IDH Farmfit Fund and Oikocredit announce strategic partnership to reduce financing gap for smallholders

13 August 2024, Utrecht, the Netherlands – Social impact investor Oikocredit and the IDH Farmfit Fund have announced a partnership aimed at reducing the global financing gap for smallholder farmers. The two organisations have signed a collaboration agreement, committing to creating synergies in their sourcing and investment transactions. By aligning their approach and intensifying their collaboration, the Farmfit Fund and Oikocredit will create efficiencies that accelerate impact for smallholder farmers.

Globally, the estimated financing need of smallholders is USD 450 billion, while the total amount available to farmers in developing economies is a mere USD 9 billion. Reducing this finance gap is essential to improving smallholder livelihoods. 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. Having access to loans, cooperatives are enabled to export directly and sell their products at improved conditions as well as invest in climate smart agriculture practices.

By joining forces, the IDH Farmfit Fund and Oikocredit will streamline their interventions, allowing both to accelerate impact. Concretely, the two organisations will align investment processes and criteria and will make use of each other’s unique and extensive network and knowledge in producing countries to source, structure and monitor deals. Additionally, Oikocredit and the IDH Farmfit Fund will share risks and provide technical assistance where necessary, ensuring the success and sustainability of their interventions. Combining the strengths of a global impact investor like Oikocredit and a specialised smallholder farmer-focused impact fund is expected to create strong synergies that lead to farmer income increases.   

Roel Messie CEO of IDH Investment Management and IDH Farmfit Fund said, “The Farmfit Fund and Oikocredit have previously partnered to provide loans to smallholder-focused Agri SMEs in Guatemala and Nicaragua. This experience has revealed how aligned our strategies are and how much we can achieve if we bundle our knowledge and networks. By formalising our collaboration in this broader framework, we can build on our complementarity to further improve the livelihoods of smallholders.”

Hans Perk, Director Specialised Finance and Community Building at Oikocredit said, “Smallholder agriculture is the backbone of many emerging economies. 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.”

About IDH Farmfit Fund

The EUR 100 million IDH Farmfit Fund provides de-risking financial instruments for smallholder farmer related financing transactions, opening access to investors and catalysing commercial capital to co-invest in the sector. This allows agri-commodity traders, agricultural SMEs and financial institutions to expand services to smallholder farmers.

As the Fund builds a solid, farmer-centric investment portfolio, it will increase the availability of affordable, long-term financing to farmers. Through a rigorous learning approach and the sharing of insights, the Fund will demonstrate that farmer financing can be done on a commercially viable basis. The Fund represents a joint investment from the Dutch government, three international brands, and two major financial institutions committed to a thriving smallholder farming sector.

For more information: www.farmfitfund.com

About Oikocredit

Social impact investor and worldwide cooperative Oikocredit has nearly five decades of experience funding organisations active in financial inclusion, agriculture and renewable energy.

Oikocredit’s loans, equity investments and capacity building aim to enable people on low incomes in Africa, Asia and Latin America to improve their living standards sustainably.

Oikocredit finances 520 partners, with total outstanding capital of EUR 1,136.1 million (at March 2024).

For more information: www.oikocredit.coop

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Note for editors

For more information or to request an interview, please contact: Viviana Cordero, Communications Business Partner, Oikocredit International, telephone: +31 33 422 4040, email: vcordero@oikocredit.org.