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Investment Thesis

The Hemispheric Fund for Agricultural Resilience and Sustainability in the Americas of the Inter-American Institute for Cooperation on Agriculture (IICA) seeks to mobilize, manage and execute new resources, both reimbursable and non-reimbursable, to strengthen the institutional, business and technical capacities needed to implement programs and projects that enhance the resilience and adaptive capacity of agricultural enterprises and, in turn, of agrifood systems in the Americas. Specifically, the reimbursable investment component will contribute to climate change adaptation and resilience by investing in sustainable and resilient practices in agribusinesses and their supply chains, with a view to reducing risks and increasing yields and productivity.

This investment thesis maintains that supporting businesses that foster climate change adaptation and resilience through technological innovation, regenerative agricultural production and efficient resource management will create a positive impact on both the sustainability of food production agribusinesses and agrifood systems, while offering attractive business opportunities for investors that are committed to sustainable development.

Vaca y ternero

Context

Agriculture in the Hemisphere faces a dual threat: climate change and global market instability. Changes in rainfall patterns and the increasing frequency of extreme weather events causing droughts, floods and soil degradation have reduced the productive capacity of the region, thereby endangering food security. Additionally, this variability creates favorable conditions for the spread of pests and diseases. The volatility of prices for key commodities -driven by factors such as changing trade policies, global demand shifts and supply chain disruptions- creates income uncertainty for farmers and ranchers, who may struggle to recover costs or invest in future production.
Effective management of these crises requires a combination of constant monitoring, scientific research and the implementation of sustainable agricultural practices to protect crops and animals to ensure long-term food production. Moreover, small and medium-sized producers, who represent a significant part of the agriculture sector, have limited access to technology, financing, and training, which restricts their capacity to adapt to these adverse circumstances.

Investment Opportunity

The fund is positioned to capitalize on the following trends:

Growing demand for sustainable food

Global demand for sustainable agricultural products is rising, driven by conscious consumers and regulations that favor environmentally responsible practices. Investing in regenerative or sustainable production models facilitates access to premium markets with more stable prices.

Technological innovation in agriculture

The development of agricultural technologies, such as precision farming, web applications, data analysis to optimize production, as well as new techniques for irrigation, fertilization, and climate monitoring, creates opportunities to significantly improve crop productivity and resilience.

Increased resilience in agricultural supply chains

Investing in practices that improve the resilience of both small farmers and agribusiness companies helps to stabilize supply chains, reducing risks associated with price volatility and global market disruptions.

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Investment Strategy

The fund will invest in projects that meet the following criteria:

Strengthening local capacities

Facilitating access to financing, training, and technology for small and medium-sized farmers, improving their capacity to adapt to climate change.

Public-private partnerships​

Promoting collaboration with governments, NGOs, and private companies that can provide technical knowledge, financial resources and markets for sustainable products.

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Sustainable technologies​

Financing initiatives that promote the use of technologies that reduce the environmental impact of agriculture, foster climate change adaptation and resilience, as well as improve the efficient use of resources, such as water, energy, and fertilizers. 

Soil and ecosystem regeneration

Supporting practices that restore soil fertility, capture carbon and preserve biodiversity, promoting nature-based solutions and regenerative agriculture as a profitable and sustainable business model.

The investment logic establishes that companies that do not meet these criteria will receive the necessary technical cooperation from IICA to achieve the required levels of investment eligibility.

Expected Impact and Returns

Financial returns

Investments are expected to generate returns through greater production efficiency, access to sustainable markets and better prices for resilient and quality agricultural products. Financial returns, under stable market conditions, are expected to be in the range of between 5.5% to 7.5%.

Social impact

Improvement of living conditions for small and medium-sized farmers, equipping them with better tools and knowledge to tackle climate challenges.

Environmental impact

Reduction of agriculture's environmental footprint, restoration of ecosystems and climate change mitigation through sustainable practices, recognizing that agriculture is a fundamental part of the solution.

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