Description financing model: Direct Farmer Financing (Corporate Supply Chain)

Direct Farmer Financing (Corporate Supply Chain) is offered to suppliers of food & agri corporates on preferential terms, subsidized by food & agri corporates

Applicability: Best suited to well-structured supply chains with formal offtake agreements

Considerations: Scalability depends on the willingness of food & agri corporates to absorb part of the cost

Description of de-risking tool(s):

Third party interest coverage: Third-party funding used to subsidize loan interest payments, reducing the cost of capital for borrowers (oftentimes farmer) and improving project viability

Price premium: Value chain actors pay higher prices for sustainably produced goods. These premiums monetize sustainability and serve as an additional revenue stream

Offtake agreements: Contractual commitments by value chain actors to purchase sustainably produced outputs at pre-agreed terms, providing revenue certainty and improving bankability

Case study description: 

Part of McCain’s Regenerative Agriculture Framework, supporting Dutch growers in transition to regen ag

1. Rabobank provides discounted interest loans (for advanced/leading growers and/or transition loans) to growers involved in the initiative
2. McCain matches the Rabobank discount when growers invest in precision agriculture equipment
3. McCain offers commercial support, by giving growers 3-year offtake agreements, incl. a price premium 
4. McCain & Aequator provide training and technical assistance to farmers (e.g., on soil life, organic matter & crop diversification)