ICAC and CFC Discussion to Advance Carbon Finance for Cotton Smallholders
Amsterdam, 17 November 2025 – The International Cotton Advisory Committee (ICAC) and the Common Fund for Commodities (CFC) convened a virtual meeting to explore innovative pathways for empowering smallholder farmers through carbon finance and regenerative agriculture. Participants included ICAC Executive Director Mr. Eric Trachtenberg, Chief Scientist Dr. Keshav Kranthi, Director of Communications Mr. Mike McCue, Head of Textiles Mr. Kanwar Usman, and Economic Affairs Officer Ms. Parkhi Vats. From CFC, attendees were Ambassador Sheikh Mohammed Belal, CFC Managing Director; Mr. Nicolaus Cromme, Chief Operations Officer; Mr. Peter Nielsen, Impact Investment Manager; and Ms. Zahra Kahla, Research and Data Assistant.
The meeting recognized the long history of partnership between ICAC and CFC and served as an opportunity to reconnect after several years. Both organizations emphasized the need for innovative approaches to improve smallholder incomes, including renewed collaboration on regenerative agriculture and carbon-credit mechanisms. ICAC also shared updates on its upcoming initiatives, including the first Global Cotton Textile Investment Summit, to be held in 2026 in Abidjan, Cote d’Ivoire, aimed at attracting investment to cotton and textile value chains in member countries, with a special focus on Africa.
During the meeting, Ambassador Belal emphasized: “At the CFC, we believe one of the most promising pathways to reshape this imbalance is through carbon finance for smallholders, particularly the model we call the smallholder carbon ticket. Unlike a carbon tax that simply penalizes emissions, carbon tickets reward action, enabling farmers to earn real income by adopting regenerative and climate-friendly practices.”
The dialogue focused on regenerative agriculture, soil health practices, biochar application, and the development of carbon credit payment systems for farmers. Participants highlighted the potential of these approaches to improve livelihoods, strengthen financial inclusion, increase yields, and enhance biodiversity while delivering measurable carbon benefits. ICAC is preparing frameworks for carbon credit payments to cotton farmers, while CFC shared its experience in carbon frameworks and impact investing, including collaborations with UNDP, CAFI, and other international partners.
Several related projects were discussed. In Peru, CFC has partnered with Café Selva Norte (CSN) and CSN+ (Conservación Selva Norte) to provide alternatives to deforestation and incentivize reforestation. Through a USD 290,000 fast-track loan and a USD 1 million trade finance facility, smallholders have been integrated into regenerative, high-premium coffee value chains, boosting productivity and resilience while conserving the Peruvian Amazon.
In Mozambique, CFC has supported a cashew supply chain transformation in partnership with a leading agribusiness operating across 26 African countries. The technical assistance project has delivered SAP training for extension officers and farmers, established tree nurseries and demonstration plots, and positively impacted approximately 13,300 hectares of land. It also enabled the world’s first Cashew Rainforest Alliance SAS certification, with certified produce procured from 3,200 farmers. Biochar research and application further strengthened carbon sequestration and climate resilience among smallholders.
ICAC also share their extensive experience on biochar project to remediate acidic soils in major cotton-growing regions. In Zambia, using biochar derived from cotton stalks, the initiative demonstrated sustainable soil remediation without additional input costs.
ICAC Executive Director Mr. Eric Trachtenberg remarked, "We are very interested in exploring collaboration with CFC. Given the progress they have already made, there is clear potential to replicate these models in cotton, creating meaningful impact for smallholders."
CFC’s growing work with CAFI, including initiatives to develop deforestation-free value chains in the Congo Basin and agroforestry PES programmes, has drawn ICAC’s attention. Seeing that CFC is involved in such innovative projects, ICAC noted the potential for replicating similar approaches in the cotton sectors, highlighting strong alignment and valuable insights between the organizations.
Together, the ICAC and the CFC aim to reshape commodity value chains by ensuring that smallholders are fairly rewarded for their climate-positive actions. The meeting served to continue discussions on technical matters, particularly along the cotton value chain in Africa, Asia, and Latin America, where smallholder participation is central to both organizations’ work.
About the Common Fund for Commodities (CFC)
The CFC is an UN-affiliated international financial institution based in Amsterdam, working in over 100 countries to support inclusive economic development through impact investing in commodity value chains.
About the International Cotton Advisory Committee (ICAC)
The ICAC (www.icac.org) is the UN-recognized intergovernmental body representing the global cotton-textile value chain. Its mission is to serve the cotton and textile community through promotion, knowledge sharing, partnerships, and providing a forum for discussion of cotton issues of global significance.
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