Annual Report Common Fund for Commodities 2014 by symsign

Common Fund for Commodities | Annual Report 2014

Common Fund for Commodities

Mission & Vision Statement Mission “To contribute to poverty alleviation by strengthening the income-generating capacity of commodity producers and mitigating vulnerability to their economic well being” Vision “To strengthen and diversify the commodity sector in developing countries and transform it to be a major contributor to poverty alleviation and sustained economic growth and development.”

Annual Report 2014 Common Fund for Commodities

© 2015 - Common Fund for Commodities The contents of this report may not be reproduced, stored in a data retrieval system or transmitted in any form or by any means without prior written permission of the Common Fund for Commodities, except that reasonable extracts may be made for the purpose of comment or review provided that Common Fund for Commodities is acknowledged as the source. Common Fund for Commodities Visiting Address Stadhouderskade 55 1072 AB Amsterdam The Netherlands Postal Address P.O. Box 74656, 1070 BR Amsterdam The Netherlands t +31 (0)20 575 4949 f +31 (0)20 676 0231 tx 12331 cfc nl e managing.director@common-fund.org i www.common-fund.org Editor Royal Tropical Institute, Amsterdam Graphic Design Anita Simons, symsign, Amersfoort Printing High Trade, Zwolle

Cover photos: Above: A farmer carrying a bundle of harvested wheat to a mechanical thresher in Adram Zai, Afghanistan. Photo: ©FAO/Danfung Dennis / FAO Below: Red and blue maize varieties, Mexico. Photo: FreeImages.com/Natalia Karguina

Photo: INBAR

Annual Report 2014 Common Fund for Commodities

Copyright ÂŠ Common Fund for Commodities 2014 The contents of this report may not be reproduced, stored in a data retrieval system or transmitted in any form or by any means without prior written permission of the Common Fund for Commodities, except that reasonable extracts may be made for the purpose of comment or review provided the Common Fund for Commodities is acknowledged as the source.

Photo: ÂŠFAO/Giulio Napolitano / FAO

Contents Annual Report 2014

Foreword

I CFC at a glance

Oilseeds, Oils and Fats

Olive Oil

Rubber (Natural)

Sugar

Objectives, Main Activities and Structure

Tea

Financing Instruments

Tropical Fruits

Governing Bodies

Tropical Timber

Establishment and Membership

Headquarters 8 Unlocking the Commodity Development Potential

Partner Institutions

Projects Approved Under the New Guidelines (as of 2013)

The CFC Partnership Network

Grants 70

Organizational Chart of CFC Secretariat 2014

Loans 71 Equity 72

II Feature Articles 10 Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali?

Regular Projects Approved in 2013 but not operational in 2014

The Joseph Initiative and Agricultural Transformation 19

VII Regular Projects Completed in 2014

VIII Twenty-Sixth Annual Meeting of the Governing Council

IX Financial Reports

CFC and INBAR: fifteen years of cooperation on bamboo and rattan development

Balancing risk and striving for impact – Providing finance to SMEs in developing countries

Iii Report on progress of projects under implementation Commitments, Financing and Disbursements

35 43 43

IV Regular Projects Approved in 2014

V Fast Track Projects Approved in 2014

VI Summary Of Ongoing Regular Projects 2014

Balance Sheet - First Account

Balance Sheet - Second Account

Income Statement - First Account

Income Statement - Second Account

Directly Contributed Capital

Voluntary Contributions

Administrative Budget 2014

Auditor’s Report

Bamboo and Rattan

Cocoa

Coffee

Cotton

Annex I Governors and Alternates Governors 2014

Annex I I Member States, Institutional Members and Votes

Institutional Members of the Common Fund

Fish 59

for Commodities

Grains/Roots & Tubers

Designated International Commodity Bodies

Jute

(ICBs) 99

Meat and Dairy

Development Partners

100

Contents | 3

Photo: ÂŠFAO/Prakash Singh / FAO

Photo: INBAR

Foreword The Annual Report of the Common Fund for Commodities

Rapidly rising incomes in the world increased the demand for

highlights work done during the year. The report contains

commodities. This led to a larger demand for many commodi-

profiles of Regular and Fast Track projects considered and ap-

ties and an impressive increase in the South-South trade with a

proved, and a summary of Regular projects under implementa-

direct impact on finances, production, employment, and tech-

tion and completed during the year. In this report you can see

nology. In view of these changes, the Common Fund adjusted

CFC supported commodity projects in different locations in

and adapted to the new realities in development cooperation to

Africa, Asia and Latin America, covering a range of commodities

meet the new expectations of its Members.

from bamboo to leather to tropical fruits. The Common Fund serves as a key instrument in attaining the For us, 2014 has been an eventful year with the successful con-

agreed objectives of the Integrated Programme for Com-

clusion of the Amendments to the Agreement Establishing the

modities and now directly promotes the development of the

Common Fund, and further increase in applications received

commodity sector and contributes to sustainable development

under the Call for Proposals for selection and prioritization of

in social, economic and environmental dimensions. The CFC

proposals.

encourages synergies through co-operation and implementation of commodity development activities, and disseminates

We at the Common Fund are happy that the Member countries

knowledge and additional information on new and innovative

agreed to amend the Agreement Establishing the Common

approaches in the field of commodities.

