Cold Storage Financing in Agriculture: Where are we now and where do we want to go?

Summary

The webinar convened experts to discuss unlocking finance for agricultural cold storage, emphasizing the urgency due to millions of farmers' lack of cooling access. It explored multi-dimensional impacts as pathways to climate finance, various financial instruments, and business models like 'cooling as a service.' The panel highlighted the importance of commercial viability, sharing insights on innovative finance and the need for public and private sectors to collaborate in developing scalable, sustainable cold chain solutions.

Takeaways

• 🌱 The need for better access to cooling in agricultural cold storage is crucial for climate health, food security, and social justice, especially impacting women adversely.
• 💰 Unlocking finance for agricultural cold storage is essential to move beyond pilot projects and scale promising business models in cooling solutions.
• 📈 There's an increasing number of entrepreneurs establishing decentralized cold rooms, which provide a pay-per-use model beneficial for farmers to extend the shelf life of produce.
• 🚀 The 'Cooling as a Service' model aggregates demand for small farming communities and eliminates the burden of upfront costs and financial risk associated with owning cooling equipment.
• 🔢 Access to cooling is a significant issue affecting millions of farmers in developing countries, leading to lowered agricultural incomes and food loss.
• 🌍 The global challenges and drivers for sustainable agricultural cold chains include the role of cold chains in nutritional outcomes, rural incomes, climate change mitigation, and energy access.
• 🏦 Financial instruments for cold storage are varied and can range from public support to private financing, with a mix of grants, loans, equity, and innovative finance options.
• 🛠 The multi-dimensional impacts of sustainable cooling, such as its role in climate change mitigation and adaptation, are important for accessing climate finance.
• 📉 Key barriers to scaling up cooling solutions include lack of bankable data, skills, capacity, and access to finance, as well as the need for integrated approaches beyond siloed interventions.
• 🔑 Commercial viability is critical for the sustainability of cooling as a service, and it's important for cooling companies to frame their impact thesis around the multi-dimensional benefits they provide.
• 🔍 An in-depth analysis and the development of tools for assessing the commercial viability of cold rooms can guide both companies and investors in making informed decisions.

Q & A

What is the main focus of the webinar series on agricultural cold storage?

The main focus of the webinar series is to explore how to unlock finance and scalability for agricultural cold storage, particularly in the context of climate finance and the need for better access to cooling solutions in developing countries.

Why is Selena Shella moderating the session?

Selena Shella is moderating the session because she is a climate finance specialist at the Bas Foundation, which is hosting the conversation.

What is the role of the Bas Foundation in the webinar?

The Bas Foundation is hosting the webinar series and has been working with cooling companies over the past three years to understand their financing needs and to enable the scaling of cold storage solutions.

Why is access to cold storage becoming a prominent issue?

Access to cold storage is becoming prominent because millions of farmers in developing countries lack or have insufficient access to cooling, which lowers agricultural incomes, affects food security, and results in food loss.

What are the challenges that cooling companies face in scaling their operations?

Cooling companies often require additional financing to support and expand their operations beyond the pilot stage, and they face challenges in accessing the necessary finance to do so.

What is the significance of the 'cooling as a service' business model?

The 'cooling as a service' model is significant because it allows farmers to store their products on a pay-per-use basis, extend the shelf life of produce, and tap into more profitable sales opportunities without bearing the upfront cost of cold storage equipment.

What are some of the barriers and drivers for sustainable agricultural cold chains mentioned by Ben Hartley?

Some barriers include policy legislation, skills and capacity support, bankable data, and access to finance. Drivers include the role of agricultural cold chains in driving nutritional outcomes, rural incomes, climate change mitigation, and energy access.

What is the importance of gender-based challenges in the context of cold chain financing?

Gender-based challenges are important because female farmers typically face more significant difficulties in accessing finance to scale up their businesses compared to males, which can hinder the overall development and impact of cold chain solutions.

What financial instruments are currently being used or have potential for agricultural cold storage?

Financial instruments include concessional debt, private equity, corporate and foundation impact investments, grants, subsidies, and innovative options like sustainability bonds and crowdfunding.

How does the 'cooling as a service' model affect the financial sustainability of cold storage solutions?

The 'cooling as a service' model can be financially sustainable by offering efficient cooling equipment installation and operation services. However, concessional capital may be required for expansion into countries with less stable capital markets or for emerging technology providers.

What recommendations does Bas Hettema have for creating viable business cases for cold storage?

Bas Hettema recommends considering the product-market combination, recognizing competing technologies, ensuring market sophistication, and possibly integrating public contributions into the business model to account for the multi-dimensional impacts of cold chains.