On March 11, the World Health Organization declared the spread of Covid-19 a global pandemic. The United Nations Secretary-General Antonio Guterres has described the COVID-19 crisis as the most significant test humanity has faced since World War II. UNSG called for the creation of a $2 billion fund to support the most vulnerable countries during this crisis. But actual cost may require substantially more. For every bankruptcy, closed store, unpicked crop or drop in online orders, people will lose jobs and families will, in many cases, lose their only income.

The International Labour Organization (ILO) recently predicted that 25 million jobs could be lost worldwide as a result of COVID-19. For Africa – which should be creating 12-15 million jobs annually to keep up with a growing population – these figures could be catastrophic. The global downturn risks putting the continent into a negative, downward spiral.

On the whole, the developing countries need, in addition to support for their health sectors, is carefully thought out support packages to keep their economies afloat and protect micro, small and medium-sized enterprises (MSMEs) from going out of business. The mitigation drive to keep them afloat is, therefore, a huge challenge for CFC.

In times of uncertainty like this, the CFC is as shocked as any other financial organizations. In our little capacity, what we are trying to do is accumulating good information to create a competitive advantage. Likewise, challenges, if there are any silver linings, the CFC is endeavoring to know of it.

The direct impact in CFC member countries so far differs in severity but all countries are feeling varied consequences of the resulting global economic outfall. And as is often the case when crises hit, developing countries feel the brunt of the shock as the virus tears through the world economy.

CFC’s response to COVID-19:

The present drop in commodity export price indices and the rise in the cost of finance to developing country governments and companies closely mirror the early movements during the Great Financial Crisis. An analysis from the Food and Agriculture Organization of the United Nations (FAO) highlights how disruption to global supply chains further reduces developing country incomes by physically restricting commerce.

If previous crises are anything to go by, demand and export prices may well take a long time to rebound while the limited supply and high cost of finance will likely further depress developing world economies. Longer term structural changes in demand are also likely.

In an analysis released late March of this year, the UN Conference on Trade and Development (UNCTAD) compared the immediate impact of Covid-19 to that of the outbreak of the 2008 Great Financial Crisis. The analysis showed that the effects felt by developing countries in terms of financial outflows and currency depreciation are significantly more severe during the current, incipient crisis.

In this context, the CFC is sentient to the particular vulnerabilities of the smallholders of the agricultural value chains in which it operates. While the actual impact to rural communities will necessarily differ across countries and value chains, the economic livelihoods of smallholders are likely to be affected by a number of common factors.

As of April 2020, there were still no signs of relevant impact on crop production. But, as the pandemic spreads in producer countries, its effects will soon be felt. It is expected that the reduction in the labour force will directly affect agricultural production, especially for labour intensive crops. Restrictions on trade and movements may also become a relevant challenge in the short-term with producers failing to connect with their markets. On the mid and long-term, the lack of access to essential inputs such as seeds or fertilizers will impose additional complications to producers.

The pandemic is also changing consumers behaviour. Although food demand is generally inelastic and the effect on overall consumption will probably be limited, dietary patterns may change. So far, the most affected countries observed an increase in both staple and ready-to-eat food that can be stored for longer periods. However, learning from the experience of the 2008 financial crisis, its expected that on the long-run food demand will also shrink as the global income is severely affected by the quarantine restrictions.

In-between the primary producers and the end-consumers, there are SMEs/SMMEs, the CFC is working with. They are key to connecting consumers with essential food supplies and producers with the income crucial to their livelihoods. And if supply chains break down now, these disruptions may become permanent unless early mitigations are not provided with.

The CFC supports many good SMEs in its portfolio, and the Fund will continue to make sure they survive the crisis and flourish afterwards. The CFC is closely monitoring the situation of the commodity producers and it is actively engaging with its borrowers to understand the particularities of their challenges. The CFC has the facilities and experience in managing the necessary instruments and further measures will be taken to support qualifying SMEs to mitigate their losses and thereby weathering this storm. This will directly serve the mission of the CFC bringing the principles and fundamental goals of the CFC into practice.