Fund to enable it to fulfil the mission prevailing in the international development paradigm. The Members recognized that

The Governing Council by acclamation approved the amend-

many aspects of the Agreement Establishing the CFC had un-

ments to the Agreement which will become effective from

dergone changes since establishment of the Fund. They noted

January 2016. This will increase the responsiveness of the CFC

that considerable progress has been made, since the 80s, in the

in facing rapid changes in the international environment.

international understanding of the relationship between pro-

During the year, the CFC continued to concentrate on pro-

duction, processing and trade of commodities, and the impact

ject implementation, its core business. The CFC approved ten

of social, economic and environmental aspects in development.

regular projects and an additional eleven Fast Track projects.

Foreword | 5

Photo: CFC

Parvindar Singh, Managing Director a.i.

The LLDCs have come a long way, but a lot still needs to be done. With understanding, solidarity and the support of the international community, it is expected that the Vienna Program of Action will move ahead for the benefit of half a billion people living in the LLDCs. This year we also have special reports on the position and approaches of the CFC with regard to (I) Risk management, (II) The Joseph Initiative and Agricultural Transformation, (III) The projects are now being selected to improve the quality of

Sesame: the new white gold for smallholder farmers in Burkina

the CFC portfolio in the context of the mission and vision of

Faso and Mali and (IV) Innovating pro-poor approaches to value

the CFC, supplemented with the financing priorities. The CFCâ&#x20AC;&#x2122;s

chain development with bamboo and rattan. These highlight

support to the approved projects stood at USD 8.8 million. The

the diversity of tasks being undertaken by the CFC, and how the

direct project-related disbursements in 2014 totalled about USD

CFC assesses the impact of its projects. A special report on the

7.5 million.

sesame project explores the possibilities of such commodities and provides insight into their possible role and contribution to

Regarding policy advocacy matters, the Common Fund par-

development in the future, particularly for leveraging resources

ticipated in several high-level events, in line with the Fundâ&#x20AC;&#x2122;s

and knowledge for commodity development. The International

mandate to articulate the need for an open and flexible strategy

Network for Bamboo and Rattan (INBAR) has contributed an

for the new role of commodities, as a pillar of sustainable global

article on the multi-facetted importance of these commodi-

growth and development cooperation.

ties for socio-economic and environmental development of sustainable forest production and on the effective use that can

In November 2014, the Second United Nations Conference

be made of these materials.

on Landlocked Developing Countries held in Vienna, Austria adopted a 10 year Action-Plan aimed at accelerating sustainable

The CFC remains committed to making a concrete and identifi-

development in the worldâ&#x20AC;&#x2122;s 32 landlocked developing coun-

able contribution to sustainable development. In this, the Fund

tries (LLDCs). This will lead to greater integration of landlocked

looks forward to a fruitful co-operation with international or-

developing countries into world trade and global value chains.

ganisations, ICBs, other development partners and civil society.

It will increase their competitiveness and ensure their economic development. The support of development partners, will diversify the production and export structures of landlocked developing countries and enhance their productivity and competitiveness in order to take full advantage of the multilateral trading system.

6 | Common Fund for Commodities Annual Report 2014

Parvindar Singh

Photo: Mahamane TourĂŠ

I CFC at a glance Establishment and Membership

Objectives, Main Activities and Structure

The Common Fund for Commodities (CFC) is an autonomous

The Common Fundâ&#x20AC;&#x2122;s mandate is to enhance the socio-eco-

intergovernmental financial institution established within the

nomic development of commodity producers and contribute to

framework of the United Nations. The Agreement Establish-

the development of society as a whole. In line with its market-

ing the Common Fund for Commodities was negotiated in the

oriented approach, the Fund concentrates on commodity

United Nations Conference on Trade and Development (UNC-

development projects financed from its resources. These re-

TAD) from 1976 to 1980 and became effective in 1989. The first

sources consist of voluntary contributions, capital subscriptions

commodity development project was approved in 1991.

by Member Countries transferred to the Second Account and interest earned. In partnership with other development institu-

