Agricultural market research from FAO estimated that an additional $265 billion per year would be needed to eradicate poverty and hunger by 2030. The impacts of climate change, land degradation, and water overuse, increasing pressure from crop and animal diseases and growing antimicrobial resistance, all raise concerns and call for more investment in agriculture.
Small-scale farms in developing nations have the potential to significantly contribute to poverty eradication, along with numerous other issues but these farms often face limited access to financial resources, preventing them from realizing their full potential. Even when financing is available, small businesses and farmers are likely to encounter unfavorable conditions such as high interest rates or inflexible repayment schedules. Innovative enterprises, business models, and technologies are particularly affected by such constraints.
Additionally, the absence of access to industry experts, such as sustainable agriculture consulting services can hinder the growth of small farms and agribusinesses. Investment is closely linked with knowledge, and without guidance from stakeholders, governments, industry experts, and investors, these businesses can make mistakes that stifle their development. For instance farmers in developing nations may not have sufficient access to the latest agriculture market research and may consequently struggle to implement appropriate food safety policies and procedures or develop robust business continuity strategies.
Traditionally, private investors are reluctant to invest in early-stage enterprises due to perceived high risk and low returns. This often leaves public and philanthropic organisations investing in agricultural projects on their own without benefiting from the experience, expertise, and capital that commercial investors can bring or the type of agricultural market research and insights that food sustainability consultants can provide.
Although developing countries frequently exhibit appealing characteristics, such as high yields and the potential for rapid expansion, investors may be hesitant to seize these opportunities if the risk-adjusted returns do not compare favorably to their alternatives. Projects in developing countries and emerging markets often require significantly more agricultural market research as they carry higher risk and are more challenging to finance, given long investment terms and higher exposure to political, market and weather related risks.
Blended finance has long been viewed by agri experts as one of the most viable ways to secure seemingly high risk or low yield investments. Blended finance uses capital from public or philanthropic sources to increase or mobilise private sector investment in developing countries. It can help distribute risk between the private sector and taxpayers, creating more attractive opportunities for investors.
Blended finance models, although varied, involve public and philanthropic entities providing the necessary support to encourage private sector investment in projects they might otherwise overlook. These blended finance strategies can also magnify the impact of public sector investments. Generally, blended finance pursues one of three primary objectives: reducing risk, improving returns and increasing the likelihood of social impact – this is where ESG consulting is particularly valuable.
