Rabobank Group 2204058 The Rabobank approach to value chain finance.

Rabobank Group 2204058

The Rabobank approach to value chain finance

22704093

Global challenges

Rabobank Group 2204058 3

Global challenges


Three units serving worldwide supply chains

Rabobank Foundation

Rabobank Development

Rabobank International

Development Phase

$

52704093

Rabobank target countries


COMMERCIAL

EMERGENT

SMALL SCALE

SUBSISTENCE

Considerable support both financial and technical

Rabobank main target groups

Considerable support both financial and technical by NGOs and Government

No financial opportunities and not recognized by support providers


Agriculture and Agribusiness

Source: Rabo India Finance, A. Datta, 2007


How to turn a supply chain into a value chain?

Product req'ts Customer

Producer Consumer requ'ts


Review of the Value Chain



Value Chain Finance Framework

Source: Terrafina/J. de la Rive Box, 2009


Towards more inclusive value chains

Frontier areas in Value Chain Finance

Commercial finance

Development finance

Microfinance

Value chain development programsProducer organizationMarket development

Value Chain Volume

FullyCommercialvalue chains

EmergingVCs

Number of farmers

Commercial large scaleagriculture

Family agriculture

Family agricultureLocalized markets only

Bank finance barrier

EmergingValue Chains

Inclusion barrier

Interventions

Source: Terrafina/J. de la Rive Box, 2009


Lease contract

Down payment

ProcessorLong-term raw materials supply contract

Transfer of lease payments

Farmer

Rabobank

InsurerSupplierEquipment purchase

contract

Insurance contract

Buy-back agreement

Integrated Agriculture Finance Structure



Agribusiness risks are complex


New mitigants are required


Chain with small farmers and large institutional processor or retailer

15

Financial dimensions of a value chain

Source: Modern Value Chains, K Schwedell

Chain with small farmers and small retailers


Case: Passion fruit from EthiopiaAn outgrower incubator approach based upon foreign investment

• Five experienced Dutch entrepreneurs studied the potentials of Ethiopia and decided to invest almost €12 million in a new enterprise to buy, rehabilitate and expand an existing state-owned fruit farm in the Upper Awash region of Ethiopia. It is a new venture that has set targets to become a major producer and exporter of tropical fruit juices, purees and concentrates from select countries in Africa to the large markets of Europe and the Middle East.

• An integral part of the project is the active promotion of an Outgrower Scheme, which will result in new producer cooperatives (in total approx. 1300 hectares) to become suppliers to the new processing plant, in effect giving the local farmers efficient access to export markets and much improved access to commercial financing


Ethiopia: Project Location


18

Ethiopia: Schematic of end objective

Fruit

Juice products

$

Fair Trade premium

Export market

banks

Community “Trust”

coop union

prod. coop1

prod. coop2

aJ processing

aJ plantation

Social development

collateral

repayments

loans for growth

equity

dividends

inputs & supportMicro finance

opportunity

etc


Case: Cooperative Banana Farmers in Peru

• Banana farmers in Northern Peru organized in a cooperative take up pre-export processing and fair trade certification. Whereas historically they supplied large multinationals, they now do the quality control, washing, packaging and exports by themselves, thus almost doubling farm incomes.

• CEPIBO is a Union of Small Producers of Organic Bananas in Northern Peru established in 2007. It represents 1500 small producers of bananas with an average of approximately one hectare each. It is responsible for marketing of organic products (both locally and exports) and it has the organizational and technological capacities that allow them to promote fair trade throughout the commercial chain and diversify the productive system in a sustainable manner.


Cooperative Banana Farmers in Peru


Case: Women milk farmers, India


Rabobank Foundation“ Making a difference “

Rabobank Group 2204058 The Rabobank approach to value chain finance.

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