The Common Fund for Commodities forms a partnership of 103

tions, the private sector and civil society, the Fund endeavours

Member States plus ten institutional members. Membership of

to achieve overall efficiency in and impact on commodity

the Fund is open to all States Members of the United Nations

development.

or any of its specialised agencies, or of the International Atomic Energy Agency, and intergovernmental organisations of regional

The CFCâ&#x20AC;&#x2122;s aim is to realize the potential of commodity produc-

economic integration which exercise competence in the fields

tion, processing, manufacturing, and trade for the benefit of the

of activity of the Fund.

poor. The CFC supports implementation of activities that:

I CFC at a glance | 7

a are innovative and target new opportunities in commodity

Governing Bodies

markets leading to commodity based growth, employment generation, increase in household incomes, reduction in

The governing bodies of the Fund are its Governing Council

poverty, and enhancement of food security,

and the Executive Board. The Managing Director is the Chief

b are scalable, replicable and financially sustainable,

Executive Officer of the Fund. The Executive Board is advised by

c have a potential measurable positive socio-economic and

a Consultative Committee, composed of nine independent ex-

environmental impact on the stakeholders in commodity

perts, on technical and economic aspects of projects submitted

value chains as compared to the prevailing baseline situation,

to the Fund. The Governing Council meets once a year, and the

d develop stronger connections with existing markets or

Executive Board and Consultative Committee biannually.

create new markets along the value chain, e increase financial or other services to commodity producers and commodity based businesses,

Headquarters

f enhance knowledge generation and information dissemination, and g build effective and cost efficient collaboration between

The Headquarters of the Common Fund are located in Amsterdam, The Netherlands.

producers, industry, governments, civil society organisations and other stakeholders for commodity based development. CFC interventions use value chain approach to identify chain

Unlocking The Commodity Development Potential

participants and to pinpoint opportunities and obstacles in specific commodity value chains thereby developing viable

The CFC regularly solicits project proposals through Open

solutions. Value chain analysis leads to identification of oppor-

Call for Proposals from entities that operate in commodity

tunities for value chain development.

value chains or provide financial services. Proponents can be public and private sector institutions, bilateral and

The CFC supported interventions cover all aspects of the value

multi-lateral development partners, cooperatives, small

chain from production to consumption i.e. from “field to the

and medium enterprises, processing and trading compa-

fork”. The CFC supports commodity based activities along

nies, and local financial institutions.

the entire commodity value chain which extend across local, national, regional and international markets. Specifically

Project proposals must be innovative in targeting new

targeted areas are:

opportunities in commodity markets and value chains and have the potential to generate a measurable positive

a Production, productivity and quality improvements

social, economic and environmental development impact

b Processing and value addition

on the stakeholders.

c Product differentiation d Diversification

Apart from scrutinizing the economic viability, equal impor-

e Marketing

tance is placed on competitive appraisal of their capability to

f Technology transfer and up gradation

accelerate growth and/or, increase employment, enhance

g Introduction of measures to minimise the physical marketing

livelihood opportunities and income and reduce poverty.

and trading risks h Facilitation of trade finance

Other key factors that always influence the evaluations of

i Risk Management

the proposals include: Realistic – Are commercial and developmental project

Financing Instruments The CFC finance is mainly in form of loans. Support in form of equity, quasi equity, lines of credit and guarantees can be con-

targets viable and realistic? Specific – Is it clear what is to be achieved and how it will be done and through which organization?

sidered on exceptional basis. Limited amount of grants may be

Agreed – Are all relevant stakeholders aligned towards

provided, e.g. to support specific new activities or support the

common targets?

loan based projects through activities such as capacity building, technical assistance etc.

8 | Common Fund for Commodities Annual Report 2014

Measureable – How will development impact be assessed?

Partner Institutions The CFC partners public and private institutions, bilateral and multi-lateral development institutions, cooperatives, producer organisations, small and medium enterprises, processing and trading companies, and local financial institutions that: • operate in commodity value chains or provide financial services to small business operators, SMEs, cooperatives, p roducer organisations, • have a proven track record in commodity development, • have the ability to invest in the value chain to reduce transaction costs or increase revenues of producers / processors / storage / marketing, • have a clear plan focusing on developing and/or diversifying their production / services, • have a clear plan to expand their markets at local, national, regional and international level, • have the technical, managerial and financial capacity to effectively and efficiently implement its activities, • include social-, economic- and environmental aspects in their work programmes, • share CFCs values, including internationally recognized principles concerning human rights, labour, the environment and anti-corruption as reflected in the United Nations Global Compact, and • collaborate with CFC to extend their core activities in ways that create additional opportunities for commodities and the stakeholders in the commodity value chains

