PowerPoint Presentation

[Audio] Now, we will continue with module 4, which is titled "Other alternative and blended mechanisms"..

[Audio] On this slide we introduce the idea of cooperative funding. This is a model where people, organizations, or stakeholders come together and pool their resources—whether that's money, time, materials, or expertise—to support a shared goal. What makes it unique is that decisions are made collectively. This funding approach is very common in community-led or grassroots initiatives, and the core idea is simple: many contributors working together to create something that benefits everyone involved..

[Audio] Here we look at why capital is critical for cooperatives. The more capital they hold, the more they can invest in important improvements—like upgraded technology, better training for staff, or enhanced operations. Cooperatives rely on three main funding sources: contributions from members, profits that are reinvested into the cooperative, and external investors. All three are essential in helping cooperatives grow sustainably..

[Audio] This slide breaks down how members financially support their cooperative. They may pay a one-time or annual membership fee, provide service-related contributions, or invest through share capital. Members can even make deposits the cooperative can use, or allow deferred payment on their produce. Member share capital is especially important because it reflects commitment and stays within the cooperative until the member leaves, giving the cooperative a stable financial base..

[Audio] Another key funding source is the cooperative's own business surplus. Instead of distributing all profits back to members, some of the surplus is retained. This becomes what we call 'institutional capital.' It's a long-term, collectively owned pool of funds that strengthens the cooperative. Of course, it requires members to give up some short-term profit, but they do so because the reinvested funds bring clear long-term benefits..

[Audio] Cooperatives also access funding from outside sources when needed. This can include grants, loans, or trade credit from banks, government programs, or donor agencies. Commercial banks typically require collateral and focus on profit, while non-commercial sources—like governments or development organizations—may offer more favorable terms. These external funds help cooperatives expand or invest in new opportunities..

[Audio] Now we shift to mutual funding, which is all about reciprocal support. Participants contribute to a shared pool or help one another over time, and the benefits circulate back to the group. Think of mutual aid networks or rotating savings groups. The underlying principle is mutuality—everyone gives and everyone receives. This helps communities build resilience and support systems outside formal financial structures..

[Audio] This slide clarifies how mutual funding differs from insurance. Mutual funding is a collective risk-sharing model that depends on active participation and shared governance. Insurance, on the other hand, is a formal contract between a client and a provider. So while insurance is more transactional, mutual funds are more community-driven and rely heavily on trust, rules, and strong member involvement..

[Audio] On this slide, we focus on what makes mutual funding systems work. First, a mutualistic culture is essential — people need to be willing to cooperate and support one another, especially in sectors like agriculture where risks are shared and interconnected. Trust and transparency among members are absolutely critical. Without these, any risk-sharing scheme collapses very quickly. Mutual funds only function when there is strong collective commitment. Members must participate actively and the scheme itself must be carefully designed, with clear rules and roles. Finally, it's important that members understand the long-term nature of the benefits. Mutual funds are not about quick gains; they're about building resilience together over time, and that requires real collaboration..

[Audio] This slide highlights why mutual funds have struggled to take off under the current CAP framework. First, in many parts of Europe there's limited prior experience managing certain agricultural risks — things like plant diseases or strong income variability. Because these risks haven't been collectively handled before, it's harder to design reliable models for them. On top of that, many of these risks depend heavily on specific farming practices, and in some cases there just isn't enough monitoring data to properly assess or price the risk. That lack of information increases uncertainty and makes funds harder to set up. Another challenge is the absence of clear, early guidance from public authorities. When the policy framework isn't clearly communicated from the start, it becomes difficult for farmers and organizations to build confidence and invest in new schemes. Taken together, these factors help explain why the new CAP support tools for mutual funds haven't performed as well as expected so far..

[Audio] Despite challenges, mutual funds are becoming increasingly important. They are uniquely suited to deal with unpredictable risks like extreme weather events, crop diseases, or global market disruptions. As we move toward the 2028–2034 CAP period, strengthening resilience becomes a major priority. Mutual funds can play a central role, but success will rely on supporting member engagement and organizational capacity..

[Audio] This slide introduces impact investing and social finance. Impact investing puts money into projects that generate measurable social or environmental benefits alongside financial returns. Social finance is broader—it includes financial instruments specifically designed to address societal challenges such as poverty, education, or environmental sustainability. Both approaches aim to mobilize capital toward positive impact..

[Audio] Here we highlight the triple bottom line: people, planet, and profit. Instead of focusing only on financial results, the triple-bottom-line approach encourages businesses to measure and manage their social and environmental performance as well. This framework is a core principle in impact investing and sustainability-driven business strategies..

