CASA 4×4: Investment opportunities in climate-smart agriculture, by Jonny Casey, CASA’s climate change advisor
This CASA 4×4 explored climate change as opportunities for investors that are able to contribute to the bottom line. We looked at the candidate technologies and business models, especially those that can enhance the performance of smallholder farming systems. Finally, we shared the work that CASA has been doing on climate based risk.
Jonny Casey is the climate-smart agriculture lead on CASA. CASA is delivered by a consortium of organisations, including CABI. Jonny is climate change manager at CABI, which leads on the research communications and management of the research programme within CASA. His work responding to the climate crisis, and the impacts felt by smallholder farmers, is central to CABI’s strategy and it is a key element of the support to their member countries.
- Explored opportunities for private investment in climate-smart agriculture
- Highlighted promising technologies and business models that investors should be considering
- Explored the steps are needed to ensure the climate smart technologies are suitable for smallholder farming systems
- Explained how technical assistance can support adjustments to adapt to the changing climate
This is a summary of CASA 4×4 Boxset 4, which explores climate change as creating opportunities for investors that are able to contribute to the bottom line. It is driven by Jonny Casey, the climate-smart agriculture lead for CASA.
Opportunities for private investment in climate-smart agriculture
Technologies with real potential for investors and climate impact are:
Investors need to find technologies with viable delivery models. In many cases the returns are not at the level investors expect, however, addressing the demand-side issue will mean technologies can reach scale which will lead to increased returns on investment.
There are 450 million smallholder farmers in Africa and Asia needing technologies to build resilience and deliver low carbon production. These changes are being demanded by governments, consumers, and corporates. There is a need to invest £300 billion in climate-smart and nature-positive technologies every year.
The steps needed to ensure the climate-smart technologies are suitable for smallholder farming systems
What is needed on the supply side, to utilise emerging technologies, is early-stage investment to take proven technologies to scale. It is often hard to move from project funding to the investment levels needed to reach the level of maturity of other forms of finance that allow the technologies to make transformational change. Changes are needed in growth stage finance and the provision of technical assistance.
On the demand-side, increased support to help farmers, farmer groups and agri-businesses, is required to access funds to enable them apply the new technologies. There is a gulf between the affordability of the technologies and ability of farmers to pay. New forms of affordable finance are needed that are mindful of the seasonal nature of agriculture, and the impact this has on cashflow. New business models are also contributing to technologies reaching small-scale producers.
Promising technologies and business models that investors should be considering
There are interesting business models being developed to overcome the issue of affordability of the new production enhancing climate-smart technologies. Farmers understand the need for solar powered and smart irrigation systems to reduce energy and water usage. New approaches include portable irrigation systems at farms, or shared by cooperatives. Many innovative approaches to making technologies affordable include subscription, pay-as-you-go and/or ‘as a service’ models.
Cold chain storage is developing with diversified revenue streams, to use storage as a leverage to access finance or combined with direct provision of farmer finance.
Digital platform providers are bundling together access to financial services, input and output markets with climate information and advisory services. This is improving farmers’ willingness to pay on an on-going basis. Some cooperatives are also working as a knowledge gateway for their members. Digital technologies do not have the same distribution challenges as other businesses, which is creating new opportunities for investors looking for businesses that can scale quickly.
How technical assistance can support adjustments to adapt to the changing climate
Investors in our survey stated that the lack of technical capacity to utilise additional investment often stopped investment in agribusinesses. Technical assistance helps firms reach a level where they can absorb new finance to take technologies to scale and manage the new levels of operation effectively.
Currently, most technical assistance is channelled to small-scale operations, at ideation stage. The provision and funding need to change to support the technical innovators, for as they mature, the requirement for technical assistance grows. Farmers also need technical assistance to be able to fully benefit from climate-smart and nature-friendly innovations.
CASA Technical Assistance Fund is offering support to businesses that are trying to apply climate-smart agriculture, explore new opportunities and market dynamics, and minimise climate related risks.
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CASA 4×4 with Jonny Casey | Investment opportunities in climate smart agriculture
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