The Cfc Partnership Network National Governments

Agricultural Development Research

International Commodity Bodies

Institutions (CGIAR)/NARS

(ICBs) Charity Foundations/Non-profit

Consultants/Technical experts

organisations

Producer organisations/NGO’s

UN Systems

Impact Investing Funds

Private Sector

Organization Chart of the Common Fund for Commodities as at 31 December 2014

Office of the Managing Director Legal Officer

Internal Audit Outsourced

Accounting, HR and Administration Unit

IT Outsourced

Policy, Information and Treasury Unit

Operations Unit

I CFC at a glance | 9

Photo: Mahamane TourĂŠ

II Feature Articles

10 | Common Fund for Commodities Annual Report 2014

Photo: Mahamane Touré

Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali? Introduction

Emergence of sesame as a cash crop

Sesame has over the last decade emerged as an important

Since 2000, sesame has developed from a crop of marginal

agricultural commodity in Burkina Faso, and Mali. Whereas

importance to a major agricultural export commodity in

cotton has in the past been labelled as the “white gold”, agri

Burkina Faso and Mali. The volumes exported increased more

cultural producers are now diversifying their cash income by

than ten-fold (Figure 1) and the area dedicated to sesame

also growing sesame. This paper investigates how the sesame

production increased five times in Burkina Faso and 2.5 times

sector can be supported to make sesame the “new white gold”

in Mali. The total farm gate value of the crop has grown

for farmers in Burkina Faso and Mali. The insights are gained

dramatically to over 60 million USD in Burkina Faso in 2011

from a CFC supported project implemented by Helvetas, IFDC

(Figure 2). Production has increased since, to 137,000 tonnes

and KIT from 2011 till 20141,2

in 2013, while also prices increased. Using a conservative farm gate price estimate of 450 FCFA the total farm gate value in 2013 would come to 124 million USD.

The project was entitled Development of Export Oriented Sesame Production and Processing in Burkina Faso and Mali (CFC/FIGOOF/27). The project was implemented under overall responsibility of the Royal Tropical Institute (KIT – The Netherlands), with country-specific activities by Helvetas in Burkina Faso and IFDC in Mali. The CFC-funding of USD 1,250,000 was covered in part through a contribution of USD 750,000 from the OPEC Fund for International Development. 2 This paper is a shortened version of a longer publication: Gildemacher, P., Audet-Bélanger, G., Mangnus, E., Van de Pol, F., Tiombiano, D., Sanogo, K., 2015. Sesame sector development; lessons learned in Burkina Faso and Mali. KIT & CFC, Amsterdam. Also available in French. Corresponding author: p.gildemacher@kit.nl 1

Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali? | 11

Figure 1: Evolution of production and export of sesame

particular have increased, probably as the result of increasing

volumes from Burkina Faso and Mali, 2000-2013

consumption resulting from household income increases. A second factor is the desire from international buyers to source

250,000

their supply from a diverse range of countries. Sesame is mainly grown in semi-arid, rainfall dependent areas where there is a

200,000

single, and often unreliable, rainy season. Buyers need a supply strategy that sources from different areas worldwide.

150,000

The increase in sesame production in Mali and Burkina Faso is not unique. Other major African sesame producing countries are

100,000

experiencing similar growth in production volumes (Figure 3) 50,000

Figure 3: Evolution of production and export of sesame 足volumes from major African sesame producing countries,

0 2000

2002

2004

2006

2008

2010

2012

Mali Production (tonnes)

Burkina Faso Production (tonnes)

Mali Area harvested (Ha)

Burkina Faso Area harvested (Ha)

2000-2013 (tonnes/year) 600,000

500,000

Source: FAOSTAT, August 2015

400,000

Figure 2: Total estimated farm gate valuea of sesame 300,000

in Burkina Faso and Mali, 2000-2013 (mln. USD) 70

200,000

100,000

50 0 40

2000

Sudan (former)

Ethiopia

Uganda

Niger

Nigeria

Burkina Faso

Tanzania

Mozambique

2002

2004

2006

2008

2010

2012

Source: FAOSTAT, August 2015 0 2000

2002

2004

2006

2008

2010

Burkina Faso Farm gate value (million USD) Mali Farm gate value (million USD) a

Sesame is a suitable crop for farmers in Burkina Faso and Mali

otal farm gate value calculated based on price data from Mali, T by lack of a continuous price data series from Burkina Faso)

Entry into sesame production is easy, for any type or size of

Source: FAOSTAT, August 2015

farmer. Growing sesame can be done with relatively little inputs. Even farmers with little else than family labor and land are able