While the pandemic will have deep effects on CFC’s Member Countries, the role of the Fund in the support of the sustainable development of commodity producers becomes even more relevant. The CFC is aware of the obligation that follows from the accumulated experience of its decade-long support for smallholder livelihoods and is increasing its efforts to provide the much needed finance for the continued operation of agricultural value chains.

On the whole, one fundamental lesson of the COVID-19 is the realization that unless poverty is addressed globally, with a renewed sense of urgency, the spread of killing viruses like COVID-19 could always run the risk of wreaking havoc in both developing and developed world.

This is why we have to start preparing now and encourage ourselves to herald a return to normal. There will, however, be no normal if we forsake the idea of humanity and turn our backs on those forgotten people, near and far.

Therefore, CFC would remain on the lookout for being a part of a good ecosystem of business support actors, with shared objectives and complementary strengths, with priority for the more vulnerable at the margin, to deploy solutions for resilience and recovery.

Problems facing vulnerable people are the focus of the CFC.

2

Newsletter 15 | April 2020

The CFC is supporting Olivado EPZ Limited (‘Olivado’) to expand the production and ex-

port of organic avocado oil. Olivado is among the world’s leading producers of organic

avocado oil, directly sourcing the avocados from 2,200 smallholder farmers. From its

processing facility in Kenya, it operates an integrated farmer-to-market model. The

avocado oil is sold for export to traders and retailers in over 30 countries. The CFC has

extended a USD 500,000 trade finance loan to accommodate the increasing interna-

tional demand for certified organic avocado oil.

Benefiting from Kenya’s great climate condi-

tions for growing avocados, Olivado created

an inclusive business model, sourcing from

small farmers based on a fair trade and

organic out-grower scheme. By buying the

avocados directly from small, bio diverse

farms at a premium price, Olivado can

reliably trace the quality and origin of the

avocados, as well as guarantee farmers a

regular income.

The loan will be used to buy more avocados

from the existing farmers and to integrate

some 160 new smallholders into Olivado’s

value chain each year. Olivado provides cash

advances to the farmers at the beginning of

the harvest season and guarantees to buy at

least 95% of each farmer’s annual avocado

crop. Every farmer who sells avocados to

Olivado joins the certified organic and fair

trade program, gaining access to extensive

agronomic training programs and rigorous

farm monitoring procedures and tools.

Olivado’s team of field officers work closely

with the farmers year-round via farmer

groups, providing education in farm manage-

ment, organic fertilizing, and pruning. In order

to ensure complete traceability from farm to

bottle, Olivado uses its own picking teams. All

farmer details, such as the estimated num-

ber of avocados per tree, are mapped and

assessed using traceability software. The fruit

is weighed on location and delivered directly

to Olivado’s factory in Murang’a county.

There, avocado oil is made using the tradi-

tional cold-pressed method, which extracts

the natural oil from the fruit, retaining its qual-

ity and nutritional value. Alongside its primary

activity of avocado oil production, Olivado

installed a biogas plant in 2019 to produce

biogas and fertilizer from the avocado waste

generated from the oil processing.

With the goal of scaling avocado produc-

tion up to 3,000 farmers, Olivado hopes to

improve smallholders’ yield and net income

by 200% over the next five years. By growing

the permanent staff to over 100 employees,

including at least 44% women, the project is

also expected to create much-needed jobs

in the region. ¢

Scaling organic avocado oil from Kenyan smallholders

contents

Scaling organic avocado oil from

Kenyan smallholders 3

The CFC appoints a new

Managing Director 4

30 years of the CFC:

Anniversary event 4

Leveraging CFC resources and

exper tise through investment funds 5

65th Meeting of the Consultative

Committee 6

Imag

es:

CFC

Olivado buys fair trade, organic avocados

directly from smallholder farmers.

