Description financing model: Intermediated Financing Facility
Commercial capital is channeled through a facility that extends loans to farmers. These facilities often pool funding from both commercial and catalytic sources, enabling greater scale while balancing risk and return
Applicability: Well-suited for a range of asset owners (e.g., pension funds, institutional investors) who seek to support farmer financing without direct engagement
Considerations: Success is dependent on effective matching of stakeholders with different risk-return expectations
Description of de-risking tool(s):
Tranching: Investment structure split into tiers with different risk-return profiles, enabling blended capital participation by matching investor risk appetite
Guarantees: Third-party assurances (typically by public or development actors) to cover losses in case of borrower default, reducing perceived investment risk
Case study description:
IDH Farmfit Fund, managed by IDH Investment Management, is a blended fund that deploys capital to de-risk investments in smallholder farming, with the aim to increase smallholder income in emerging markets
- The €100M IDH Farmfit Fund de-risks investments into smallholder value chains by taking the high-risk positions to mitigate the risk of co-investors
- The Fund is supported by a second loss guarantee facility from DFC (up to ~€220M)
- The IDH Farmfit Fund Technical Assistance Facility de-risks and accelerates investments by funding advisory, capacity building, and ESG improvements for agribusinesses, financial institutions, and smallholders. The TAF grants are funded by IDH Stichting (Foundation)
€100M mobilised from investors, of which €51M already disbursed (and €17M to be disbursed in 2026). Investees expect to reach 3M farmers through services, credit and off-take