The sesame sector is entirely export oriented, there is virtually

to produce sesame, although modest investments in fertilizer

no local market. Burkina Faso and Mali have sesame available

and seed do increase productivity. The modest need for cash

from the end of November. International buyers, their local

investments makes sesame a very accessible cash crop, more

agents and local traders at different levels fiercely compete to

so than cotton, which does require substantial investment in

purchase sesame in the short period from the end of November

seed, fertilizer and crop protection. The majority of farmers in

to February. The strong demand for sesame puts pressure on

Burkina Faso and Mali produce sesame without investment in

quality control, as buyers first and foremost seek to satisfy their

external inputs. Only 15 and 21% of producers was using ferti-

desired volumes.

lizer in Burkina Faso and Mali respectively (own data). 足Quality seed from a reliable source was used by 5% of producers in

The fast increase in sesame production has been triggered

Burkina Faso (source DGPER, 2011-2012) and 17% of producers

by a growing worldwide demand. Chinese sesame imports in

in Mali (source CPS, 2012-2013).

12 | Common Fund for Commodities Annual Report 2014

Photo: Mahamane TourĂŠ

Transport of sesame stalks, Mali Marketing sesame is easy for producers, specifically in Burkina Faso. There is a country-wide coverage by sesame collectors

Productivity increase in Farmer Field School demonstrations

who have field brokers going to farms to buy sesame. There is a fierce competition amongst sesame buyers, which gives farm-

Although sesame production is profitable at current productiv-

ers a reasonable bargaining power. Sesame is usually paid cash

ity levels, and prices seemed to rise annually, there will come

immediately upon collection, which is highly appreciated by

a moment when production efficiency and price will become

resource-poor farmers. This is very different from cotton, as

important factors for international competitiveness. The re-

the payment procedures by the cotton societies take time.

corded average yield in Burkina Faso was 555 kg per hectare in 2011, compared to 445 kg per hectare in Mali in 2012, accord-

A last important feature of sesame is that it is relatively hardy,

ing to national statistics. The 25% best producers in Burkina

requires little rainfall, during a short period, and is relatively

Faso were however producing more than 750 kg of sesame per

tolerant to pockets of drought. This makes it suitable for areas

hectare, showing the potential for productivity increase. With

where rainfall is or has become too unreliable to grow cotton

sesame experts from different organisations a sesame Farmer

as a cash crop. In Burkina Faso sesame is grown in areas with as

Field Schools (FFS) programme, was initiated. A curriculum was

little rainfall as 500 mm per year, where there are no alternative

developed with public, private, non-governmental and farmer

cash crops possible without irrigation.

organizations (KIT et al., 2012), FFS facilitators were trained within the participating organisations. In total 188 field facilitators were trained, and they conducted season-long sesame

The CFC funded sesame sector Âdevelopment project

Farmer Field Schools with a total of 12,782 farmers. The farmer field schools evolved around demonstration plots

Clearly, the sesame sector provided opportunities to contribute

in which current farmer practices were compared with the

to rural development, reason for the CFC to support a sesame

proposed improved practices. The proposed improved practices

sector development project in Mali and Burkina Faso. The

increased yields by an average of 62% and 28% in Burkina Faso

objective of the project was to increase the value and volume of

and Mali, respectively (Table 1). The main differences between

quality sesame produced and marketed from the two countries.

common farmer practices and improved practices are the ap-

The project intervened at three levels, productivity increase,

plication of modest amounts of fertilizer, sowing fewer seeds

value chain development and processing.

per pocket, thinning of plants to two stems per planting hole,

Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali? | 13

and harvesting at the appropriate time. The difference in yield

a single micro-dose three weeks after emergence. An additional

increase between FFS groups in Burkina Faso and Mali is hard

side-dressing of Urea 40 days after plant emergence provided

to explain. Possibly the team in Mali has been less focused on

additional yield benefits in Kourritenga, but not in Gourma.

selecting farmer not previously trained in sesame production.

A side dressing of Urea alone 40 days after emergence clearly

Obviously better results can be obtained when successfully

provided lesser yield benefits than the NPK treatment.

selecting those farmers who need training on good sesame Table 2: Fertilizer response of sesame in farmer managed

farming practices the most.

trials in Burkina Faso, 2013. Table 1: Difference in yield between current farmer practice and improved practices in Farmer Field Schools in Burkina

Kourritenga

Faso and Mali, 2010-2013 (kg/ha.)

