Investments aligned with this Strategic Goal aim to increase the resilience of agricultural and food systems through improved viability of businesses, diversification of product lines, and technical support.

The sections below include an overview of the approach for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Resilient food systems can withstand short and long-term shocks and stressors such as natural disasters and extreme weather events. They are described as diverse, integrated, self-regulating, adaptive, inclusive, and equitable (1). Examples of food system resilience, including food sovereignty, are found globally, often led by civil society and Indigenous peoples. These systems guarantee and protect people’s space, ability, and right to define their own models of food production, distribution, and consumption (2).

Food-system resilience begins by supporting sustainable farming businesses that prioritize both environmental and human health. Over the last century, global competition has led to enormous consolidation of agricultural production (3). Large industrial farms, many of which lack diversity and only produce one or two commodity crops, degrade soil health, reduce biodiversity, pollute water, threaten food security for local communities, limit employment opportunities, and exploit farm workers (3). Micro, small-, and mid-sized sustainable farms, by contrast, contribute to a vibrant agricultural economy with more farmers and local jobs, keep more money circulating within regional economies, and reduce greenhouse gas emissions and other off-site environmental impacts on communities. They can also reduce food safety risks for consumers (3).

Micro, small, and mid-sized farms need access to markets, capital, and technical assistance to achieve viability, which derives from a combination of farm productivity, farm profitability, keeping land in long-term agricultural use, and ecological land stewardship (4). Viable farm businesses build stronger local and regional communities and economies, encourage the broad use of sustainable and ecological production practices, facilitate equitable food access, and increase wealth for socially disadvantaged populations. All of these effects drive increased food-system resilience (5). Comprehensive, culturally responsive technical assistance is required to support farmers in growing existing and new enterprises and to leverage government programs for implementing conservation objectives and sustainable agricultural practices (6).

The sustainable agricultural value chain encompasses an entire range of actors and interlinked value-addition involved in the production, aggregation, processing, distribution, consumption, and sustainable disposal of food products and byproducts (7). Industrial food systems, by contrast, have dramatically lengthened supply chains in terms of physical distance from farm to plate, characterized by progressively more stringent food-safety and -quality requirements (8). Any one break in the system can lead to food waste, delayed food delivery, or food safety issues. In emerging markets, agriculture and food systems are central to promoting inclusive economic growth and reducing poverty; in developed markets, investments in agriculture and food systems can contribute to vibrant rural economies (8). Sustainable and resilient food value chains that are profitable and equitable can deliver broad-based benefits for society and have a positive or at least neutral impact on the environment (7). Responsible investments that enhance collaboration and communication along value chains allow institutional solutions to be realized, including markets, farmer organizations, contractual arrangements, and infrastructure, not to mention technological solutions, including digital technologies and novel mechanisms of finance (9).

Investments that aim to improve food system resilience through sustainable agriculture can:

  • develop and finance agricultural technologies that support climate-resilient practices; such as improved soil health, efficient water use, and increased water-holding capacity*; or that manage and promote agricultural diversity on farms and in markets;
  • finance food production, infrastructure, and businesses along the value chain, including processing facilities and transport innovations, in regional markets in order to connect sustainable agricultural products to markets;
  • purchase or assist in purchasing farmland and farming operations with an emphasis on sustainable practices, regional markets, and social equity and justice;
  • finance Indigenous-led companies that can increase acceptance of Indigenous foodways as a vital component of global production, increasing food sovereignty; and
  • create new investment mechanisms, including appropriate technical assistance, to fund sustainable farms and food businesses that improve farm viability.

Outcomes of these investments could include:

  • increased profitability and viability of micro-, small-, and mid-scale sustainable farming and food businesses in the value chain;
  • access to value-added and post-harvest processing to increase farmers’ share of agricultural income;
  • improved composting and circular economy systems;
  • decreased food waste;
  • diversification of production and supply chains, including sourcing from and supplying to local and regional supply chains;
  • increased viability of food-focused micro-, small-, and medium-sized enterprises and less corporate consolidation;
  • increased stability of markets and businesses through diversification of revenue streams;
  • transparency in production and business practices;
  • increased food sovereignty and food security; and
  • increased funding of locally appropriate technical support and services for sustainable agriculture.

*For more on climate change resilience through sustainable agriculture, see IRIS+ “Improving Climate Resilience through Agriculture” Strategic Goal in the Sustainable Agriculture Impact theme.

*The GIIN’s Understanding Impact Performance: Agriculture provides analysis of the impact performance of agriculture impact investments and showcase the real-world results associated with them.

What is the scale of the problem?

Sustainable farm businesses are integral to resilient food systems, producing culturally appropriate and nutritious foods for society. Though the industrialized food system has increased calories, that has not necessarily translated to increased nutrition. Almost one billion people worldwide are hungry or undernourished, while a growing 1.5 billion are overweight or obese (10).

