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Rabobank Group 2204058 4
Three units serving worldwide supply chains
Rabobank Foundation
Rabobank Development
Rabobank International
Development Phase
$
Rabobank Group 2204058 6
COMMERCIAL
EMERGENT
SMALL SCALE
SUBSISTENCE
Considerable support both financial and technical
Rabobank main target groups
Considerable support both financial and technical by NGOs and Government
No financial opportunities and not recognized by support providers
Rabobank Group 2204058 8
How to turn a supply chain into a value chain?
Product req'ts Customer
Producer Consumer requ'ts
Rabobank Group 2204058 11
Towards more inclusive value chains
Frontier areas in Value Chain Finance
Commercial finance
Development finance
Microfinance
Value chain development programsProducer organizationMarket development
Value Chain Volume
FullyCommercialvalue chains
EmergingVCs
Number of farmers
Commercial large scaleagriculture
Family agriculture
Family agricultureLocalized markets only
Bank finance barrier
EmergingValue Chains
Inclusion barrier
Interventions
Source: Terrafina/J. de la Rive Box, 2009
Rabobank Group 2204058 12
Lease contract
Down payment
ProcessorLong-term raw materials supply contract
Transfer of lease payments
Farmer
Rabobank
InsurerSupplierEquipment purchase
contract
Insurance contract
Buy-back agreement
Integrated Agriculture Finance Structure
Source: Rabo India Finance, A. Datta, 2007
Rabobank Group 2204058
Chain with small farmers and large institutional processor or retailer
15
Financial dimensions of a value chain
Source: Modern Value Chains, K Schwedell
Chain with small farmers and small retailers
Rabobank Group 2204058 16
Case: Passion fruit from EthiopiaAn outgrower incubator approach based upon foreign investment
• Five experienced Dutch entrepreneurs studied the potentials of Ethiopia and decided to invest almost €12 million in a new enterprise to buy, rehabilitate and expand an existing state-owned fruit farm in the Upper Awash region of Ethiopia. It is a new venture that has set targets to become a major producer and exporter of tropical fruit juices, purees and concentrates from select countries in Africa to the large markets of Europe and the Middle East.
• An integral part of the project is the active promotion of an Outgrower Scheme, which will result in new producer cooperatives (in total approx. 1300 hectares) to become suppliers to the new processing plant, in effect giving the local farmers efficient access to export markets and much improved access to commercial financing
Rabobank Group 2204058 18
18
Ethiopia: Schematic of end objective
Fruit
Juice products
$
Fair Trade premium
Export market
banks
Community “Trust”
coop union
prod. coop1
prod. coop2
aJ processing
aJ plantation
Social development
collateral
repayments
loans for growth
equity
dividends
inputs & supportMicro finance
opportunity
etc
Rabobank Group 2204058 19
Case: Cooperative Banana Farmers in Peru
• Banana farmers in Northern Peru organized in a cooperative take up pre-export processing and fair trade certification. Whereas historically they supplied large multinationals, they now do the quality control, washing, packaging and exports by themselves, thus almost doubling farm incomes.
• CEPIBO is a Union of Small Producers of Organic Bananas in Northern Peru established in 2007. It represents 1500 small producers of bananas with an average of approximately one hectare each. It is responsible for marketing of organic products (both locally and exports) and it has the organizational and technological capacities that allow them to promote fair trade throughout the commercial chain and diversify the productive system in a sustainable manner.