Investing in supply chain resilience

Reducing investment risk and unlocking capital for high-impact initiatives is not just a financial strategy, it's a pathway to climate resilience, economic empowerment, and sustainable land use.

Across emerging markets, there is growing momentum to invest in solutions that protect forests, promote responsible land use, and empower smallholder farmers through sustainable and inclusive agriculture. Blended finance is proving to be a powerful catalyst, unlocking private capital and accelerating investment into impact initiatives.

IDH is working to shift the investment paradigm by convening coalitions, enabling strategies that reduce investment risk and aligning capital with purpose.

Can smallholder-inclusive finance be both impactful and commercially viable?

Six years ago, the IDH Farmfit Fund was launched to answer this straightforward yet unresolved question. A central insight from the past years is that capital alone is insufficient; smallholder resilience requires systemic, collaborative approaches that align investors, funders, financial institutions, value chain actors and civil society around shared outcomes.

Strategic capital orchestration, patient capital, flexible instruments and continuous learning are essential to overcome fragmentation and reach meaningful leverage points. No single organisation can address the structural challenges in smallholder finance, and persistent risk perceptions make openness even more important.

In the spirit of shared learning, we compiled the lessons the Fund has learned from its experiences in the publication Cultivating Capital for Smallholder Finance. Grounded in practical experience rather than theory, it reflects on deploying capital in imperfect conditions, adapting assumptions, and learning alongside investees and partners.

Barbara Visser, Chief Operating Officer IDH Investment, explores the publication further on her blog, highlighting, with honesty and transparency, the journey's complexity.

Mid-Term Review of the IDH Farmfit Fund

For those grappling with similar questions explored in the publication Cultivating Capital for Smallholder Finance, we recently welcomed the independent Mid-Term Review of the IDH Farmfit Fund alongside the full management response. The review assesses the Fund’s progress from 2020 to 2024 and provides valuable insights into what it takes to make smallholder finance work in practice. The findings confirm real progress, including supporting over a million smallholder farmers, advancing inclusive agribusiness models, and mobilising private capital in a challenging context. They also recognise the Fund’s catalytic role, with a leverage ratio of 3:1, of which more than 90% is private capital. At the same time, the review highlights important lessons, particularly on structuring blended finance vehicles, aligning investor expectations, integrating technical assistance, and strengthening local market engagement.

Read the full review enabled by the Ministerie van Buitenlandse Zaken and the full management response.

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We value both the positive findings and important lessons from this evaluation, which highlight that strengthening the smallholder and agricultural finance ecosystem requires intentional deployment of catalytic capital, clear additionality, and continuous adaptation and learning in volatile conditions. These insights directly guide how we deploy the IDH Farmfit Fund’s final capital as it nears full deployment, and how we design future vehicles.

Thomas K.– Impact and Learning Advisor, IDH Investment Management

Bridging the smallholder finance gap: hear from partners

To bridge the smallholder finance gap, we need more than ambition. It requires systemic innovation and proven expertise. Two of the IDH Farmfit Fund advisory committee members share what six years of implementation have taught us: the practical strategies that attract capital at scale. From deep sector knowledge and thoughtful fund design to the anchor partnerships that build investor confidence, discover what it really takes to make finance work for smallholder farmers.

Songbae Lee on building investor confidence in agriculture

Albert Boogaard on systemic innovations in smallholder finance

Capital orchestration for systems transformation

Too often, investment flows follow capital availability rather than purpose. But what if we started from a shared vision of the impact we seek, and aligned the right forms of capital to realise it?

When it comes to smallholder farmers in emerging markets, the investment opportunity extends far beyond direct lending. It’s about financing the full ecosystem around them: infrastructure, services, value chains, and the enabling conditions that allows farmers to build climate resilience and increase incomes. This is where systemic investment approaches through Strategic Capital Orchestration can make the difference.

At the centre of this approach are Financial Backbones. To convene coalitions, align different types of capital, and ensure that investment flows are strategic rather than fragmented. This thinking is explored in the publication from the TransCap Initiative, co-authored with 27 members of the TransCap Community, including Barbara Visser from IDH Invest.

How can blended finance unlock private capital for regenerative agriculture and land restoration?

After six years of hands-on investment and collaboration, the Land Degradation Neutrality Fund and its Technical Assistance Facility share practical lessons from financing sustainable land management projects in complex, high-risk markets. From leveraging public and private financing to working with local developers, these insights offer a blueprint for building more resilient, high-impact investment strategies in sustainable land use. 

About IDH Invest

IDH Invest is a blended finance platform jointly developed by IDH and IDH Investment Management.

The platform addresses the financing gap that prevents smallholder farmers, agribusinesses, and rural communities from adapting to climate change and building sustainable livelihoods. By integrating investment hubs, technical assistance facilities, and blended finance funds, IDH Invest strengthens investment readiness, lowers barriers for private capital to flow at scale, and drives systemic change in the markets where it operates.