In 2020, the novel coronavirus pandemic revealed the vulnerabilities of industrialized food systems and their impact on food access, farmworker health and well-being, and farm profitability. The UN estimated that, at minimum, an additional 83 million would go hungry in 2020 as a result of the pandemic-triggered economic recession (11). In the United States, more than 40,000 meatpacking workers tested positive for the novel coronavirus, and more than 200 have died (12). Furthermore, millions of pounds of food were wasted, as the industrialized food system could not adapt to meet the shift in demand from institutions and food service to retail (13).

In 2011, the UN estimated that roughly one-third of food produced globally for human consumption is lost or wasted, amounting to about 1.3 billion tons per year (14).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

  • Communities (both urban and rural). Systems that can respond and adapt to regional needs ensure the production of healthy food for all communities. Resilient food systems that pay farm workers a livable, equitable wage and offer fair employment policies and practices uplift these members of the community and create positive impacts throughout the local economy. Resilient food systems include ecological practices on farms that reduce a community’s toxins and pollutants. Building resilience can increase the supply of diverse, healthy foods produced near the communities where it will be consumed, improving community health outcomes (6).
  • Sustainable farm businesses. Integral to resilient food systems, sustainable farms produce ecologically grown and nutritious foods and provide fair and equitable employment opportunities. Micro, small-, and medium-sized farms, if given access to capital and technical assistance, can invest in conservation practices and grow the supply of culturally appropriate foods for their communities (6).
  • Farm and value-chain workers. Resilient food systems prioritize worker equity by supporting farms and food-system businesses that provide fair wages, safe working conditions, the right to organize, job security, professional development opportunities, and employee engagement (15).

What are the geographic attributes of those who are affected?

Food system resilience impacts communities across the globe, but it particularly affects remote and rural communities. Most micro and small farms are in developing countries, where they support around two billion people (16). The positive economic benefits of viable smallholder farms can help transform rural areas into vibrant, local economies. When rural economies are strong, they demand more locally produced goods and services, which in turn, leads to growth and higher employment in non-farm businesses (such as services, processing, and small-scale manufacturing) (16).

The industrialization of food systems, focused on global production, has not improved resilience. For example, a production-focused area in the Asia and the Pacific region has reduced poverty and decreased the cost of food calories while in turn, increasing rates of malnutrition and degrading the environment, which makes the entire food system more susceptible to shocks (17). In a study of Canadian and American food systems, researchers identified characteristics of an industrialized food system—one in which decision-making autonomy is declining, diversity is decreasing, and farm consolidation is rising—as also being associated with systems that are more vulnerable to external perturbations and shocks (18).

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations can consider contribution at two levels—enterprise and investor. At the enterprise level, contribution is “the extent to which the enterprise contributed to an outcome by considering what would have otherwise happened in absence of their activities (i.e., a counterfactual scenario).” To learn more about methods for assessing counterfactuals, see the Impact Management Project.

Investors can contribute as follows toward addressing larger issues related to the resilience of food systems through sustainable agriculture.

  • Signal that impact matters: Interest has been growing in food and agriculture as a sector for investment. The GIIN’s Annual Impact Investor Survey identified that although these investments account for a relatively small proportion of assets under management (9%), agriculture is the most common sector for investment; nearly six in ten impact investors allocate at least some capital to this sector (23). Similarly, the 2020 Report on U.S. Sustainable and Impact Investing Trends identified an 81% increase in assets allocated to sustainable natural resources and agriculture compared to 2018, totaling USD 2.4 trillion (24). Croatan Institute’s report, Soil Wealth: Investing in Regenerative Agriculture across Asset Classes, identified 127 U.S.-focused investable strategies, with combined assets under management of USD 321.1 billion, that explicitly integrate sustainable food and agriculture thematically or as criteria in their investment process. Of these investments, USD 45.7 billion included one or more criteria related to regenerative agriculture. While there is no standard definition, “regenerative” broadly refers to systems that work with natural systems to restore, improve, and enhance the biological vitality and diversity of farming landscapes, supporting the resilience of the rural communities and broader value chains in which they are situated (25). Growing investment in sustainable and regenerative agriculture can signal the importance of these practices for society and the environment.

