Incofin Investment Management, Fairtrade International and Grameen Foundation partner on international investment fund with first US$1.3m (€1m) investment from Starbucks
Brussels, Bonn, Washington, D.C., Seattle, April 24, 2012 –Today, Incofin Investment Management, Fairtrade International and Grameen Foundation announced they are establishing the first fund to focus on the unmet demand of smallholder farmers for long-term loans. Starbucks Coffee Company (NASDAQ:SBUX) joins as the Fund’s first anchor private investor with a $1.3m (€1m) commitment. The Fund will offer investors both financial and demonstrable social results.
The Fairtrade Access Fund will provide farmers’ cooperatives and associations the long-term loans they need to renew their farms or adopt new technologies and equipment.
Smallholder farmers in developing countries have tremendous potential but are held back from growth because they cannot access the financing they need. According to a 2010 survey conducted by Fairtrade International, Fairtrade farmers in Latin America alone say they need $500 million to cover their financing needs, more than half of this for long-term loans.
The Fairtrade Access Fund uniquely offers a full range of loan types and technical assistance to enable farmers’ organizations to strengthen and secure their businesses, including a new facility that will allow farmers to receive timely information on Fairtrade certification practices, crop management and localized market information via their mobile phones.
The Fund will provide financing to farmer cooperatives and other producer organizations that are Fairtrade certified or are applying for certification. Through Fairtrade, farmers’ organizations will have improved access to international markets, a minimum price safety net and other economic benefits.
The Fund will launch in Latin America later in the fall and expand into Africa and Asia in a second phase. It targets a launch size of $8-12m (€6m-9m), and is projected to approach $25m (€20m) by the end of year two. The three sponsors have committed the initial locked-up capital. The Fund offers investors a competitive financial target return with the possibility of a yearly dividend. Its open-ended structure gives investors flexibility to redeem their shares.
The Fund represents a unique collaboration between a social investment firm and two global nonprofits that focus on helping people in developing countries improve their lives.
"The Fairtrade Access Fund is an effective way of promoting agricultural finance and achieving a high social impact for smallholder famers. This new initiative is entirely in line with our social mission and underlines our commitment to supporting rural businesses in emerging economies," said Loïc De Cannière, Managing Director of Incofin Investment Management.
“In Fairtrade we’ve witnessed how farmers can transform their own lives if they just have the means. With the help of our partners and investors, the Fairtrade Access Fund will fill a critical gap so producers can drive change in their communities,” said Tuulia Syvaenen, Executive Operating Officer of Fairtrade International.
“Grameen Foundation is pleased to be partnering with Incofin and Fairtrade on an innovative, holistic approach to solving the challenges that poor smallholder farmers face and ultimately help them reduce their risks and increase yields and income,” said Alex Counts, president and CEO of Grameen Foundation.
“Investing in smallholder farmers directly reflects our desire to strengthen coffee supply chains and improve the livelihood of farmers around the world,” said Ben Packard, vice president, Global Responsibility, Starbucks. “By working with the Fairtrade Access Fund, we come that much closer to our goal of establishing $20M in farmer loans by 2015.”
Three complementary partners with a common goal
Incofin Investment Management, Grameen Foundation and Fairtrade International all focus on giving people in developing countries the opportunity to build their own businesses and improve their lives. Each will contribute its own experience and capital to a common initiative to maximize the impact of their activities.
Incofin IM selected to manage fund and take lead in fundraising
Incofin IM was asked by the other partners to manage the Fairtrade Access Fund and will take the lead role in the further fundraising for the Fairtrade Access Fund. The Fairtrade Access Fund will be the seventh facility under management of Incofin IM and will complement its current outreach in rural areas. Currently Incofin manages six microfinance investment facilities, totalling $400m, which reach about 6 million small entrepreneurs in developing countries.
Fairtrade International leverages relationship with producers to support pipeline development
Fairtrade International will assess possible fund beneficiaries according to the Fairtrade Access Fund criteria. They will also support producers’ efforts to gain Fairtrade certification so they can access benefits which include Fairtrade Premium income to invest in their own communities and businesses, minimum prices for their crops, more stable contracts with buyers, and growing demand for Fairtrade products.
Grameen Foundation to play pivotal role in technical assistance and social performance measurement
Grameen Foundation will support the complementary technical assistance that will disseminate and collect information via mobile phones from the farmers, thus promoting market transparency, enhancing yields, reducing risks and facilitating monitoring and data analysis. The foundation will also enable investees to measure the poverty levels of their member farmers and track changes over time using the Progress out of Poverty Index® (PPI®).
Starbucks continues ongoing commitment to helping farmers
The Starbucks investment of €1m ($1.3m) represents the first private enterprise piece of funding for this targeted loan and continues to demonstrate the company’s support of providing farmer access to credit. In 2011, Starbucks funded more than $14m in farmer loans to Fairtrade co-operatives as part of an on-going commitment to helping farmers manage risk and strengthen their businesses.
About Incofin Investment Management
Incofin Investment Management is a manager of investment funds that strive to achieve balanced social and financial returns. Incofin invests in microfinance institutions in developing countries that not only show growth potential and a healthy financial structure, but attach great importance to social performance as well. Incofin IM’s main goal is to reach out to people who live in more secluded rural areas and/or who are active in the agricultural sector. The Fairtrade Access Fund will enable Incofin IM to make direct investments in this sector. From its offices in Belgium, Colombia and India Incofin finances and supports organizations in over 40 countries. More information is available on www.incofin.com.
About Fairtrade International
Fairtrade International (FLO) is an internationally recognized, non-profit organization that works to secure fairer trade terms so that farmers and workers in developing countries can invest in a better future for themselves and their communities. Fairtrade International is responsible for the strategic direction of the Fairtrade system, setting the international Fairtrade Standards and supporting producers to gain Fairtrade certification. Fairtrade International owns the FAIRTRADE Certification Mark, a registered trademark which shows that a product has met the Fairtrade Standards. FLO’s members include producer networks who represent the interest of producers in the Fairtrade system and labelling initiatives who promote Fairtrade to business and consumers in the countries of sale. Over 6 million people (farmers, workers and their family members) in 60 countries directly benefit from the global Fairtrade system. For more information, please visit www.fairtrade.net.
About Grameen Foundation
Grameen Foundation, a global nonprofit organization, helps the world’s poorest people – especially women – lift themselves out of poverty by providing access to small loans and other financial services, life-changing information and unique business opportunities. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; Kenya; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit www.grameenfoundation.org.
About Starbucks Corporation
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest-quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at www.starbucks.com.
For more information about the fund, please contact:
Alexander Vuylsteke at Incofin Investment Management,
+32 3 829 25 30
alexander [dot] vuylsteke [at] incofin [dot] com
For more information about Incofin:
Kaat Van Bosstraeten
Incofin Investment Management
+32 3 829 25 66
kaat [dot] vanbosstraeten [at] incofin [dot] com
For more information about Fairtrade International:
+49 228 949 23 141
r [dot] fick [at] fairtrade [dot] net
For more information about Grameen Foundation:
+1 202-628-3560, x128
lyorke [at] grameenfoundation [dot] org
For more information about Starbucks:
Starbucks Coffee Company
hadrage [at] starbucks [dot] com