The Inclusive Green Growth department (IGG) of the Dutch Ministry of Foreign Affairs (MFA) commissioned SEO Amsterdam Economics to provide evaluation and monitoring support for the AGRI3 Fund. The AGRI3 Fund aims to mobilise private finance for sustainable land use, forest protection, and rural livelihoods through credit enhancement products and technical assistance (TA). In 2017, the UN Environment Programme (UNEP) and Rabobank announced the fund with the goal to finance projects that stimulate deforestation-free, sustainable agriculture and land use. The Dutch entrepreneurial development bank (FMO) and IDH joined AGRI3 in 2018.

As part of this evaluation assignment, four reports will be produced: (1) an evaluation of the first three years of AGRI3 operations (see below); (2) a monitoring report covering AGRI3-supported investments and TA during 2023 and 2024Q1 (currently being written); (3) a second monitoring report covering investments and TA during the remainder of 2024; and (4) a final evaluation report (expected in early 2025). Learning is the main objective of this evaluation and monitoring exercise.

Key findings (first evaluation report)
During the first few years, AGRI3 made notable strides in certain areas but faced challenges in achieving its targets, due to a slow start and operational hurdles. The evaluation team found that the fund’s approach and instruments were relevant but identified a need for increased risk-taking and enhanced use of TA to fully realise its ambitious goals for sustainable agriculture and rural development.

    • Relevance: AGRI3’s financial instruments were found to be relevant for the needs of partner financial institutions and end-borrowers. However, the riskiest instruments had not yet been utilised, and AGRI3 had mainly operated in low-risk segments of the agricultural finance market.
    • Effectiveness: Significant progress was observed in sustainable land use and forest preservation in Brazil, while positive effects on farmer income and productivity were noted in Nicaragua. Nonetheless, the overall impact on rural livelihoods in Brazil was limited, primarily benefiting large agribusinesses rather than local farmers.
    • Additionality: AGRI3 was largely financially additional, particularly in Brazil, due to extended loan maturity and long grace periods. In Nicaragua and China, the main financial additionality came from shared lending risks. However, the financial additionality in Brazil was declining due to alternative sources of long-term finance becoming available. Development additionality was limited, as most projects supported sustainable investments that were already under way, and none supported groundbreaking technologies.
    • Efficiency: The fund’s set-up was found to be broadly efficient, leveraging existing financial structures and providing funding swiftly. Nonetheless, high operational costs relative to the fund size posed a concern, necessitating urgent cost-saving measures. On the positive side, stakeholders saw AGRI3’s decision processes and documentary requirements as transparent and timely.
    • Impact & Sustainability: The evaluation team found limited evidence thus far of demonstration effects on other funds or banks, although Rabobank in Brazil showed increased attention to client sustainability. The use of technical assistance had been limited during 2020-2022, but showed substantial scope for enhancing development results and de-risking transactions.
    • Coherence: AGRI3 was found to align well with the Ministry’s Global Climate Strategy and with food and nutrition security policy objectives on sustainable agriculture, broadly avoiding overlap with other global funds. However, the evaluation team found that there was potential to further strengthen complementarities and maximise synergies with other development partners.

The evaluation employed a mixed-methods approach, including desk research, primary and secondary data analysis, key informant interviews, and field visits to partner banks and end-borrowers in Brazil and Nicaragua. Five out of nine AGRI3 investments  were reviewed in detail, ensuring a comprehensive assessment across various sectors and impact themes.