Fairtrade Access Fund (FAF)
- Business model
AgriFI invested EUR 5 million in the Incofin Fairtraide Access Fund to support its growth strategy in Africa. By expanding its scope to numerous countries, the FAF targets to contract 500+ new loans to empower 200,000+ smallholder farmers by 2022.
Contracting date: April 2019
Countries: Latin & Central America, the Caribbean and Africa
Sector: Agri multi crops/ lending products
Total AgriFI Financing: EUR 5 million
Environmental and Social Category: B
(A) high risk, (B+) medium high risk, (B) medium risk or (C) low risk
The Fairtraide Access Fund is an impact fund created in 2012 to address the financial needs of smallholder farmers by providing better access to financing. The fund is active in 19 countries with a fund size of EUR 51m (2019).
The Fund invests in Fairtrade or sustainable certified smallholders by providing loans and offering technical assistance. As a result, the Fund contributes to the development of a fair and sustainable agriculture, with a strong commitment to sustainable development.
Funding objective and impact:
AgriFI will invest up to EUR 5 M in Class A equity (long term investor, +7 years) in order to:
1. increase the size and scope of the Fund in order to impact a larger number of smallholder farmers engaged through their organizations in sustainable agriculture, with a special development focus in Africa
2. attract more senior finance by securing the Fund financial stability thanks to increased equity in the Fund: both private investors, subscribing to more liquid B-Shares, as well as long term lenders.
Why AgriFI wants to fund this project
The Fund has a clear development impact for smallholder farmers, by enabling them to invest in their land to raise crop yields, improve quality and get a fair return.
Beyond the certifications’ advantages, including the premium, having the FAF as a trade financing partner, greatly improves the bargaining power of the investees, mainly producer’s organisations.
Environmental & Social rationale
The overall portfolio risks include a limited number of business activities that have potential medium level adverse environmental or social risks or impacts that are few in number, generally site specific, possibly reversible, and readily addressed through mitigation measures. FAF will be required to formalise the current processes and procedures used for assessing and mitigation of E&S risks.
IFC Performance Standards 1 to 4 are expected to be triggered by the portfolio investees’ activities.
- Smallholder farmers
- 500,000 (by 2022)
- Ha of sustainably cultivated area
- 2,000,000 (by 2022)
- Jobs created
- 10,000 (by 2022)
- Financial instrument
- EUR 5 million