As the urgency of the climate crisis becomes clearer, market forces are beginning to shift. Producers and food companies need to embrace more stringent environmental standards, organic-certification requirements, and traceability standards in the face of evolving regulation. Consumers want more sustainably produced food and demand bold climate action.
Agri-wallet, a Dutch fintech, aims to unlock investment and drive innovation and sustainable food production. Founded in 2017 and winner of multiple awards, including the World Bank’s Disruptive Agricultural Technology Award, Agri-wallet provides supply chain finance to ensure that all actors in the value chain – including farmers, buyers and suppliers – can access the resources they need to grow and scale. Agri-wallet makes agri-finance easy and affordable for its customers and profitable for its investors – an often difficult balance to strike when it comes to smallholder farmers and agricultural finance. Linking lending to a reduction in greenhouse gas emissions and environmental, social and governance (ESG) scores drives food and agribusiness transformation.
Access to finance
Agri-wallet’s blockchain-enabled solution provides easy and affordable supply chain finance to farmers, buyers and input providers “earmarked” for income generating agricultural activities. Buyers can access working capital overdrafts earmarked to pay farmers for their produce. At the time of purchase, buyers use their Agri-wallet overdraft to pay the farmer quickly, repaying the value of the produce they have purchased plus interest to Agri-wallet later. Farmers can sign up for an Agri-wallet account for free. When a farmer gets paid by a buyer, they can choose to get the payment in either mobile money or tokens. These tokens, effectively a down payment, are earmarked for purchasing inputs, such as seeds and fertiliser, and can be redeemed at partner input suppliers. When farmers have reached a minimum balance, they can purchase inputs on overdraft and repay Agri-wallet within six months. Finally, input providers who are part of the Agri-wallet network pay a fee when they withdraw their tokens, and in return can apply for an overdraft from Agri-wallet earmarked for purchasing inventory.
Partnerships with international and local investors or wholesale banks enables Agri-wallet to tap into large pools of capital, while debt investors can earn attractive returns from Agri-wallet’s fintech solution. In practice, financing smallholders and SMEs in agricultural supply chains is considered by most funders too risky to even be considered. This creates a large gap between demand for and supply of financing for smallholder farmers and agri-SMEs. Risk mitigation tools such as credit guarantees can go a long way in unlocking agri-finance. For example, IDH Farmfit Fund de-risks investments in smallholder farming and helps drive sustainable impact by lowering risks and costs for both farmers and investors. Collaboration between Farmfit and Agri-wallet could create a new asset class that would appeal to a broad range of investors.