Newsletter 15 | April 2020 4

In September 2019, the CFC reached a major milestone, completing 30 years of

operations. To celebrate this occasion, on 3 December 2019, the CFC hosted a 30th

Anniversary event in The Hague to highlight the lessons learned during the past three

decades, diagnose the current global commodity system, and set a direction for the

next 30 years of the CFC.

Key CFC stakeholders were invited to contribute to the

event, including Dr. Ha-Joon Chang, from the University

of Cambridge, who delivered the keynote address on

the need for intelligent diversification in commodity-

dependent developing countries. Other panelists

included representatives from governments, inter national

organizations, private sector companies operating in

commodity value chains, nonprofit development organi-

zations, impact investors, academics, and development

think tanks.

A full report on the event is being prepared and will

include more details about its main outcomes. When

completed, it will be available on the CFC’s website and

social media channels. ¢

The Governing Council at its 31st Meeting in The Hague has decided to appoint

H.E. Sheikh Mohammed Belal (Bangladesh) as the Managing Director of the CFC for

a four-year term. Ambassador Belal was elected by consensus from a pool of six

candidates for the post of Managing Director of the CFC on 4 December 2019.

H.E. Sheikh Mohammed Belal served as

Ambassador of Bangladesh to the Kingdom

of the Netherlands with concurrent accredi-

tations to the Republic of Croatia, and

Bosnia and Herzegovina since March 2014.

He was elected as a member of the Board of

Directors of the Trust Fund for Victims of the

International Criminal Court for three years

with effect from December 2018. The Bureau

of the Assembly of States Parties appointed

Ambassador Belal as “Facilitator for the Trust

Fund of Victims” for the term 2015-2016.

H.E. Sheikh Mohammed Belal also served as

the Permanent Representative of Bangladesh

to the Organization for the Prohibition

of Chemical Weapons (OPCW) since

30 April 2014. During his term in the OPCW,

Ambassador Belal served in different capaci-

ties including his role as Chairperson of the

Executive Council of the OPCW. He served

in Bangladesh Missions in Washington,

Canberra, Kuala Lumpur and Tashkent in

different capacities. H.E. Sheikh Mohammed

Belal obtained a Master’s in Public

Administration from Harvard University in the

USA, a Master’s in International Relations and

Trade from Monash University in Australia

and also did his graduation in Forestry at

Chittagong University in Bangladesh.

Ambassador Belal is committed to working

for the forgotten people in order to bring

prosperity to the lives of millions of people

living on the margins.

Ambassador Belal is married to Dr. Dilruba

Nasrin. They are blessed with two children

and a grandson. ¢

The CFC appoints a new Managing Director

30 years of the CFC: Anniversary event

Anniversary Event

3030thth

The Hague

3 December 2019

Dr. Ha-Joon Chang,

University of Cambridge

Newsletter 15 | April 2020 5

According to the Global Impact Investing Network, assets under

management of impact investors exceeded USD 500 billion in

2018. CFC’s project portfolio (which is 100% impact investing) is

relatively small compared to figures like these. However, beyond

managing assets, the CFC and other DFIs also play a catalytic role

in attracting outside investors to the industry.

One of the ways CFC does this is by providing the necessary exper-

tise and capital to attract additional resources to new impact funds.

Since 2013, the CFC has committed more than USD 9 million to eight

impact funds. The CFC furthermore sits on the advisory committees

of three of these funds, and manages the technical assistance facility

of two others. As a result, the CFC has leveraged both its financial

and human capital to contribute to unlocking total commitments of

USD 600 million.

