The Common Fund for Commodities - PowerPoint Presentation

Slide1

The Common Fund for Commodities

Partner in Commodity DevelopmentSlide2

Common Fund for Commodities

2

Intergovernmental financial institution

Established within the framework of the United Nations

in 1989

Headquarters: Amsterdam, The Netherlands

102 member countries

Institutional Members: EU, African Union, Common Market for eastern and Southern Asia(COMESA),

South African Development Community (SADC),

Economic Community of West African States (

ECOWAS),

West African Economic and Monetary Union (

UEMOA),

Caribbean Community (

CARICOM),

East African Community (

EAC),

Eurasian Economic Community (

EAEC), Andean CommunitySlide3

Common Fund for Commodities

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Mandate

Core values

Financing

projects aimed at mitigating the vulnerability of commodity producers by financing the development of innovative business models in the commodity

business

The CFC

supports interventions

cover all aspects of the value chain from production to consumption

Address

vulnerability of poor participants of

agricultural commodity value chainsPractical measures include diversification, value addition, market expansion, risk managementProjects are structured around commodity value chains

The Common Fund for Commodities (“

CFC”) is an

intergovernmental financial institution established within the framework of the United Nations

in 1989 and headquartered in AmsterdamSlide4

CFC Mandate

4

CFC

interventions aim at

enhancing

the

competitiveness

and

income opportunities

of commodity producers, processors and traders in developing Countries by:

Supporting a

value chain approach (vertical integration, diversification and reducing dependency on a single commodity)Improving the competitiveness and cost effectiveness of commodity production: through the introduction of modern technologies, sustainable inputs, higher quality seeds and planting materials, waste reduction, IPM strategies, etc.Technology transfer -

Stimulating the dissemination of technology & know-how

Enhancing

Food Security

Synergies

among producers, industry, Government for commodity-based economic developmentPromoting and supporting Sustainable Development

Enhance the socio-economic development of commodity producers, processors and tradersSlide5

CFC Technical competence in commodity sector

26

years of

experience in financing projects in the commodity sector

Number of total Project financed: 390

Total cost

almost USD 800

million, of which USD

400

million is CFC funding

5 Projects financed in the tea industry, for a total of USD 8.5 million of grantsCurrently a USD 4.2 mln investment is under appraisal for a CFC loan up to USD 1.5 millions to finance an investment aimed at the modernization of tea infrastructure in Sri Lanka

Some projects are supported by:5Dutch Trust Fund

ECSlide6

6

The CFC NetworkSlide7

Evaluation methodology

7

Beneficiaries

Direct Beneficiaries

Indirect Beneficiaries

Women inclusion

Firms/Cooperatives assisted

Minority inclusion

Jobs Created

Economic

benefit

(Net) Project Benefits

Value Added

Farmers’ Income increase

Modernization and environmental impact

Production Costs

Additional Revenues

Production impact on

Hectares under production

Modernization/ access to markets

Yield increase

Quality improvements

Others

Food Security

SustainabilitySlide8

8

Up until the end of 2012

CFC interventions was mainly in the form of

grants to finance projects of general interest for all the commodity stakeholders

(Research Institutes, International Commodity Bodies, producers organizations, NGOs, national governments, and the private sector

)

CFC – Activities until the end 2012 Slide9

CFC – Activities until the end 2012

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Starting from 2013 the % of grants is decreasing in favor of other financing instruments

Breakdown by geographySlide10

CFC – Activities until the end 2012

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Intervention in the value chain

Financing structureSlide11

CFC - New

Financing Policy

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Starting from 2013

CFC’s mandate

has been extended to finance projects promoted by Small and Medium Sized Enterprises operating in the

private sector. Grant financing are limited to small scale interventions

up to USD 120,000.

This change represents

a great opportunity for private sector players

in the commodity business to propose innovative projects for CFC financing.

Private sector stakeholders may benefit from pilot projects and previously financed researches. Slide12

CFC - New

Financing Policy

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Flexible Financing Instruments

depending on project characteristics and final beneficiary profile and financial need.

Main Instruments

of financial support to commodity stakeholders:

Loans

on concessional terms

Corporates

Associations and NGO’s

Financial intermediaries

Direct equity investments

Participation in investment funds

Grants

Corporates

ICBs, Research Institutes, Development agencies

Associations and NGO’s

Micro, Small and Medium

sized

projects

Amount of CFC financing ranging from USD 100,000 to USD 1.5 million

CFC financing is up to 50% of the project costsSlide13

CFC -

New

Financing Policy

13

Projects :

Shall be

Innovative

Shall promote

inclusive growth

and engagements with indigenous people

Shall be

financially sustainable

Shall be

environmentally

sustainable

Shall have a

reliable

management

and implementation strategy

Shall have

final

beneficiary focus

Shall be scalable and

replicable

Should have and

economic and social development

impact on vulnerable stakeholders (direct/indirect beneficiaries)

The CFC does not finance start-upsSlide14

CFC - New

Financing

Policy - Grants

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The Fast Track

Projects

l

imited

to small scale interventions.

Between USD 50,000 and USD 120,000Some example: Bamboo as housing material in Nepal – via INBARSisal value chain enhancement in Haiti – via Concern World WideCoffee and Cocoa production by a minority group in Peru – via Rainforrest Foundation UK Slide15

CFC - New

Financing

Policy - Loans

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Term loans

Loan Amount

: Between USD 300,000 and USD 1,500,000;

Eligibility criteria

: innovative projects, commercially viable with an economic development or social impact. The CFC finances up to 50% of project costs

Tenor

: up to 7 years;

Interest rate:

depending on CFC risk assessment

Repayment

: amortized with the possibility of obtaining a grace period on repayments

Commodity Orientation Interventions

Development Relevance/Impact

Environment Effects/Impact

Addressing Receptive Market

Financial Viability

Quality of Loan Proposal

Own Contribution

USD 300,000 – USD 1.5 mlnSlide16

CFC provides expertise as Partner in Impact Investment Funds

The CFC provides technical assistance to AATIF and the companies in its portfolio.

