Increasing Climate and Income Resilience of Smallholder Farmers
Summary
In 2023, Acumen committed to launch their Trellis initiative, a 5-year, $30M global initiative that will make up to 25 investments in early-stage agri-business entrepreneurs across four investment regions in East Africa, West Africa, India, and Latin America, with $54M in expected leverage of co-and follow-on investment capital. This is a farmer-centric initiative that will invest in agribusinesses that are building wealth, livelihoods, and climate resilience for 2 million smallholder farmers, including women, youth, and Forcibly Displaced People (FDP) . In addition to mobilizing investment capital, Trellis will provide targeted technical assistance, including hands-on engagement, board seats, technical assistance grants, impact measurement, and gender assessments, to companies and build insights and evidence on food security, food systems and climate resilient business models, and innovative financing. Trellis builds on Acumen’s 18 years of investing in agriculture and food systems globally, impacting 43M+ lives and generating 3 times in follow-on capital.
Approach
Acumen commits to launch their Trellis initiative, a 5-year, $30M global initiative that will make up to 25-30 investments in early-stage agri-business entrepreneurs across four investment regions in East Africa, West Africa, India, and Latin America, with $54M in expected leverage of co-and follow-on investment capital. This is a farmer-centric initiative that will invest in agribusinesses that are building wealth, livelihoods, and climate resilience for 2 million smallholder farmers, including women, youth, and Forcibly Displaced People (FDP) . In addition to mobilizing investment capital, Trellis will provide targeted technical assistance, including hands-on engagement, board seats, technical assistance grants, impact measurement, and gender assessments, to companies and build insights and evidence on food security, food systems and climate resilient business models, and innovative financing.
For Acumen, “livelihoods” moves beyond income generation and into the social components of human well-being and the ability to live with dignity. Acumen will measure increases in the number of smallholder farmers reporting improvements to their quality of life, including their ability to provide access to basic household goods and services, and to live the life of their choosing.
Trellis will integrate multiple measurement and evaluation processes into each stage of investments. Data to validate impact during the screening and due diligence phases will be used, and most importantly it will ensure that the voices of the smallholder farmers are considered in every investment decision. This means each Trellis investment will have been thoughtfully considered from a financial and impact point of view. Trellis builds on Acumen’s 18 years of investing in agriculture and food systems globally, including investing $34.9M into 36 companies across 11 countries, impacting 43M+ lives and generating 3 times in follow-on capital. Acumen is uniquely positioned to operationalize Trellis given the organization’s on-the-ground presence with local investment teams.
Action Plan
Trellis is a five-year initiative, where Acumen hopes to have impacted 2 million farmers and invested in up to 25 companies by the end 2028. Our patient capital model invests in and accompanies enterprises over a 7–12-year time horizon, helping them scale and grow sustainably.
2023 through 2025
Make 7 to 9 investments focusing on climate resilient innovations for smallholder farmers, using a range of financing instruments (equity, convertible debt and self-liquidating instruments for pre-seed stage) across regions. The portfolio is expected to generate at least 3X in additional capital by 2028.
Conduct 9 to12 lean data due diligence/impact studies related to climate resilience, livelihood and income improvements and income generation for smallholders including empowerment of women and girls and food security customers/suppliers.
Deploy 7 to 9 Technical Assistance (TA) grants for pre/post investment support: e.g. venture building support, business development, impact measurement, gender actions plans and governance support for investees.
Complete 1 research report dedicated to breakthrough insights and evidence generated by the portfolio investments, building on the research agenda.
Convene and lead specific action groups on climate finance and share insights on impact measurement with a view to developing harmonized impact metrics for climate resilience.
Increase visibility and awareness of Trellis at ecosystem events in order to catalyze more support.
2025 through 2028
Make up to 10 new investments, and between 5-10 follow-on investments across regions.
Conduct 12-18 lean data due diligence/impact studies related to climate resilience, livelihood and income improvements and income generation for smallholders including empowerment of women and girls and food security customers/suppliers.
Deploy 15-20 TA grants for pre/post investment support: e.g. venture building support, business development, impact measurement, gender actions plans and governance support for investees.
Complete 1 research report dedicated to breakthrough insights and evidence generated by the portfolio investments.
Background
There is a meta-crisis of smallholder poverty and climate change. Across the globe there are 570 million small-scale farmers that produce as much as 35% of the food the world consumes, according to the FAO. Their daily activities create livelihoods for 2.5 billion people – nearly one quarter of the world’s population.
Yet despite this staggering contribution to global food provision and decades of work by government, NGOs, and private actors to support the agricultural sector, smallholder farmers still cannot consistently feed their families. The majority of smallholder farmers live well below their nationally designated poverty lines. They work in places with outsized exposure to climate change and crisis, resulting in comparatively low yields. Nearly half of the world’s smallholder farmers are women and yet, women own less than 20% of land in the world, according to the United Nations. Women smallholder farmers face multiple constraints beyond those of men farmers, including the burden of reproductive roles within the family and community, less access to education and healthcare facilities, and discrimination that can limit access to credit and financial services.
A joint report by Dalberg Associates and the German Development Bank KfW estimated that there is an annual $65 billion funding gap for agricultural small-medium enterprise (SMEs) in Sub-Saharan Africa alone, limiting the ability of the sector to harness the power of agriculture, strengthen value chains, catalyze job creation, and increase food security and resilience. It is also known that economic growth in agriculture is more than three times as effective at reducing poverty than other sectors (Science Direct) .
While difficult for any farmer to achieve climate resilience, this condition is particularly elusive for smallholder farmers, whose lack of access to timely information, savings buffers, and investment capital leaves them at the whim of a changing climate.
Progress Update
Partnership Opportunities
Acumen is currently seeking anchor funding – philanthropy/grants – for the Trellis initiative. The 2023 fundraising goal for Trellis is $10M, with the intention to reach the initiative’s $30M total goal 18-months after that. Acumen is also actively exploring and open to different pathways to recycling the capital that flows through the initiative in order to engage more philanthropists and institutions that are interested in this type of returnable structure
Best practice information at the ecosystem level in terms of demonstrating viable and scalable business models; mobilizing action and co-investment for climate resilient agriculture and developing investable deals for follow-on, institutional investors who are anxiously looking for pipeline; Technical and operational support to investees directly or through networks.