CFC fund investments

CFC fund portfolio Amount committed

SME Impact Fund EUR 400,000

AATIF USD 1,980,000

AAF-SME Fund USD 2,000,000

Africa Food Security Fund USD 1,000,000

EcoEnterprises Fund II USD 500,000

EcoEnterprises Fund III USD 1,000,000

Moringa Fund EUR 1,100,000

agRIF USD 1,000,000

Following the CFC mandateThe CFC follows the same impact mandate for investing in both

impact funds and making direct investments. However, investing

through impact funds has allowed the CFC to increase impact in

member countries and value chains with limited or no presence in

the CFC loan portfolio. Up to the first half of 2019, the CFC portfolio

funds were enhancing the livelihoods of nearly 150,000 beneficiaries

and supporting the creation of over 20,000 jobs in 30 countries.

CFC loan and fund portfolio summary statistics

CFC loan portfolio CFC fund portfolio

Regions Africa: 72%Latin America and the Caribbean: 19%Asia: 8%

Africa: 66%Latin America and the Caribbean: 30%Asia: 5%

Top 3 countries Kenya: 14%Nigeria: 9%Peru: 9%

Côte d’Ivoire: 10%Zambia: 9%Ecuador: 8%

Value chain activities

Processing: 48%Primary production: 25%Finance: 16%Market access: 8%Others: 2%

Processing: 41%Primary production: 22%Finance: 26%Market access: 5%Others: 6%

Top-3 commodities Fruits (excl. citrus): 11%Sea products: 9%Cocoa: 8%

Finance: 22%Fruits (excl. citrus): 20%Fertilizers and other Inputs: 10%

Note: CFC loan portfolio figures are per February 2020. Fund portfolio figures are per 30 September 2019. Distributions are shares of total loan and equity commitments.

While the regional distribution is similar to the loan portfolio, the fund

portfolio has allowed greater country diversification of CFC invest-

ments. The biggest recipient of finance across impact funds in the

CFC fund portfolio is Côte d’Ivoire, with an average of 10% of total

investments. In contrast, the country is in the 17th place in terms of

total commitments among CFC loan recipients. Similarly, Zambia,

Ecuador and Burkina Faso, which are number two, three and four in

the fund portfolio, aren’t even listed as CFC loan recipients.

The value chain activities also differ slightly from typical CFC loan

projects. In the fund portfolio, refinancing of financial intermediaries

servicing rural micro and agri-businesses finance represents about a

quarter of total funds committed. Conversely, processing and primary

production activities account for a lower share of fund investments.

Altogether, compared to direct investments, the fund portfolio is

less concentrated on commodities and more focused on supporting

activities such as finance and input provision.

The future of CFC fund investmentsThrough its fund portfolio, the CFC has been able to support the

development of the impact investment sector and reach countries and

value chains currently not present in the CFC loan portfolio. With sev-

eral fund investments maturing only in the mid-2020s, the fund impact

figures should increase even further in the next few years. In the mean-

time, the CFC will continue to closely monitor its fund portfolio and

share its experience where needed to promote the socioeconomic

development of commodity dependent developing countries. ¢

Leveraging CFC resources and expertise through investment funds

5%

41%

26%

22%

6%

Processing 41%

Finance 26%

Production 22%

Others 6%

Market Access/Extension 5%

Finance 21.6%

Other fruit 20.1%

Fertilizers and other inputs 10.3%

Other legumes and vegetables 7.3%

Cashew 5.3%

Grains 4.3%

Livestock and animal products 3.9%

Maize 3.6%

Sea products 3.6%

Citrus fruits 3.4%

Soybeans 3.4%

Coffee 3.4%

Other crops 9.8%

Commodity distribution of fund

commitments

Value chain activity distribution

of fund commitments

Newsletter 15 | April 2020 6

65th Meeting of the Consultative Committee

Common Fund for Commodities

Tel: +31 20 575 49 49

Fax: +31 20 676 02 31

CFC Headquarters

Rietlandpark 301

1019 DW Amsterdam

The Netherlands

www.common-fund.org

info@common-fund.org

Postal address

P.O. Box 74656

1070 BR Amsterdam

The Netherlands

The Consultative Committee (CC) of the CFC met in Amsterdam

from 27 to 30 January 2020 to assess the proposals received

under the 15th Call for Proposals. The Committee reviewed

five regular projects and one Fast-Track project based on their

technical feasibility and practical potential for having a lasting

development impact, as well as their preparedness to start with-

out delay upon approval. All five regular projects were recom-

mended for consideration and approval by the Executive Board,

and the Fast-Track project was recommended for consideration

and approval by the Managing Director.

