Better Cotton™, a worldwide cotton sustainability initiative and investment firm launched in 2023, announced the signing of a Memorandum of Understanding to jointly develop and launch a fund for smallholder farmers in the cotton industry with FS Impact Finance.
The fund will be piloted in India and help incentivize cotton farming communities to invest in field-level work related to women’s empowerment and climate resilience by eliminating traditional financing barriers.
Smallholders, who make up more than 90% of the world’s cotton farmers, often struggle to access adequate financial support due to their Farmer Producer Organization (FPO) lack of credit history.
In India, with 16,000 Farmer Producer Organizations representing over 5.8 million farmers, only a few large Farmer Producer Organizations have access to formal financial markets, and the vast majority lack the turnover and credit history to qualify for finance.
Under this new fund, FPOs will be supported in the implementation of gender equality and climate resilience activities with the goal of fast-tracking field-level results. This will enable less developed FPOs to improve their credit history and benefit from services that will help them create strategic and sustainable growth plans for the future.
“This collaboration with FS Impact Finance has the potential to accelerate important work already underway in India, and it will do so in an inclusive way. Access to finance for smallholders is always a challenge and we are excited at the prospect of helping to change that,” says Alan McClay, Better Cotton CEO.
“We look forward to jointly developing this innovative financing solution in the cotton sector that complements Better Cotton’s great work in this area. Our goal is to improve the situation of smallholder farmers and contribute to the development and professionalization of players along the local value chains,” says Martin Cremer, managing director of FS Impact Finance.
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