    Many investor networks and convenings are also emerging around investment in sustainable agriculture, including Sustainable Agriculture Food System Funders, Slow Money groups, the Global Alliance for the Future of Food, Regenerative Food Systems Investment Forum, and Transformational Investing in Food Systems, among others. These groups not only highlight the importance of the ecological impacts of agriculture but also prioritize social benefits, such as equity, health, viability, inclusivity, and interconnectedness. These are all characteristics of food-system resilience. Such networks provide educational materials, best practices, and on-the-ground research to support better-informed, much-needed investment in sustainable food systems.
  • Engage actively: Investors can engage to support resilient farm and food businesses through the proxy process and shareholder resolutions, direct dialogue with companies, and advocating for fair policies. In addition, investors can provide business technical assistance, legal aid, and connections to other value chain partners.
  • Grow new or undersupplied markets: The founder of Arabella Advisors has claimed that the biggest bottleneck for the world to reach a good food system is a distinct lack of access to capital (26). There is great need for financing mechanisms that can unlock capital at the ground level, facilitating community-level decision-making about where money moves and how. As one potential solution, revolving loan funds can unlock capital flows into farming and ranching communities (6). Impact investment is also needed for early, growth-stage agricultural businesses to meet their full impact potential (27).
  • Provide flexible capital: Transitions to resilient, sustainable agriculture require upfront capital while these businesses will often experience reduced farm revenue during the transition period. Combined with the already-tight financial position of most farmers, a farmer or rancher faces too great a risk to realistically change their practices without access to flexible, patient capital. When designed and implemented in ways that align incentives and values, mechanisms such as partial loan guarantees, risk-sharing facilities, reserves for first-loss capital, and technical assistance funds can mitigate risk and expand impact. Such blended-financing structures, particularly guarantee loan funds backed by philanthropic funders and impact investors, can also lower barriers to entry for other lenders and funders to mobilize capital from a range of sources. Such funds should include frameworks to ensure that those on the ground have most of the decision-making power, which might include review committees that include farmers and people of color, among other participatory models (6).

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

Two billion people worldwide depend on the food produced by some 500 million smallholder farmers (19). The agricultural sector generates jobs and incomes, helping to eradicate poverty and grow rural economies. Investors have an opportunity to invest in both developing and developed countries in a way that can promote equitable economic growth and contribute to rural communities (20).

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

Target stakeholders can experience long-lasting improvements to overall well-being, including social, environmental, and economic benefits. In the United States, the majority of farms, 88%, gross USD 350,000 or less. However, this segment accounts for just 5% of U.S. net farm income. Meanwhile, farms grossing over USD 1 million annually account for 56% of net farm income. Only 41% of small farms turn a profit each year, and 64% of farmers have an off-farm job (21). There is great opportunity to invest in the long-term viability and resilience of these farms.

Resilient, sustainable agricultural systems also help farms adapt to the impacts of climate change. Building healthy soils, diversifying agricultural production, and improving biodiversity can mitigate the impacts of climate change, such as severe flooding, heat waves, and drought (22).

Urban and rural communities alike benefit from better, more reliable access to regionally produced, nutritious foods. Additional benefits derive from regionalized, circular economies and from the reduction of negative health and environmental impacts from the food value chain.

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

The following are impact risk factors for investments in line with this Strategic Goal.

  • Evidence Risk: Assessing the impact of investments in food system resilience is challenging. The extent to which investors can catalyze wide-scale changes in the food system depends, first, on the structures and tools that measure and manage returns. Second, it depends on the impact of the transformational gains that can occur when investments in food systems properly align a) human capital for nutritional gains, b) social capital for fair and resilient values-based supply chains, and c) natural capital for soil health and related benefits for water, air, biodiversity, and the climate. Investors that do not consider systemic issues that undermine food and agricultural systems and the impact that climate change is having on this industry simply expose themselves to unassigned risks (28).
  • External Risk: Although investments in sustainable food systems have increased, very little of the USD 600 billion governments provide farms each year in subsidies supports ecological, social, or economic resilience. For example, just 5% of this funding supports any kind of conservation objective, and just 6% supports research and technical assistance. As a general rule, the world’s poorest farmers are losers rather than winners from global agricultural subsidies. Of all farm support, 20% takes the form of direct production subsidies to farmers, of which most flows to the largest farms. Sustainable farm businesses thus need to compete with subsidized industrial and extractive practices, while not receive much support for regenerative and resilient agricultural practices. In India, these subsidies contribute to both excessive use of fertilizer overall and an imbalance of nitrogen compared to other nutrients (29). Climate risk is another external factor that threatens farm systems. The impacts of climate change on agriculture require farmers to adapt to changing precipitation patterns that include more frequent floods and droughts, changing temperature patterns, and new problems with pests, pathogens, and weeds (22).

What are likely consequences of these impact risk factors?

Investment is needed to achieve food-system resilience to respond to climate, economic, and social shocks and ensure the well-being of communities, farmers, and workers in the food system. Without the ability to properly measure impact and change, adequate investment cannot be identified and thus may lack the capacity to adapt to these shocks. This will further be exacerbated if there are political forces working in opposition to these goals.

