriculture is the backbone of many emerging economies,” Oikocredit director specialised finance and community building Hans Perk said. “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.”
Both Oikocredit and the IDH Farmfit Fund have focused on closing financing gaps by providing loans to cooperatives and other small and medium enterprises (SMEs) in the smallholder farming sector.
The two organisations intend to align investment processes and criteria and will make use of each other’s networks and knowledge in producing countries to source, structure and monitor deals.
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Additionally, Oikocredit and the IDH Farmfit Fund will share risks and provide technical assistance where necessary.
“The Farmfit Fund and Oikocredit have previously partnered to provide loans to smallholder-focused Agri SMEs in Guatemala and Nicaragua,” said Roel Messie chief executive of IDH Investment Management and IDH Farmfit Fund. “This experience has revealed how aligned our strategies are and how much we can achieve if we bundle our knowledge and networks.”
Farmfit is a €100m fund, while Oikocredit currently finances 520 partners, with total outstanding capital of €1,136.1m reported in March 2024.
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