(kg/ha) Additional % (kg/ha) Additional %

Gourma

NPK (14:43:14) 75kg

495

759

Burkina Faso

Mali

Urea 50kg

352

584

FFS, farmer practice

411

364

NPK (14:43:14) 75kg +

578

750

FFS, improved practice

667

465

Urea 25kg

292

420

% increase FFS

Control

Source: Own data, field trials 2013

Effects of modest fertilizer application

Economic analysis shows that the highest additional net profit can be obtained through the combined application of 75kg of NPK and 25kg of Urea, while the return on investment is highest

that the crop responds poorly to fertilizer. Like any other crop

for a single application of 75kg NPK (Table 3). Considering the

though, limitations in soil nutrients affect crop growth. Clear

ease of application and that it provides the highest return on

fertilizer recommendations were however lacking. Simple farm-

investment, a single dose of 75kg of NPK (14:23:14) per hectare

er managed fertilizer trials were implemented in 16 locations in

can be advised. A blanket advice for fertilizer use is however

Burkina Faso with best-bet dosages of available fertilizers. The

not ideal as crop response to fertilizer is highly dependent on

trial results (Table 2) show that considerable yield benefits can

the soil type and land-use history. For the time being however,

be obtained by farmers with use of modest amounts of fertilizer.

farmers are fairly sure to get a healthy return on their invest-

Good results were obtained from the NPK (14:23:14) applied as

ment using this â&#x20AC;&#x153;best-betâ&#x20AC;? advice of 75kg NPK per hectare.

Photo: Mahamane TourĂŠ

Among producers in Burkina Faso and Mali it is widely believed

Hand cleaning of sesame, Mali

14 | Common Fund for Commodities Annual Report 2014

Table 3: Marginal benefit analysis of fertilizer use on sesame

in Kourritenga more than doubled. This could be explained by

in Burkina Faso, 2013

the history of sesame production in both areas. In Kourritenga, sesame production dates back much further and farmers have NPK 75kg Urea 50kg NPK 75kg +Urea 25kg

Additional yield compared

271

111

308

135,508

55,703

153,867

30,000

17,000

38,500

2,000

4,000

103,508

36,703

111,367

3.2

1.9

2.6

to control (kg/ha)a Gross marginal benefit (FCFA/ha) Fertilizer cost (FCFA/ha) Additional labour cost (FCFA/ha) Net marginal benefit (FCFA/ha) Return on investment (FCFA/FCFA) a

become accustomed to re-using their own seed. In Gourma, sesame production has recently become an important economic activity and the use of quality seed has been promoted from the start and farmers are relatively well organised to assure access to quality seed. The regular influx of quality seed and higher seed renewal rates, has a positive impact on the general quality of recycled (bigaré) seed in the Gourma province. Table 4: Yield difference between pure seed of a single variety and bigaré seed of sesame, Burkina Faso, 2013 (kg/ha)

Based on a presumed farm gate price of 500 FCFA/kg

Source: Own data, field trials 2013

Local seed

Certified

Difference

seed

(kg)

Difference (%)

Kourittenga

262

564

302

115

for cotton farming in the main cotton zones of the two coun-

Gourma

565

634

tries. Considering the fast growing importance of sesame in

Average

413

599

186

The current mixture of NPK has been proportioned specifically

Burkina Faso and Mali, it could be worthwhile to look into the

Source: Own data, field trials 2013

development of a tailored fertilizer for sesame. If the average yield increase is used as an indication, the marIn addition to the use of fertilizer, the use of manure and/or

ginal net benefit of the use of high quality seed can be calcu-

compost, provided it is well decomposed, is advised to assure

lated (Table 5). High quality seed use resulted in an average yield

maintenance of soil organic matter levels and assure the avail-

increase of 186 kg per hectare, which is worth 93,000 FCFA

ability of micro-nutrients. As the availability of both compost

(assuming a price of 500 FCFA/kilo). This means that for each

and manure is small, no specific advice is required, other than

investment of a single FCFA in high quality seed, it is possible

to apply whatever amount available, in addition to the above

to obtain a phenomenal return on investment of 19 FCFA.

recommended chemical fertilizer.

Profitable indeed! Table 5: Marginal net benefit of the use of high quality pure

Effect of high quality seed

sesame seed, Burkina Faso, 2013

Most farmers in Burkina Faso and Mali obtain their seed for the

Additional costs (FCFA/ha)

next seasons from their own plot. This results in a relatively sta-

Additional yield (kg/ha)

ble, location specific, mixture of genetic characteristics within

Additional gross revenue (FCFA/ha)

93,000

the sesame population planted called “sésame bigaré”, as if it

Additional net revenue (FCFA/ha)

88,500

were a specific variety. The quality of bigaré sesame is not all

Return on investment (FCFA/FCFA)

that bad, with the exports of this sesame as the important proof. However, there are gains to be expected from the use of more

