The agricultural sector is a cornerstone of economic growth in emerging markets and developing economies (EMDEs). However, it faces a critical double bind: it is the primary source of environmental pressure, and producers are increasingly vulnerable to extreme weather and lack the financial tools and technical support needed to transition to regenerative agriculture practicess.  

Through the FiCS Lab, the Development Bank of Minas Gerais (BDMG) has partnered with Climate Policy Initiative (CPI) and a coalition of experts to design the Regenerative Agriculture (RA) Fund. Targeted at farmers in Brazil, this initiative aims to move beyond simple lending to introduce an integrated approach that equips producers with the necessary tools to sustain long-term soil health and productivity. 

The fund aims to achieve this through a three-tier approach that:

De-risks Investments: Lowers the barrier for financial intermediaries to participate in green lending. 
Empowers Producers: Combines capital with essential technical assistance. 
Aligns Incentives: Connects financial terms directly to long-term soil health and productivity. 

Key lessons from the RA Fund

The following key lessons from the tool’s incubation identify the systemic barriers to transition and the strategic opportunities for Public Development Banks (PDBs) to intervene:

• Farmers identified financing constraints, high collateral requirements, and potential yield volatility as major obstacles to adopting RA practices.
• Knowledge and training were cited as the most significant early-stage challenges in transitioning to RA practices, with technical assistance being the most critical element for risk mitigation.
• Existing credit lines vary significantly in rates, tenors, and ticket size requirements, creating gaps for flexible, transition-oriented RA financing.
• Federal agricultural credit lines are highly competitive and often exhausted quickly, with limited access in Minas Gerais.
• Farmers do not receive price premiums for adopting RA, despite experiencing gains in soil, water, and biodiversity.
• Farmers showed willingness to participate in payment-for-ecosystem-services (PES) schemes.
• Strong PDB buy-in emerged as a critical factor for the instrument’s overall success.

This model demonstrates how PDBs can play a vital role in turning policy ambition into reality on the ground. By creating scalable, implementable initiatives, we can bridge the financing gap between global climate goals and local farming success. 

Download the report for details on the Regenerative Agriculture Fund design and explore the blended finance opportunities that can drive the future of agri-innovation. 

Read the full report