Smallholder farmers are the backbone of global agricultural supply chains. They produce a significant share of the world’s food, steward vast landscapes, and play a vital role in biodiversity conservation. Yet, when it comes to accessing finance—especially for transitioning to deforestation-free production—they face some of the steepest barriers.
The Sustainable Finance Knowledge Journey (SFKJ) was launched to explore how financial innovation can support smallholders and other key actors in agricultural supply chains. Through a series of webinars and collaborative sessions, SFKJ convened experts, practitioners, financial institutions, and grassroots organizations to unpack challenges, share promising models, and spotlight regional case studies from Latin America, Africa, and Southeast Asia.
Key Takeaways from the SFKJ Sessions
Barriers to Smallholder Finance
- Smallholders often face limited access to capital because they lack the collateral, credit history, or formal documentation required by traditional financial institutions.
- Regulations such as the EU Deforestation Regulation (EUDR) impose new traceability and sustainability requirements, which result in high compliance costs for smallholders.
- The financial ecosystem is fragmented, as many mechanisms operate in silos with little coordination between donors, banks, and grassroots actors.
- Financial solutions are frequently not tailored to smallholders, as they fail to account for their production cycles, risk profiles, and local realities.
- Even when finance is available, smallholders often lack sufficient technical assistance, such as training or support, to use it effectively.
There are large amounts of capital, but they don’t reach the base of the bioeconomy.
Innovative Financial Solutions
The SFKJ sessions showcased a range of financial solutions that are helping bridge the gap between capital and smallholders. Including:
- The FarmFit Fund: This fund is managed by IDH, which is a €100 million blended vehicle designed to improve the livelihoods of 3 million smallholders by providing them with the means to increase their income. It provides long-term financing and investment positions that match the investors’ risk profile. The fund has invested in producer organisations and fintechs that offer bundled services—such as training, market access, and digital tools to smallholders.
Just by improving processing, farmers saw a 15% increase in income.
- Asia Climate-Smart Landscape Fund (ACLF): It is a USD 100 million fund launched by ADM Capital, that provides financing to sustainable agriculture and conservation enterprises in Indonesia, using blended finance to deliver both returns and positive impacts. For smallholders, it enables access to capital for practices such as agroforestry, while boosting yields, income, and climate resilience.
Why Finance Matters for Deforestation-Free Supply Chains
The SFKJ sessions made clear that finance alone isn’t enough—but when paired with technical support, inclusive design, and strong partnerships, it can unlock real transformation.
Finance won’t change everything, but it’s an essential piece of the puzzle to make the agriculture sector transition towards sustainability.
Finance is a lever. It can incentivize sustainable practices, enable compliance with regulations, and empower smallholders to invest in long-term resilience. But to be effective, it must be:
- Accessible: Designed with smallholders in mind, featuring flexible terms and low entry barriers.
- Inclusive: Paired with technical assistance, gender-sensitive approaches, and support for marginalized groups.
- Coordinated: Embedded in broader ecosystems that include governments, NGOs, financial institutions, and grassroots actors.
All of the insights, case studies, and financial mechanisms discussed in this article are available for public exploration through the SFKJ Miro board:
Explore the SFKJ Board
The SFKJ Miro board is publicly available and designed for open exploration. Anyone interested in sustainable finance and smallholder support can access the board to find detailed information, session highlights, and financial models discussed throughout the SFKJ.
It’s especially relevant for:
- Financial institutions designing inclusive products for agriculture
- NGOs and development agencies supporting smallholder transitions
- Policymakers shaping sustainable finance frameworks
- Corporate sustainability teams navigating EUDR and other compliance frameworks
- Researchers and students exploring climate finance and agricultural transformation
Whether you’re designing a financial mechanism or looking to understand the landscape, the SFKJ board offers a valuable starting point.