TA includes:

Training for credit officer on agribusiness lending

Project structuring

Contract farming outgrow schemes

Value chain analysis

The CFC is currently expanding this business line Slide17

CFC invests in Impact

Investment Funds

AAF SME Fund

Sustainable Investment Fund Tanzania

Starting from 2012, the

CFC started participating in impact investment funds related to agricultural commodities, recognizing the impact of these funds carry on communities and value chains. Slide18

Open Call for Proposals and development of the Project Profile

ICB review (Optional)

CFC Secretariat assessment and screening

CFC Consultative Committee – Technical review

CFC Executive Board – Final approval

Application and

Appraisal

Process

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CFC seeks applications for financing from all interested parties through

open

call for proposals targeting specific commodity

issues.

The call for proposals

are published

on international press (The Economist

)

Project

Proposals obtained through

2 Open Calls per year

(April and October)

Lead Time – from selection to Financing about 8 months (April to December)Slide19

Completed application form and a business plan

On the CFC web site is possible to download the application form

Application needs to clearly state expected impact such as:

Beneficiaries and Incomes

Impact on the environment

Additional development impact indicators, as applicable for the proposed activity such as:

Impact on value chain

Impact on the market system

Application

Process - Information

& Documentation needed

19Slide20

Financed Projects in the Tea industry

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Development production and trade of organic tea – China and India – FIGT 04 – in cooperation with FAO, IFOAM and Indian Tea Board

Developed,

on a pilot

basis,

the technology and techniques

for

organic tea production

Set up of modern farms in China and India

Model farms established in:

Zhejiang province; Fujian Province,

Guangdon province in ChinaAssam, Darjeeling, Anamalai in India Developed appropriate export strategies and market development

Total project costs: USD 7

mln

of which USD 3.5

mln

financed

by the CFC in the form of a grantIn India: Assam, DarjeelingSiliguri, munnar (south Slide21

Financed projects in the Tea industry

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Capacity building and rejuvenation of tea smallholders farmers in Indonesia and Bangladesh –– FIGT 05 – in cooperation with FAO and Indonesia Tea Board and Bangladesh Tea Board

Objective:

The project aimed at:

strengthening the knowledge base of tea small holder farmers

rejuvenate smallholder farmers production technique in Indonesia and Bangladesh for enhanced productivity and quality improvement

Total project costs

:

USD

2

mln

of which USD 1.8 mln financed by the CFC in the form of a grant (including USD 0.9 mln from the OPEC Fund for International Development - OFID)

The project is completed in both countries

Tea Board

of Indonesia acted

as Project

Executing Agency

and manager for the project activities in both countries. The Bangladesh Tea Board acted as Project Implementing Agency in BangladeshSlide22

Financed projects in the Tea industry

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Capacity building and rejuvenation of tea smallholders farmers in Indonesia and Bangladesh –– FIGT 05 – in cooperation with FAO and Indonesia and Bangladesh Tea Board

Indonesia

Jan 2011 to

J

une 2015

Budget USD 1.1

mln

Results

:

Increased performance of existing tea smallholdingsTraining of smallholder tea farmers on production and harvesting techniquescreation of cooperatives for strengthening relation with processorsSelf help group system implemented The project benefitted around 1,000 households for a total area of 790 ha

3 locations in the outlined areas: Bandung,

Cianjur

and

MajalengkaSlide23

Financed projects in the Tea industry

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Capacity building and rejuvenation of tea smallholders farmers in Indonesia and Bangladesh –– FIGT 05 – in cooperation with FAO and Indonesia and Bangladesh Tea Board

Bangladesh

Limited progress during the project life (3 years including a one year extension)

Two tea nurseries have been established in

Panchagarh

and one in

Bandarban

Training has not been completed

Bandarban

P

anchagarhSlide24

Projects in the Tea industry under appraisal

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Open Call for Proposals and development of the Project Profile

Tea Supply chain in

Sri

L

anka

– investment in a state of the art warehouse in Colombo

Objective:

The project aims at:

Building a state of the art warehouse in Colombo

Potential borrower:

One of the largest tea broker in Sri LankaTotal project costs:

USD 4.2

mln

of which USD

1.5

fina

nced by the CFCDevelopment impact: reducing delivery time at the Colombo Auction from 1.5 days to 1.5 hours reducing the tea to cash cycle to 3 weeks. Enhancement of hygienic and safety of warehousing services

36 additional jobs createdadditional

30,000 tea growers will benefit from racking storage which is far superior to storing on the floor

.

assuming

ownership of two acres per

grower, 3% income increase. Slide25

Upcoming Call for Proposals

The next Call for proposals will be opened on March 2016

Deadline

for submission of applications: the deadline will be around April 2016Screening of proposals: May 2016Slide26

Contacts

Website:

www.common-fund.org

Phone Number:

+31 (0)20 575 4949

E-mail General Questions:

managing.director@common-fund.org

E-mail Open Call for Proposals:

clt@common-fund.org

Visiting Address:

Stadhouderskade 55

1072 AB Amsterdam

The NetherlandsSlide27

Thank You