Agriculture has been largely left behind as private equity funds have poured into financial services, healthcare and other high-growth sectors in emerging (oops, growth) markets in the last three decade.
The obstacles: high risks, uncertain returns and few fund vehicles targeting smallholder farmers, the mainstay of most farm economies.
Take another look, says the Initiative for Smallholder Finance, which has identified more than 80 impact-oriented agribusiness funds with roughly $19 billion assets.
A variety of fund types for different kinds of investors offer unique strategies to reach small farmers.
“Fund managers can make long-term bets around trends and impact goals that will drive market development and pay off over time,” write ISF’s Dan Zook, Martin Slawek, and Duda Cardoso.
One tip for smart investors: take advantage of concessionary capital, grants and technical assistance to de-risk investments.