Illustrative Investment

Moringa is a private equity fund that targets agroforestry projects in Latin America and sub-Saharan Africa. In parallel with their investments, they have created an Agroforestry Technical Assistance Facility (ATAF) with a vision to become a unique, innovative tool to remove the barriers to the development of viable agroforestry systems and the inclusion of smallholders in pioneering outgrowing schemes (30). Moringa has invested in Texbel Farms, a coconut water and citrus company in Belize. Through a coconut and lime intercropped agroforestry model, TexBel is renovating degraded citrus orchards affected by the citrus greening disease (HLB disease), a major threat to rural communities in Belize and its important citrus industry. Since August 2016, Moringa has financed the development of TexBel’s own processing facility, which uses innovative processes to export value-added fresh products, including coconut water (31). Through its investments, Moringa has helped create 9,000 jobs, restore 25,000 hectares of land, and has impacted 20,000 farmers (32).

Akiptan, a Native CDFI, strives to provide fair financing to Native American agriculture operations throughout Indian Country. Akiptan offers both loans and investments that allow their investees to pay interest only for several years before repaying the principal. The fund has deployed USD 3.4 million across 57 loans, investing in Native farms and companies in the agricultural value chain that strengthen the resilience of the regional food system (33).

Hivos-Triodos Fund invested in Ecozen Solutions, a provider in India of technology-enabled products to strengthen the sustainable agricultural value chain of perishable foods. Ecozen products are used on 20,000 farms and touch the lives of more than 65,000 people. Farmers using Ecozen’s cold rooms have seen significant increases in profits—up to 40%—as cold storage enables farmers to send their perishable products to better, further markets or to wait for favorable market conditions (34).

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 2
Worker Equity in Food and Agriculture: Practices at the 100 Largest and Most Influential U.S. Companies

Kelly, Marjorie, Heather Lang, Gurneesh Bhandal, and Christi Electris. “Worker Equity in Food and Agriculture: Practices at the 100 largest and most influential U.S. companies.” Tellus Institute and Sustainalytics, October 2012. http://croataninstitute.org/documents/Worker-Equity-in-Food-and-Agriculture-2012.pdf

NESTA: 1
Food Systems Resilience: Concepts & Policy Approaches

Harris, Jenileigh and Emily J. Speigel. “Food Systems Resilience: Concepts & Policy Approaches.” Vermont Law School, June 2019. https://www.vermontlaw.edu/sites/default/files/2019-07/Food%20Systems%20Resilience_Concepts%20%26%20Policy%20Approaches.pdf

NESTA: 1
Bridging the Gaps: Funding and Social Equity across the Food System Supply Chain

Foley, Kyle, Taryn Goodman and Bridget McElroy. “Bridging the Gaps: Funding and Social Equity across the Food System Supply Chain”. RSF Social Finance, August 2012. http://rsfsocialfinance.org/wp-content/uploads/downloads/2012/08/Rockefeller-Paper.pdf

NESTA: 1
Barriers for Farmers & Ranchers to Adopt Regenerative Ag Practices in the US

O’Connor, Jennifer. “Barriers for Farmers & Ranchers to Adopt Regenerative Ag Practices in the US.” Guidelight Strategies and Patagonia, August 2020. https://forainitiative.org/wp-content/uploads/Barriers-to-Adopt-Regenerative-Agriculture-Interactive.pdf

NESTA: 1
Background Notes on Sustainable, Productive and Resilient Agro-Food Systems: Value Chains, Human Capital, and the 2030 Agenda

FAO and OECD. “Background Notes on Sustainable, Productive and Resilient Agro-Food Systems: Value Chains, Human Capital, and the 2030 Agenda.” 2019. http://www.fao.org/3/ca5385en/ca5385en.pdf

NESTA: 1
Food System Resilience: Defining the Concept

Tendall, D.M., J. Joerin, Brigit Kopainsky, Peter Edwards, A. Shreck, Quang Bao Le, Pius Krütli, M. Grant and J. Six. “Food system resilience: Defining the concept.” Global Food Security. 6 (2015): 17-23. https://www.researchgate.net/publication/282577265_Food_system_resilience_Defining_the_concept.

NESTA: 1
Resilience and the Industrial Food System: Analyzing the Impacts of Agricultural Industrialization on Food System Vulnerability

Rotz, Sarah and Evan Fraser. “Resilience and the industrial food system: analyzing the impacts of agricultural industrialization on food system vulnerability.” Journal of Environmental Studies and Sciences 5(3), June 2015. https://www.researchgate.net/publication/279512957_Resilience_and_the_industrial_food_system_analyzing_the_impacts_of_agricultural_industrialization_on_food_system_vulnerability

NESTA: 1
Soil Wealth: Investing in Regenerative Agriculture across Asset Classes

Electris, Christi, Joshua Humphreys, Kristin Lang, David LeZaks, and Jaime Silverstein. “Soil Wealth: Investing in Regenerative Agriculture across Asset Classes,” Croatan Institute, July 2019. www.soilwealth.org

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.