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Rabobank: Food, Agri & Africa

Bouwe Taverne

Head Sustainable Development

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How to feed 9 bn and fuel the economy sustainably?

Resource efficiency is key

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Contents

• Rabobank & CSR

• Development banking

(Foundation & Development)

• Food & Agri Principles and

Policies

• Examples in Africa

• Questions/discussion

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Rabobank & CSRRabobank & CSR

Introduction through film

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Development Banking: Rabo Development & Foundation

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Non-commercial:Rabobank Foundation

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Rabobank Foundation in Africa

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Rabobank Foundation

• Expanded from a small relief organisation into a professional development organisation

• 200 projects per year

• 75 in The Netherlands and 125 abroad

• Focus on fighting poverty and neglect

• Loans ranging from 100 dollars to 100.000’s

and € 1 million

• Increasingly internal relation

with rural banking

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What is Microfinancing?

• Buying chickens to sell eggs

• Starting a bicycle repair shop

• Purchasing fishing nets and other fishing gear to catch fish

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Working method

• New businesses first receive a donation to build

up capacity, then loans can be granted in local currency

• Loans are granted in local currency

• Group loans based on solidarity, mutual suretyship, group pressure

• Individual loans: with suretyship or liability and/or limited collateral

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Support trade chains

• Emphasis on improving the structure of the trade chains and cutting out middlemen

• Setting up co-operatives of small farmers and

agricultural workers so that they form a significant party in the sector.

• This usually results in a higher price for the

products (coffee, cacao, citrus fruits, cotton and sugar)

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Sustainable Agriculture Guarantee Fund

• Access for selected small- and medium-sized producers of sustainable agricultural products

• in developing countries

• to working capital credit

• on the basis of commercial and sustainable terms

• The fund issues partial credit guarantees to mitigate risks

• An instrument for financial intermediaries e.g. banks and financial institutions

• Eligible co-operatives are those that have outgrown

• The assistance / financing possibilities provided by the Rabobank

• The participants Rabobank, the Dutch Ministry for Development Co-operation, Cordaid, Solidaridad

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Semi-commercial:Rabobank Development

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Partner Banks Rabo Development in Africa

Rwanda

BPRTanzania

NMB

Mozambique

Banco Terra

Zambia

Zanaco

BTlogo

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Agri contributes 17 % to GDP; 40% to exports and employs 60 % of people

But,

• African agricultural production per capita decreased since 1970

• Agricultural GDP same as in Thailand and a quarter of Brazil

• Participation in international agri trade only 4 %

• 7 out of 10 African countries are net food importers

Whereas,

• Only quarter of arable land is under cultivation, land titles often unclear

• 1% increase in agricultural yields lifts 2 million people out of extreme poverty

Agri Key to Development Sub Sahara Africa

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• Better quality and higher productivity, those require agri technology, technical assistance

and finance to farmers

• Better infrastructure (physical, markets, institutions), this requires investments and

capacity building

• Organization of fragmented supply of primary production and access to affordable

finance are conditions to achieve these requirements.

Requirements for Agri to eradicate Poverty

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Create a balance in economic power between oligopsonistic demand side

(e.g. few off-takers agri commodities) and many suppliers (farmers);

By creating countervailing power through organizing farmers.

Most co-operatives are active in agriculture (predominantly primary agri) and in (rural)

banking, both in industrialized and in developing countries.

Essence of a co-operative

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In industrialized countries

• In the European Union farmers co-operatives account for 60 % of processing

and marketing and for 50 % of input supply (including banking)

• In the Netherlands a farmer is a member of 4 co-operatives on an average

And in developing countries

• The International Co-operative Alliance consists of 221 co-operatives from 88

countries, representing 800 million members. But there are many more.

• Co-operatives provide 100 million jobs around the world (more than

multinational enterprises)

Significance of Co-operatives

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• Many co-operatives depend financially or regulatory on government support and

restricting regulation. Consequently, often co-operatives are used as an instrument for

government policy which undermines (business) objectives and (financial) solidity.

• Governance and management not appropriate and not of good quality. Capacity building

is required to solve this problem.

• Ideological approach of co-operatives by donors and governments. Co-operatives are

businesses in order to serve the interests of its members.

Shortcomings Co-ops

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Credit co-operatives in developing countries serve groups of small farmers that have no

direct access to banks. They are community based and use social control as an instrument

for repayment, and therefore can serve the informal economy well.

However, when the financial industry is consolidating, they will not survive:

• hardly economics of scale and therefore relatively high interest rates

• concentration of credit risk (same crops, weather, disease)

• their best (most profitable) customers will go to (better equipped) banks

• lack of professional management (too expensive)

Credit Co-ops mostly grassroot organizations

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F&A Principles & Policies

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Foodchains

Upstream Downstream

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CSR policy framework

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Food & Agribusiness Principles Rabobank Group

• Vision: Sustainable business will gain an edge on competition and contributes to common wealth

• Food & Agribusiness regards the entire value chain

• Our five Food & Agribusiness Principles:

1. Aiming for food safety and food security

2. Using natural resources responsibly

3. Promoting social welfare

4. Treating animals responsibly

5. Enabling citizens and consumers to make well-considered choices

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F&A Principles enable strategic Corporate Social Responsibility (CSR)

• Integrated approach in two ways: risk management and

strategic choices to attune CSR to commercial options

• Risk management by applying CSR criteria within customer due diligence and loan assessment

• Strategic CSR by engaging in:

- Round tables such as RTRS, RSPO, BSI and BCI

- Programmes to organize small holders

- Programmes to develop sustainable financial services

- Programmes to improve the access to affordable financial services in developing countries

- Programmes of Solidaridad to support soy, sugarcane

and palm oil smallholders

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Sector policies

1. Palm oil

2. Soy

3. Cotton

4. Sugar Cane

5. Cocoa

6. Coffee

7. Forestry

8. Fishery –Wildcatch

9. Aquaculture

10. Biofuels

11. Mining

12. Oil & Gas

1. Palm oil

2. Soy

3. Cotton

4. Sugar Cane

5. Cocoa

6. Coffee

7. Forestry

8. Fishery –Wildcatch

9. Aquaculture

10. Biofuels

11. Mining

12. Oil & Gas

Roundtableon Sustainable Biofuels

Aquaculture stewardship council

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Distribution&

Consumer

Inputs

Feed

Financial Institutions

Producers Trading Processing Food industry

AnimalProteins

NGO’s

Sustaining value chains

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Active throughout the supply chain

Often not the core business of our client!Core expertise Rabo Foundation

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Example: Progresso Coffee Fund

• The chain (from crop to cup)

• Every program has a number of components:

– Capacity building for the producer organisation

– Technical assistance)

– Providing access to finance markets

– Diversifying sources of income

• Dedicated organisations in Asia, Latin America and Africa

• Assisting about 20 co-operatives of coffee producers, 8 countries

• 160,000 small coffee farmers involved

• The coffee is sold under Fairtrade label, thus providing higher proceeds

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Check SME

local b

ank clie

nts

From risk analysis to better management practices

Check RI clie

nts

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Building sustainable supply chains

• Stakeholder and consumer pressure

• Transparency - sustainability - traceability responsibility

• Responsible sourcing

• Sustainability labels & supplier audits and certification

• Strengthening of supply chain relationship engagement

• From direct footprint to indirect footprint

���� How/where can we help you

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