The climate bill is being paid by the wrong people
Marcela Paranhos
Director Financial Markets, IDH
Smallholder farmers spend an estimated $368 billion a year of their own money adapting to a climate they didn't cause. Drought-tolerant seed. Water harvesting. Rebuilding after a bad season.
Against that, climate finance reaching small-scale producers has been estimated at somewhere between $2 billion and $5.5 billion a year. This is a fraction of one percent of global climate finance, for a group producing roughly a third of the world's food. Even conservative estimates of what's actually needed put the annual smallholder adaptation gap at $75–150 billion. The ratio is the story: producers are carrying the cost of adaptation, and the financial system is barely showing up to share it.
I'll be on stage at New York Climate Week with partners from FSC, Satelligence and Root Capital to talk about where that money gets stuck. This is the argument I'll be making.
Stop calling it a capital gap
I hear it constantly: there isn't enough capital for climate finance in emerging markets. It's rarely true. Change a fund mandate, add a guarantee layer, and capital starts moving into long-duration infrastructure it currently can't touch. The money exists, what's missing is a structure built to hold the risk.
Smallholder agriculture is the same story. Institutional capital is withholding exposure that it isn't mandated or priced to hold. Every capital gap headline is really a structuring gap in disguise. Closing it means building the guarantee, the blended layer, the de-risking instrument that lets an investor say yes on terms their own mandate allows.
The IDH Farmfit Fund, a €100 million blended vehicle, has spent six years lending into this gap: over €50 million deployed, €150 million+ mobilised in co-investment, roughly 3:1 leverage, over 90% private capital, reaching more than a million farmers. It is built on long tenors and flexible repayment that match agricultural cash flows rather than forcing farmers into products designed elsewhere.
Our Investment Development Hubs build the pipeline upstream of that capital. reVive, launched in Colombia in 2024, has already engaged 120 businesses against an 80 target and moved €2.16 million into follow-on deals across biochar, regenerative agriculture and sustainable land use — sectors invisible to investors two years ago. Since 2016, every euro of IDH technical assistance has mobilised roughly €2.90 in follow-on investment. By 2030, we're aiming for three or more Hubs turning an estimated €865 billion agri-food financing gap into a de-risked, investable pipeline.
The clock is the point
El Niño is back, with forecasts pointing to lower wheat output in Australia and the US, weaker soybean harvests in Brazil and Argentina, and a dip in palm oil in Malaysia. Large exporters have insurance, storage and hedging markets. Smallholders facing the same weather have none of that buffering. For a large producer, this kind of shock means a bad year. For a smallholder, it can mean a bad decade unless investment and the financing architecture in affected regions adopt a systemic lens rather than treating each shock as a one-off.