Coffee Roasters and Coffee Shops – Guatemala

De La Gente (DLG) is a Guatemalan coffee trader sourcing and

exporting premium Arabica coffee, mainly to the USA. DLG aims

to strengthen the socio-economic position of farmers by providing

access to export markets, training, extension services and coffee

tourism programs. In partnership with five coffee cooperatives, DLG

is currently working with 137 smallholder farmers. The project aims

to upscale DLG’s business model, providing direct market access

and price premiums to more farmers. The CC recommended

financing the project with a loan of up to USD 120,000.

Agro Processing and Packaging Facility – Nigeria

Agroeknor International LTD (AEI) is an agricultural commodities trader

in Nigeria focusing on dried hibiscus flowers, which are used in prod-

ucts like herbal teas, herbal medicines, syrups and food coloring. The

company intends to upgrade its operations, seek Global Food Safety

Initiative (GFSI) certification and increase its supply base from 600 to

2,500 smallholder famers. The company expects to create 104 addi-

tional full-time jobs, of which 75% will be for women. The CC recom-

mended financing the project with a loan of up to USD 400,000.

Fruits and Spices - Madagascar

Located in Madagascar, SCRIMAD aggregates and processes fruit

and spices from local farmers and cooperatives for export to global

markets. The company’s focus on organic and fair-trade products

enables it to pay a price premium to its suppliers. The company

supports organizing farmers into cooperatives and offers vocational

training. SCRIMAD plans to expand its operations and increase its

smallholder network from 2,000 to 3,000 farmers. The CC recom-

mended financing the project with a loan of up to Euro 1,200,000.

Working Capital Banana Project – Costa Rica

London-based Working Capital Associates (WCA) provides work-

ing capital to exporters in food value chains in developing and least

developed countries who struggle to access conventional trade

finance. WCA plans to extend a loan to Grupo Productores Asociados

San Alberto (GPASA), a Rainforest Alliance and Global GAP certified

farm group in Costa Rica. GPASA sources bananas from their own

farms as well as smallholders for export to Europe. With the working

capital, the company expects to expand production, create 44 new

jobs, increase sourcing from smallholders, and offer earlier payment

to the farmers to improve access to inputs. The CC recommended

financing the project with a loan of up to USD 2,000,000.

Goldtree – Sierra Leone

Established in 2007, Goldtree Sierra Leone Ltd. is the first commer-

cial palm oil mill operating in Sierra Leone since the country’s 1991-

2002 civil unrest. Goldtree recently changed its business model

to focus on producing 100% Roundtable on Sustainable Palm Oil

(RSPO) and certified organic oil for export. The company aims to

increase production by expanding its own plantation, growing its

smallholder farmer network and upgrading its existing process-

ing plant. The number of participating smallholders is expected to

increase from 8,050 to 10,050, and their income is projected to

grow from USD 163 to USD 264 p.a. The CC recommended financ-

ing the project with a loan of up to USD 1,200,000.

Commodities Trading and Processing – Tanzania

Elements Ltd. is a commodities aggregator and trader in Dar es

Salaam, Tanzania. Since 2013, it has purchased products such

as cashews, oilseeds and beans directly from smallholders and

marketed them domestically and abroad. Elements currently works

with around 3,500 smallholders, and acts as an aggregator with an

exclusive purchase agreement for 800 of these who are organized

in cooperatives. The company intends to grow its operations by

increasing smallholder sourcing, reaching 8,200 farmers, of which

70% would be women. It also aims to expand the cooperative model

for more smallholders, offering technical assistance and loyalty

premiums to them. The CC recommended financing the project

with a loan of up to USD 900,000.