4,500 186

Source: Own data, field trials 2013

pure seed of a single variety, such as higher yields, oil content, homogenous color and size of the sesame seed. Finally, a more

Sesame value chain development

homogenous field makes harvesting easier reduces losses as a result of shattering. The actual yield benefits of pure good

The sesame collection chain is presented in Figure 3. In both

quality seed had however never been quantified.

countries, producers have a number of competing options to sell their sesame: they can market it through a farmer group or

In farmer managed trials in Burkina Faso the performance of

through a cooperative; they can also sell to a village trader, who

pure seed of the S42 variety was compared to the local Bigarré

buys at the market or at a collection point; or they can sell to

seed. The use of high quality seed resulted in an average

field brokers who travel to the farm to buy sesame directly from

45% yield benefit compared to locally recycled seed (Table 4).

the producer. Exporters are local business people, or buying

This depended a lot on location though: in Gourma province, a

agents operating on behalf of foreign traders and processors.

modest average yield increase of 12% was recorded, while yields

Exporters buy from intermediate traders, but also employ field

Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali? | 15

Photo: Mahamane TourĂŠ

Packaging cleaned sesame in the sesame cleaning plant of PROSEMA, Mali brokers directly. Intermediate traders can decide to stockpile

cooperative or a farmer organization represent only 11% in

sesame to manipulate the supply and speculate on rising prices,

Burkina Faso, versus 50% in Mali (Table 6). The latter figure is

before selling to exporters. They often have direct relations

suspected to be inflated because farmers feel obliged to indi-

with exporters, and part of their operations can include acting

cate their cooperative as their main buyer, while actually selling

as buying agents for an exporter (using the exporterâ&#x20AC;&#x2122;s money),

a large proportion of their production elsewhere. Still it shows

combined with purchases with their own capital.

that organized group marketing is much more important in Mali than in Burkina Faso. The explanation could be that sesame has

Figure 3: Graphic representation of the sesame collection

become a nation-wide commodity in Burkina Faso, with a fine-

chain in Burkina Faso and Mali

meshed network of collectors, while in Mali sesame production is more dispersed. To attract buyers, Malian farmers have to make efforts to bulk their produce.

Exporter

Table 6: Fractions of sesame producers selling to different first buyers in Burkina Faso and Mali, 2013

Intermediate trader

Burkina Faso

FCFA/kg

Unions

Cooperative

Village trader

Individual field broker

18%

Village buyer

n/a

11%

50%

391

75%

23%

433

400

Cooperative or farmer

Field broker

Producer

358

group Field broker, from outside

Producer group

Mali Price offered

the village Sold in town

Source: Sesame chain survey

Given that sesame is largely paid for immediately upon collection, The percentage of producers who sell to a field broker con-

trade finance is a major constraint, especially because all col-

tracted by a larger buyer from outside the community is 75%

lection takes place in a period of only two to three months. The

in Burkina Faso, compared to 23% in Mali. Those selling to a

estimated cash requirement for sesame collection in Burkina Faso

16 | Common Fund for Commodities Annual Report 2014

in 2012 was roughly 80 million USD. Exporters combine funding

oil could be produced in Mali in an efficient manner, and sesame

from different sources. An important source is funding advances

is acquired at a price of around 300-400 FCFA is developed. The

from foreign customers, however, this means that the exporter’s

valorisation of the seedcake as animal feed could contribute to

client list is set in advance and results in lower profit margins. A

making sesame oil a profitable business case. To produce ses-

second source of funding is an exporter’s own capital, combined

ame oil for export a similar price can be anticipated, especially

with loans from other business people, including family. Finally,

when contracts can be secured with larger buyers.

the banking system can also provide funding but it is hesitant (and slow) in stepping into the market of short term trade finance,

Still, export prices for crude sesame from Burkina Faso and Mali

even though it would theoretically be valuable for them.

are such that a better profit can be made by collecting, stocking and exporting crude sesame, rather than by oil processing.

Sesame value addition and processing

Pure and White Sesame A simple form of value addition would be to export sesame of

Sesame from Burkina Faso and Mali is currently exported as

a higher grade of purity (being free of foreign matter). A related

crude bulk product. Although this is currently highly profitable,

opportunity for value addition is to focus on white sesame,

the CFC looked into options for value addition.

rather than mixed color sesame. For the bakery and confectionary use of sesame, as well as for Tahini, large grain white

Organic Sesame

sesame is required. Offering pure white sesame is one of the

Certified organic sesame production is a niche product in

ways in which Burkina Faso and Mali could be more distinctive

Burkina Faso, however, its export is currently facing difficulties.

in the world market.

