Agriculture remains a key driver of economic growth in emerging markets and developing economies (EMDEs), but it also faces significant challenges. The sector contributes heavily to environmental pressure while farmers are increasingly exposed to extreme weather events. At the same time, many producers lack access to financial instruments and technical support needed to shift toward regenerative agriculture practices that restore soil health and improve long-term productivity.
To address these challenges, the Development Bank of Minas Gerais (BDMG), through the FiCS Lab, has partnered with the Climate Policy Initiative (CPI) and a group of experts to design the Regenerative Agriculture (RA) Fund. Focused initially on farmers in Brazil, the initiative goes beyond traditional lending by combining finance with technical assistance and sustainability incentives. Its goal is to enable a structured transition toward farming systems that are both productive and environmentally resilient.
The fund is built on a three-part approach. It reduces investment risk for financial institutions to encourage green lending, provides farmers with both capital and technical support to improve adoption of regenerative practices, and links financing conditions to long-term outcomes such as soil health and productivity. This integrated model is designed to make sustainable agriculture more financially viable and scalable.
Insights from the fund’s development highlight several key barriers to adoption. Farmers report that limited financing options, strict collateral requirements, and uncertain yields make it difficult to transition to regenerative methods. A major gap also exists in early-stage support, with technical assistance identified as the most important factor in reducing risk and enabling successful adoption of new practices.
The analysis also found that existing agricultural credit systems are often fragmented, with inconsistent loan conditions and limited flexibility for transition-focused financing. In Minas Gerais, federal credit lines are highly competitive and frequently exhausted, further restricting access for farmers seeking support. Despite improvements in soil quality, water retention, and biodiversity, farmers do not yet receive market-based price premiums for adopting regenerative practices.
At the same time, there is growing interest among farmers in participating in payment-for-ecosystem-services schemes, indicating potential for incentive-based sustainability models. Strong engagement from public development banks is seen as essential to scaling such initiatives and ensuring their effectiveness.
Overall, the Regenerative Agriculture Fund demonstrates how public development banks can help translate climate and sustainability goals into practical, on-the-ground solutions. By combining finance, technical support, and incentive alignment, the model offers a scalable pathway to bridge the gap between global climate ambitions and real-world agricultural transformation.
