Around the world, financing smallholder agriculture remains inadequate. And the financing of perennial fruit trees – which take 5-7 years to mature – is unprecedented because no one has figured out how to do it successfully. Until now.
The advantage of this model is that all participants gain from their involvement: the farmers become orchardists; bondholders receive a good return, and the communities receive social stability through more jobs and new economic activity.
For “Tree Bonds” to be successful, the financials have to make sense. The objective is to bring the bondholders a reasonable rate of return for the associated risks, and to return the orchard to the farmer as quickly as possible.