Climate Adaptation Innovations

Insights from the IAP Challenge Fund

Climate change is a threat multiplier for smallholder farmers, as it amplifies the threat of food insecurity. Smallholder farmers produce a large proportion of the available food but have the most limited capacity to adapt to become climate resilient. In line with the Intergovernmental Panel on Climate Change, we define climate resilience as the ability of a system to absorb, adapt, and transform its functioning and continue to produce results when exposed to current and future climate-related shocks, stresses, changes and uncertainties.

UNEP estimates annual adaptation financing needs for developing countries atUS$202 billion.[1] The private sector provides products and services that enable the adoption of climate adaptation strategies in a cost-efficient manner. These products and services – including irrigation infrastructure, improved crop varieties and grain storage facilities [2]– are particularly valuable for reaching smallholder farmers that are underserved by public services. However, businesses fostering smallholder inclusion struggle to access capital for growth due to perceived risks.

Innovations Against Poverty (IAP) catalyses fund and support to such inclusive businesses integrating climate adaptation. These business enhance smallholders resilience by providing adaptive products and services.

Solar-powered irrigation improves climate resilience of smallholder rice farmers

Rice is Cambodia ‘s crucial staple crop, but  without adaptation, the country anticipates a 10 to 15% net yield loss by the 2040s.[3] Vulnerability arises from the prevalence of rain-fed systems, making it more susceptible to water shortage or excess.

Solar Green Energy (SOGE) Cambodia Ltd sells high quality solar products and services, including– on- and off-grid systems, hybrid systems, mini-grids, street lighting, and water pumps. With IAP support, they expanded into solar-powered irrigation services for small-scale rice farmers, ensuring reliable water supply and enhancing resilient to droughts. The sun-tracked grid-connected solar hybrid system, developed by skilled in-house technicians ensures reliability with low operational costs.

With support from IAP, SOGE initiated a water service pilot in Kampong Cham, serving300+ rice farmers, securing a non-collateral loan from AMK, a local MFI, for expansion after their success implementation. Now operating in seven sites, SOGE aim to further scaling with additional financing across Cambodia, supplying almost 800 farmers, boosting rice yields by approximately 13%.

Climate-resilient crop models target smallholders as customers and out-growers

In Zambia, most smallholder farmers rely on maize with guaranteed government markets, but low profit margins. Climate change simulations predict a 15 to 20%  decline in rainfed yield (2035-2066).[4] Optimized crop management help, but faces challenges. in Northern Province, growing Mbereshi beans emerges as an attractive alternative for smallholders .

Stewards Globe Limited (SGL) is Zambian seed company, partnered with IAP to pilot seed multiplication for Mbereshi beans where smallholders act as out-growers. The Afriseed brand focuses on regionally adapted cereals and legumes. SGL expands its seed distribution network to rural farming communities, promoting Mbereshi beans for enhanced nutrition security. The beans’ short season and drought tolerance improves farmers’ climate resilience, enhances soil fertility through nitrogen fixation and diversify crops, leading to substantially incomes increase for farmers.[5]

SGL’s seed multiplication model needed working capital to bridge the income gap production season. IAP’s funding catalyst aEUR 1.7mfrom the Zambia National Commercial Bank (Zanaco) in 2022 for scaling. SGL is also applying to the Dutch Fund for Climate and Development to further access a concessional loan at a larger ticket size.

Mbereshi beans are popular for taste and quick cooking. In Zambia, demand surged from 100 to 500 tonnes (2023 to 2023). With no mechanically harvesting, an out-grower scheme with smallholder farmers is vital.  Between August 2021 and December 2022, 28 tonnes of parent seed (EUR 24k) were sold to farmers, yielding 170 tonnes (EUR 164k) brought back by SGL after 40% yield increase through investments  in training and inspections. To enhance the model, SGL  considers mobile seed cleaning stations to cut transportation cost by 10-15%.

Technology reduces post-harvest food loss

Ethiopia faces significant post-harvest food loss, particularly during storage.  Shayashone’s Purdue Improved Crop Storage (PICS) bags, hermetic solution, combat storage loss from weevils, rodents and grain mould. These three-layered bag extend grain freshness and use threefold , uniquely combing storage and protection. In 2017, IAP partnered with Shayashone Trading Plc to pilot a youth resellers distribution model for the PICS bags to reach remote smallholder farmers.

Since the IAP partnership, Shayashone has sold 10 million bags, saving around 222 thousand tonnes of maize from storage loss. With a remarkable 45% annual sales growth (2017-2021), their strategy heavily relies on demand creation. The youth resellers model is a catalyst for market development and product knowledge transfer. Shayashone recently secured a USD 500k investment from the Global Social Impact Fund and USD 1.2 million from the Development Bank of Ethiopia.

Shayashone sustain last-mile distribution with customers promoters, keeping marketing costs low. IAP research shows 86% of customers promote, ensuring healthy profit margin. One farmer explained the value of the PICs bag: “It preserves agricultural products for a long period. I kept my products for more than one year without [them] being spoiled.”

Replicate and scale climate adaptation innovations

To address climate-induced food insecurity, new farming practices and adaptation tech must reach global smallholder. Proven enterprise solutions exist, emphasizing transformative potential of focusing on economic pyramid’s bottom. However, successfully integration requires vision, sustained investments, trial and error, and building relations of trust. Available follow-on financing is crucial for scaling proven business models.