[Audio] This slide explains Social Impact Bonds, or SIBs. These are outcome-based financing tools where private investors fund social programs upfront. The government repays investors only if the program achieves agreed outcomes. Essentially, SIBs shift financial risk away from the public sector and support innovative approaches to social challenges..

[Audio] This slide breaks down the SIB process. Investors provide upfront capital to service providers who deliver a social intervention. An independent evaluator measures results. If the program succeeds, the government repays investors—sometimes with a return. If not, investors absorb the loss. This model incentivizes effective, results-driven service delivery..

[Audio] The key features of SIBs include an outcome-based focus, risk transfer from government to investors, and the opportunity to test innovative solutions without requiring public funding upfront. Globally, SIBs are still relatively new and most projects are concentrated in just a few countries, but they show promise in areas like unemployment, homelessness, and education..

[Audio] This slide summarizes the benefits and limitations of SIBs. They promote evidence-based policymaking, attract private investment to public challenges, and foster collaboration across sectors. Challenges include the complexity of designing measurable outcomes, navigating legal and regulatory issues, and the lack of long-term data to evaluate effectiveness..

[Audio] This slide visually summarizes the SIB model. It illustrates the flow of funds among investors, service providers, public authorities, and evaluators, making it easier to understand how the outcome-based repayment mechanism works..

[Audio] Green bonds are financial instruments used to fund environmentally beneficial projects—such as renewable energy, clean transportation, or climate adaptation. Their popularity is growing rapidly. In Europe, green bonds rose to nearly 7% of all bond issuance in 2024. This growth reflects strong demand for sustainable investment products and alignment with EU decarbonization goals..

[Audio] This slide defines blended finance, which combines public and private funding to attract private capital into socially beneficial projects. It is especially useful for projects that are high risk or not yet commercially viable. By using public funds to de-risk investments, blended finance opens the door for private sector participation..

[Audio] Here we look at the European Investment Bank, the EU's financial arm. Since 1958, the EIB has invested over a trillion euros in priority areas including climate action, digitalization, cohesion, agriculture, and social infrastructure. Its mission is to mobilize both public and private capital to support EU policy goals..

[Audio] This slide presents the InvestEU Fund, which promotes investment across four EU priority areas. It combines public and private financing to support innovation, sustainability, competitiveness, and resilience across Member States..

[Audio] This slide explains how InvestEU supports strategic investments, including Important Projects of Common European Interest. It also introduces the two funding compartments—the EU compartment and the Member State compartment—which allow both levels to support their respective policy goals more effectively. Member States can also redirect shared management funds to benefit from the EU guarantee..

[Audio] This slide looks at emerging Web3 technologies—such as blockchain, smart contracts, and decentralized finance—and how they can support agriculture. These tools help improve supply chain transparency, enable smart agriculture solutions, and support decentralized crop insurance. In developing regions, these technologies also support financial inclusion by providing secure identity, land registry, and payment systems..

SeedSafe: Connecting Farmers & Investors Through NERO Chain's Gasless Web3 Innovation.

[Audio] This slide begins the comparison of benefits and risks across all the alternative funding models we've discussed—cooperative, mutual, impact investing, SIBs, blended finance, and decentralized models..

[Audio] Here we continue mapping out advantages and risk areas, helping to understand which models fit specific purposes. This comparison is important because no single funding model is universally optimal—each works best in particular contexts..

[Audio] This slide introduces Agrifarm, a Greek agri-food enterprise working with small-scale farms producing pulses and rice through ecological farming practices. Agrifarm supports young farmers, promotes sustainability, and exports internationally. The company's model shows how small-scale, impact-oriented agriculture can succeed with the right support..

[Audio] Here we see how Agrifarm secured financing: through an EU-guaranteed loan backed by the EIF under EFSI/COSME. This loan allowed the company to scale production, secure raw materials, and expand partnerships. For the company's leadership, this financing was essential to meeting rising demand..

[Audio] This slide explains why Agrifarm is a useful example. It shows how guarantee-backed financing can unlock opportunities for sustainable and socially impactful agri-businesses that might struggle to get traditional loans. It highlights EU policy alignment, SME support, and the ability to scale sustainably..

[Audio] This final case study presents Etherisc, which offers blockchain-based, parametric crop insurance. Instead of conventional claims processes, payouts are triggered automatically when weather data—like rainfall or drought levels—hit predetermined thresholds. This makes insurance fast, transparent, and affordable for smallholder farmers, sometimes costing as little as fifty cents. It demonstrates how Web3 tools can support risk management and resilience in agriculture..