The Challenge
Climate change is already disrupting Indian agriculture with erratic rainfall, droughts, and floods, leaving smallholders exposed to crop losses and volatile incomes. While climate-smart agriculture (CSA) can strengthen resilience, adoption remains limited. Farmers face high upfront costs, irregular cash flows, and thin credit histories, making them unattractive to lenders. At the same time, Farmer Producer Organizations (FPOs) and Village-Level Entrepreneurs (VLEs), critical channels for aggregation and last-mile CSA delivery, struggle to access longer-tenor capital, tailored debt products, and business support. Without new financing approaches, smallholders remain locked out of climate-smart transitions.
Blended Finance in Action
TBFC is structuring a blended finance facility, in partnership with a leading global development finance institution, to channel capital through FPOs and VLEs, positioning them as anchors for CSA adoption at scale. The facility is designed to unlock climate-aligned investments across agricultural value chains, while de-risking lending and building institutional confidence in these borrower segments. The facility creates additionality across three levers: financial additionality by offering longer-tenor, flexible debt products to finance CSA inputs, assets, and services; beneficiary-level additionality by expanding coverage to new and currently excluded FPOs and VLEs; and product additionality by enabling warehouse receipt financing across more commodities, thereby reducing post-harvest waste and strengthening income resilience through price risk management.
Alongside finance, the facility embeds a capacity-building agenda to strengthen governance, digital records, and market linkages of FPOs and VLEs, ensuring their long-term viability as borrowers and CSA service providers. Over time, the facility will generate evidence on repayment performance and climate outcomes, with the goal of mainstreaming FPOs and VLEs as a self-sustaining asset class.
