AGRI3 Fund

Title AGRI3 Fund
Country/Location Central and South America, East Africa and South Asia
Size >$85m capital base
Revenue Model Fees from loan guarantees and other investments
Private Investment/Finance Structure Loan guarantee fund with mix of grant, equity and debt funding
Public/Philanthropic Investment $35m grant funding from Dutch government
Env/Social Impact Reforestation and forest conservation, sustainable agricultural production and value chains, reduced carbon emissions, improved rural livelihoods.


The Agri3 Fund facilitates investment in sustainable agriculture by providing partial loan guarantees to commercial banks, known as partner banks, on loans to sustainable agriculture projects that those partner banks would normally consider too risky. When it offers partial loan guarantees to partner banks, the Fund typically covers 30% to 50% of the exposure. It is an evergreen Fund that has an $85m capital base. It targets sustainable agricultural projects in Central and South America, East Africa and South Asia.


Agriculture accounts for one quarter of global greenhouse gas emissions. The dramatic increase in the human population has led to a rapid expansion of agricultural production, which also continues to be a major cause of deforestation, habitat loss, and soil and water pollution. The transition to a more sustainable agricultural system is an urgent priority, but such a large-scale transformation will require significant amounts of financing at a time when the forestry and agriculture sectors have only received 3% of the climate finance available to date.

The mission of the AGRI3 Fund is to mobilise public and private capital at scale from commercial banks, development finance institutions (DFIs), impact investors and institutional investors to actively prevent deforestation; stimulate reforestation; contribute to sustainable agricultural production and value chains; reduce carbon emissions; and improve rural livelihoods.  


Financial and technical support

It does this mainly by providing partial loan guarantees to commercial banks, known as partner banks, on loans to sustainable agriculture projects that those partner banks would normally consider too risky. When it offers partial loan guarantees to partner banks, the Fund typically covers 30% to 50% of the exposure on a loan and these individual loans are typically between $5 million to $10 million. AGRI3 also has the ability to advance subordinated loans directly to customers of its partner banks where that would incentivise the participation of private lenders at a senior level, although it has not done so yet.

A Technical Assistance facility has also been established to support projects before and after investment has been agreed to maximise their impact. This includes project design support, enhancement of impact monitoring, and knowledge sharing amongst its portfolio.


Mobilising finance for sustainable agriculture and forest conservation

The AGRI3 Fund was born out of a partnership between the UN Environment Programme and Rabobank, which came together in 2017 to come up with a blended finance fund to mobilse finance for sustainable agriculture and forest conservation. The partnership subsequently expanded to include the Dutch Entrepreneurial Development Bank (FMO) and The Sustainable Trade Initiative (IDH).

After the design phase and the selection of the Fund’s investment advisors, Cardano Development and FOUNT, AGRI3 was launched in 2020 as an independent entity. The Ministry of Foreign Affairs of the Netherlands provided a $35 million non-interest-bearing repayable grant as part of fund’s first loss tranche, which will be repaid after 20 years.

The Ministry also provided a $5 million non-repayable grant to fund the Technical Assistance Facility. Rabobank provided a $50 million debt facility to match the first loss capital within the fund – the $35 million provided by the Dutch government and anything above that from other investors as well. FMO and IDH are not investors in the fund, but IDH is the non-profit entity that manages the Technical Assistance Facility. The Fund has three broad tranches:

  • The $35m capital preservation, or first loss tranche, which is the most junior
  • A tranche for equity participants
  • The $50m debt tranche provided by Rabobank, which is the most senior tranche in the structure

The Fund aims to raise additional funds from a range of institutional investors and financial institutions in all three tranches. The Fund is evergreen, meaning it is open ended with no termination date, and aims to continue to raise funds to support demand for guarantees. The financial return to investors is made up from the fees the Fund accrues by issuing partial loan guarantees to partner banks; the interest on any subordinated loans it makes in the future; and the returns on the liquid investments the Fund makes to preserve liquidity and capital in the Fund as collateral for its guarantees.

