Putting Food on the Balance Sheet 2025

Commercial capital Blended finance facility1 managed by capital coordination structureCatalytic capital Enterprises/cooperatives/farmer organizationsIndirect farmer lending through a blended finance facility Blended finance facilities represent an opportunity to invest in food production for those financiers who currently don’t ‘have direct relationships with farmers. Commercial capital providers can ensure their risk return expectations are met by investing in blended finance facilities which blend commercial and catalytic funding, used for providing loans to farmers. This is a highly scalable approach. However, setting up the blended finance facility can be complex as it requires blending capital of stakeholders with different goals, expectations and tolerance to risk. Project Acorn, led by Dutch lender Rabobank, has raised approximately $100 million for smallholder farmers through a blend of catalytic capital from aid agencies, with more senior tranches from Rabobank, Oikocredit and the US International Development Finance Corporation. Acorn helps smallholder farmers transition from monoculture to agroforestry by covering their upfront transition costs and verifying and issuing carbon removal units. The proceeds from the sale of these carbon credits repay the upfront costs and compensate farmers for sustainable agroforestry practices. Project Acorn thus shows the importance of ecosystem outcome monetization as a key derisking mechanism, improving the business case for farmers. As of March 2025, Project Acorn has onboarded more than 470,000 farmers in Latin America, Africa and Asia.19 Financing model 6: Indirect farmer lending through a blended finance facility FIGURE 10 Envisioned capital structure Capital PreservationSmallholder Agroforestry Finance BVLoans Repayment10% CRU2 revenue CRU2 payment CRU2Training, seedlings CRU2 generation CRU2 paymentSmallholder farmersLocal partners (NGOs) Carbon credit buyers Provision of capital Provision of non-financial servicesJunior tranche Mezz. tranche Senior tranche Technical assistance facility Envisioned Donors MRV1 certified by Ecosystem monetization Direct de-risking for capital providers Tranching First-loss coverage Guarantee Interest payment Insurance premium payment Impact bonus/incentiveIndirect de-risking through demand commitments Offtake agreements Ecosystem outcome monetization Price premiumTechnical assistance/training Grace periodEnablers ESG rating Value chain network Notes: 1. Measurement, Reporting and Verification; 2. Carbon Removal Units Source: Acorn status update Sept 2024.Model 6 Putting Food on the Balance Sheet 14