Agroforestry Partnership Fund
A partnership wants to create a “climate-smart” investment fund that supports
sustainable agriculture and provides a decent return. The Agroforestry Partnership Fund invests in
smallholder producers around Vietnam to help them become more efficient and successful, while
offering a portfolio guaranteeing environmental and social standards along with a healthy
- Investment in up to 25 sustainable agriculture projects around Vietnam
- $500 million estimated fund volume
- Mid- to high-single digit return
Enhancement of sustainable, low-carbon, and efficient agriculture faces a number of barriers. On the
producer side, fragmentation of the sector means it is difficult for farmers to access financing.
Smallholders also lack information about how to adopt sustainable or more efficient practices. In addition,
producers face the risk of failure when switching methods or stock, for example to higher-yield seeds. On
the investor side, few socially and environmentally responsible funds focus on the agricultural sector
– leaving a gap in food security investment.
Under the umbrella of the Green
Growth Action Alliance, the Agroforestry Partnership Fund is working with multiple public, private, and
non-governmental stakeholders to package a portfolio of climate-smart agricultural and forestry projects
for investment. The fund has developed a set of environmental, social, and governance metrics to evaluate
the projects. These include social and food security indicators, greenhouse gas mitigation, reduced carbon
emissions, crop resilience, and likelihood to generate environmental and social co-benefits.
The fund will invest in 20 to 25 small-to-medium sized enterprises in various regions of Vietnam, such as:
organically produced shrimp; wood that has been certified by the Forest Stewardship Council; and replacing
coffee varieties with cultivation of a more efficient hybrid. The package intends to get off the ground
with initial public funding of 20 percent.
Helping the planet
Investment in sustainable and efficient agriculture will reduce greenhouse gas emissions that contribute to
climate change. More efficient agricultural practices and stocks will help conserve precious natural
resources, such as water and arable land. Sustainable agriculture also reduces extractive pressures, for
example on marine environments.
The focus on smallholder producers more directly benefits local populations, rather than transnational
corporations. The fund’s orientation toward food security should benefit those more vulnerable to
fluctuations in food prices, in particular the poor. Since the fund is being co-designed with
Vietnam’s Ministry of Agriculture, it is closely aligned with the country’s rural development
strategy, which should help improve the lives of people living in the countryside.
The fund is structured for scale, and its initial goals can be expanded once they are successfully reached.
The fund intends to circulate templates for sustainable business models among distributor networks like
farmers’ associations and warehouses, as well as making its own investment blueprint publicly
available for potential spinoffs. The combination of a climate-smart and commercially viable investment
fund has novel potential and strong investor interest – meaning, great prospects for expansion, as
Images owned by the activity partners, all rights reserved.