Pioneering revenue protection for smallholders
The Climate and Commodity Hedging to Enable Transformation (CACHET) is a financial solution designed to ensure revenue protection for smallholder farmers against climate-related disasters and price shocks. It aims at addressing two key challenges that are limiting the use of risk transfer mechanisms by smallholders: the lack of access and the limited sustainability of the existing schemes. To address these challenges, CACHET relies on market-based instruments (derivatives), which are substantially used by large private sector operators but have remained unexplored by small-scale producers.
Thanks to a grant from IFAD’s Adaptation for Smallholder Agriculture Programme (ASAP), CACHET is the prelude to creating a comprehensive risk management package to protect the incomes of smallholder farmers. The ultimate aim is to offer such farmers more predictable incomes – and hence more sustainable livelihoods.
CACHET is currently being piloted in Senegal and Nigeria and will progressively scale up to other African countries, assuming availability of funding. The initiative has South-South and Triangular Cooperation at its core. The Multi-Commodity Exchange of India (MCX) is a key partner of the project conducting country studies and sharing their in-depth knowledge of the commodity markets and smallholders agriculture.