IDH in a glance Profile• Accelerating + up-scaling sustainable trade Founded in 2008• Convening impact oriented coalitions• Co-funding private investments to achieve Investment package sustainable production Euro 600 M for• Stimulate private sector development 2011-2015• Impact on MDG1, MDG 7 and MDG 8 12-16 commodity programs International coalition: Reaching ‘tipping point’ - 70 companies, - 10 NGOs Scaling impact Endorsed by Dutch Accelerating (and other) governments 35 staff members
IDH in a glance Profile• Accelerating + up-scaling sustainable trade Founded in 2008• Convening impact oriented coalitions• Co-funding private investments to achieve Investment package sustainable production Euro 600 M for• Stimulate private sector development 2011-2015• Impact on MDG1, MDG 7 and MDG 8 12-16 commodity programs InternationalPublic Co- Impact Commercial coalition:grants funding investing finance - 70 companies, Reaching ‘tipping point’ - 10 NGOs Scaling impact Endorsed by Dutch Accelerating (and other) governments 35 staff members
Bankability of commodities Bankability = the ability to pay back = the ability to meet the organizational objectives Ecological Social Business performance • ↓ use of agro- • Contracts with workers • Quality mngt chemicals • Community relations • Health mngt • Control use of feed • Insurances • Monitoring of farming • Nature and bio- • etc. • Farming protocols diversity conservation • ↑ Supply chain links • ↑ Productivity • Traceability • etc. • Market positioning • etc. Certification = more robust management = increased ability to meet organizational objectives (less risks, less costs, higher profitability)
Finance and aquaculture “Cautious due to past experiences”• Country risks Difficult for (foreign) lenders to register collateral Macro economy: fast growth and high trade deficit lead to growing inflation• Market risks aquaculture Price volatility: raw material and farm-gate prices Increased international competition Difficult to differentiate through quality• Farming risks Diseases Production failures Environmental and social risks• Financial and currency risks Informal financing (small holders shrimps) High interest rates (for farmers)
Finance and cocoa • Economic growth • Employment • External balance • Secure long term supply • Fertilizer business opportunity• Profitability• Community welfare• Food security • Environmental preservation • Reduce pressure on land clearing
Finance and cocoa1. Farm finance: The farmer group takes a bank loan for fertilizer for its members, with risk-sharing from the other supply chain agents2. Fertilizers-for-beans: The cocoa supplier is partially paid in fertilizer upon delivery of beans to the trader3. Cash-and-carry: Building on the supply chain infrastructure, fertilizer is made available at selling points close to farmers to buy in cash Need for innovative financing models: • Robust • Efficient • Outreach
Finance and aquacultureAverage annual growth in global per capita food consumption, 2012-2021: Source: OECD-FAO Agricultural Outlook 2012-2021, 2012
Finance and aquaculture Feed Seed FI Policy & regulation Farming Middle- men Middle- men Need for innovative financing models: Proces- • Robust sor • Efficient • Outreach
Finance and aquaculture: de-risking • Savings • Organising capacity building & training On farm • Aggregation • Certification as risk-mitigator? Finance • Risk assessment profiles in aquacultureinclusive supply • Risk-sharing arrangements (supply chain) chain • Professionalization of suppliers and chain management partnerships • Support farmer aggregation Government & • Clarity on land-titles Investors • • Patient money for investments in capacity building Diseases: monitoring & control
Insights on bankability of small holders:1) Value chain needs to bestreamlined2) Farmers need to save3) Certified farmers controlrisks better
Key messages:1) Value chain commitmentsincrease access to finance2) Certification is a tool:‘aggregating receptivefarmers’ + streamliningvalue chain + risk-tool
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