Incofin Investment Management, Fairtrade International and Grameen Foundation partner on international investment fund with first US$1.3m (€1m) investment from Starbucks
On 24 April, 2012, 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 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.