Description

The Food Securities Fund seeks to provide working capital loans to agricultural aggregators (cooperatives, processors, traders) operating in developing and emerging markets. The fund has been developed by Clarmondial with input from leading institutional investors, agribusinesses, and conservation organizations and aims to provide an additional source of timely and affordable credit to support the transition to sustainable agriculture notably on climate mitigation, sustainable land management, rural livelihoods and gender.

Structured and launched by Clarmondial, the fund’s open-ended structure is suitable to institutional investors, allowing it to deliver impact at scale. Conservation International and WWF are founding members of the Fund’s Impact Advisory Board, and Clarmondial also received support from Convergence, Good Energies Foundation and Climate KIC. The risk blending of the fund comes from a USAID credit guarantee commitment of USD 37.5 million, and uniquely, also from value chain partners including large corporations. The Global Environment Facility (via Conservation International) has also committed USD 15 million to the initiative.

Stage of Implementation

In March 2021, the Fund successfully began operations with a first investment in coffee production in East Africa to reach nearly 4,000 smallholder farmers operating agroforestry systems and using organic and regenerative practices.

Actors Involved

• Fund manager: Vistra is the Alternative Investment Fund Manager (AIFM) and Clarmondial is the Fund’s investment advisor.
• Accelerator funding: Convergence has provided a design funding grant to support structuring work that is required to launch the fund. This grant funding fills a critical gap in structuring financial instruments that have significant potential to draw in private investment but where private investors may not have risk appetite to enter the instrument at the earliest stage.
• Institutional investors: The fund is designed for institutional investors and is in due diligence with several such private sector investors.
  DFIs and bilateral ODA: The fund has received a commitment of USD 37.5 million in credit guarantees from the US International Development Finance Corporation (DFC), subsidized by USAID’s Bureau for Resilience and Food Security (RFS).

Criteria

• Strength of agriculture SMEs: The fund targets local SMEs operating in established value chain relationships and will thus be most successful in markets where there are relevant agri-SMEs and where access to working capital is scarce.
• Strong institutional investor pool: The fund will also appeal to investors primarily in areas where institutional investors have an interest in SDG-aligned fixed income and private credit investments. The Fund is primarily targeting European and US institutional investors (banks, pension funds, insurance companies).

Applicable Countries

The Fund is a global emerging and developing markets fund and has an initial focus on Sub Saharan Africa. The fund intends to have a diverse portfolio of investments, spanning different commodities and countries.