The Fund currently supports around $50 million of loans issued by partner banks and Nick Moss, managing director of the AGRI3 Fund, says that it has another $50 million to $60 million currently in the Fund’s pipeline. “We launched this fund during COVID, so for the first year or so, the Fund was really restricted,” he says. He explains that at that time, bank financing to sustainable projects was restricted because the banks were trying to shore up their own business and weren’t interested in potentially risky projects. “Now were are suddenly picking up momentum, broadly in terms of our partner banks, but also in the countries that we’re looking at,” he says.

Target Beneficiaries

The ultimate target beneficiaries of all transactions of the AGRI3 Fund are farmers, although the Fund wants to work with partner banks that make loans to clients throughout agricultural value chain, including primary producers, processors, traders, wholesalers, technology providers and input providers. To date, most of its end investments have been in Brazil, which has a large agricultural economy, many large, well managed farms to invest in and extensive deforestation issues to address.

For example, a loan from Rabobank Brazil, with a tenor extension guarantee from the AGRI3 Fund, provided an established soybean, maize and vegetable farmer in the state of Goiás with a $13 million, 10-year loan facility to give the farmer the long-term funding required to create a new 8,000 hectare sustainable farm on formerly degraded pasture. Under the terms of the loan, the farmer will preserve the native vegetation and wildlife in the project’s forest reserve areas and protect and restore one hectare of native vegetation for every hectare used for crop production. This is more than twice the amount legally required under Brazil’s Forest Code. The project, which will create around 200 new jobs at the site, will also include a research station to test new cultivars, hybrids and farming techniques for the project and develop educational environmental activities at four schools in the region.

The Fund is now looking at other geographies in East Africa, Central America and South Asia, particularly India, where smallholders make up the majority of farmers. “In Brazil, farms are bigger, but in other economies, we’re going to be looking at aggregators, either financial aggregators or off takers or manufacturers,” says Moss.  


Tracking Impact

At a fund level, impact KPIs have been defined for each of the core impact objectives of the fund:

  • The protection of existing natural forests and restoration of natural ecosystems; for example, the hectares of production forest under sustainable management
  • Sustainable agriculture; for example, the tonnes of CO2e per year reduced from change to farm practices
  • Improved rural livelihoods; for example, the number of participants reporting an increased income

Before loans are advanced, projects are screened against these objectives to see if they are likely to significantly contribute to the fund’s core objectives, while mitigating any environmental and social risks. The Fund analyses the targeted impact, risks and opportunities and sets up an environmental and social action plan. This requires the borrower to meet certain milestones as part of the loan facility agreement.


Finding partner banks

The AGRI3 Fund is unusual in that it facilitates sustainable agriculture investments through loan guarantees, but Moss says that structuring these deals has not been the biggest challenge since the Fund was launched. “The actual guarantee structures we work with are not super complicated. It’s finding bank partners that want to make these types of investment in the first place that is hard, and that’s not just down to the perceived risk,” he says.

He explains that the biggest commercial banks do not tend to invest in primary agricultural production, while national banks in places like East Africa and India do not make large-scale loans in the agricultural sectors because of the prevalence of smallholder farmers. “We also find that, even with more sophisticated banks, we’re pushing them to go beyond what they do from an environmental and social impact perspective,” he says. Ultimately, the AGRI3 Fund aims to mobilise $1 billion of loans by providing credit enhancement tools and technical assistance.

Moss says that attracting more private capital to sustainable land use and reforestation will require more government regulation that sets hard lines when it comes to forest conservation; for commercial banks to improve their capacity for and understanding of lending to sustainable agriculture projects, and a bigger focus on how to derisk this area for institutional investors. “If you look at renewable energy, that’s turned into an asset class because we can predict it relatively well. Primary production is just so diverse that sustainable agriculture is very difficult to predict…However, over the past few years, more banks and impact fund managers have started to redirect private capital toward sustainable agriculture initiatives. This gives hope that there is willingness to work through these complexities and help the transition to a more sustainable agricultural system,” says Moss.  



  1. Interview with Nick Moss, managing director of AGRI3 at Cardano Development
  2. AGRI3 Fund website
  3. LinkedIn