Root Capital: “Investing in Resilience” for world’s farmers

Root Capital is a well-established nonprofit social investment fund that focuses on small farm businesses in the developing world.  They lend capital, provide training, and build the local market ecosystems that can help these small and growing businesses thrive. Like many others, Root Capital is rallying around the idea of resilience as a practical and powerful way to respond to the uncertainties of our changing climate.  Their new Issue Brief addresses this head-on; it’s called Investing in Resilience: A Shared Value Approach to Agricultural Extension.  As they note in the Executive Summary:

The science is clear: climate change is coming. What is less clear is how climate change will impact specific farmers, supply chains, or countries over different time horizons, and how stakeholders should prepare for these impacts. . .  . This issue brief focuses on scaling the use of climate-smart practices among smallholder farmers by working through local agricultural enterprises, such as farmer cooperatives or processors. Aggregating hundreds or often thousands of dispersed smallholder farmers, these enterprises represent a significant, but often overlooked, channel for delivering “last mile” agricultural extension – that is, services that provide farmers with the information and skills they need to improve their farming practices.

Root Capital has been focusing on this key element of local and regional markets for a while, and this Issue Brief is designed at least in part to rally new investors to the cause (direct investment in Root Capital’s fund is open to accredited investors, though they do accept donations as well).  Extension Services are well-established the US; most states have a formal state ag extension program that provides a range of support services for working farmers, often with county-level offices as well.  But in the developing world, such services are often lacking, and piecemeal where available.  Thus, Root Capital has made this the heart of their program; already, 86 percent of the over 280 enterprises receiving loans from Root Capital provide extension to their smallholder suppliers. Root elaborates:

Collectively, these enterprises source from more than half a million farmers in Africa, Asia, and Latin America. In fact, these enterprises are often the primary or only source of agricultural extension for smallholders, due to historic underinvestment, and in many countries disinvestment, in these critical support services. Many agricultural businesses facilitate farmers’ adoption of improved practices, including those considered climate-smart. . . . By promoting the adoption of climate-smart practices, extension can create “shared value” for entire supply chains.

The idea of shared value has emerged in the past five years, and is a particular approach to the issues that most impact investing aims to address:

The Shared Value framework defines a new role for business in society that goes beyond traditional models of corporate social responsibility. Rather than focus on mitigating harm in the company’s existing operations, shared value strategies engage the scale and innovation of companies to advance social progress. At the same time, shared value offers new ways for other societal actors (NGOs, philanthropic, government, academics) to engage with corporations in delivering social impact.

The work being done by Root Capital and many others to increase information exchange, training, and climate readiness among the world’s farmers is a powerful part of Zone 9 impact investing as well as Zone 6 regenerative investments; this is a place where resilient investing’s financial assets and tangible assets are deeply interwoven, but in both cases these innovative global efforts fall clearly into the evolutionary strategy column of the resilient investing map.  We say, “more of this, please!”

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