Fairtrade Access Fund (FAF)
- Business model
Country: Multiple – Latin America, The Caribbean and Africa
Sector: Agri multi crops/ lending products
Total AgriFI Financing: EUR 5m
Environmental and Social Category: B
Impact evergreen fund created in 2012 addressing the financial needs of smallholder farmers by providing better access to financing, including long-term capital and to sustainable markets, both locally and abroad.
The Fund contributes to the development of a fair and sustainable agriculture sector by offering its lending products to agricultural companies who works primarily with organizations of smallholder farmers and have a strong commitment to sustainable development, through Fairtrade and sustainable certifications.
Funding objective and impact:
AgriFI will invest up to EUR 5 M in Class A equity, ie as a long term investor (+7 years) in order to:
1. contribute to increase the size of the Fund portfolio to benefit a larger number of smallholder farmers engaged through their organizations in sustainable agriculture. It will also support the expansion of the Fund toward 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 and social rationale
The Project is rated category B.
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.
- Financial instrument
- 5 Mn €