Much of the organically certified sesame “leaks” away into the conventional sesame market as prices for conventional sesame

In the current market, there is little to no price incentive (up to

regularly peak above the agreed prices for organic sesame.

5%) for the production and collection of pure white sesame, and

Organic sesame buyers are as a consequence faced with a

obtaining white sesame in Burkina Faso and Mali requires a bit of

supply shortage and fail to satisfy the contracted volumes.

extra effort in the form of the use of high quality seed and tak-

Under the current conditions, investment in organic sesame

ing care not to mix white and mixed lots during collection. This

production, certification and marketing is high risk, and less

explains the difficulties traders have to acquire white sesame.

profitable than conventional sesame. To improve the availability of white sesame, the major pre Sesame Oil

requisite is a functioning sesame seed system which makes high

The bulk of the sesame purchased from Burkina Faso and Mali is

quality seed of the current best variety, S42, available to pro-

used for the production of sesame oil. Local production of sesame

ducers. A program to select and promote new varieties which

oil could increase the export value. An added advantage of sesame

respond even better to the demand for white sesame would be

oil production would be the reduction of the risk of export bans

strategic and could contribute to the future competitiveness of

as a result of contamination with micro-organisms, most notably

Burkina Faso and Mali on the international sesame market.

salmonella, which is common in sesame export worldwide. It is technically possible to obtain a more homogenous white Sesame oil is currently produced in both Burkina Faso and Mali

sesame, of a high purity grade, by color sorting using an opti-

on a minor scale, to serve small local and foreign niche markets.

cal sorting machine, a Sortex. Considering the current lack of

Overall however, the volume of sesame processed into oil is

clear price incentives for pure white sesame it would only make

negligible and domestic consumption of sesame oil is largely

sense to invest in a Sortex if specific clients have been identi-

non-existent in the two countries. A market and consumer study

fied and a supply of fairly pure S42, suitable for further sorting

by the project in Mali indicated that the characteristics of the

and cleaning, is secured from producers. Currently, only part of

sesame oil produced in Mali were much appreciated. It is unlikely

the sesame produced in Burkina Faso and Mali goes to sesame

that with current sesame prices its oil can become a mainstream

processors directly. Most sesame is bought by international

product. Imported palm oil is retailed at 800 FCFA per liter. Cur-

intermediate transit traders from Europe and India, who often

rently, the 2.25 kg of sesame required to produce 1 liter of oil

ship the sesame to their own cleaning facilities and redistribute

costs at least 800 FCFA at the farm gate and a liter of oil costs

it to the major end-clients. As the intermediate buyers have

around 2,000 FCFA. Still, consumers who tested the product

their own cleaning facilities, they are not inclined to pay gener-

indicated that a price of 1200-1300 FCFA could be low enough

ous premiums for better cleaned sesame. To make investments

for them to consider using sesame oil occasionally. P ossibly a

in cleaning and sorting facilities pay off, direct trade relations

modest share of the high-end market might be gained if sesame

with large international sesame processors are needed.

Sesame: the new white gold for smallholder farmers in Burkina Faso and Mali? | 17

Recommendations for future interventions in the sesame sector in Burkina Faso and Mali

• Sowing machines could be promoted to improve the timing of sowing and reduce drought damage as result of late planting.

Based on the lessons learned in the CFC supported project, a number of recommendations is formulated for consideration by

Value chain development, value addition and processing

future interventions.

• Sesame exporters from Burkina Faso and Mali can be assisted with trade missions to and from Asian sesame processing

Productivity increase • Productivity increase is the most promising entry point for

countries, to develop direct trade relations. • Develop a functioning sesame collection credit system with sesame exporters and banks to increase independence from

further sesame sector development.

intermediate buyers.

• Promotion of high quality seed and modest fertilizer use can contribute to further productivity increase.

• Improve the capacity for national competitiveness and innovation through the transformation of efforts to develop

• The development of commercial quality seed production

a sesame “interprofession” into a lighter fit-for-purpose

and marketing is worth investing in:

innovation platform.

Develop (in Burkina Faso) and improve (in Mali) a pre-

ordering and pre-financing system for (pre-)basic seed

• Very cautiously consider investing in organic sesame farming, as the required additional efforts are currently not being

production

compensated by higher prices.

Support seed companies in the development of seed dis-

tribution systems allowing producers to buy high quality

• Cautiously consider investing in sesame oil processing, under current market circumstances, as the trade in crude

seed in small quantities locally;

sesame is more lucrative.

Lobby for a halt to government-run subsidy schemes

for sesame seed, as they distort the market and hinder

• Cautiously consider investing in facilities to colour sort sesame, as a reliable supply of reasonably white sesame

private sector development.

cannot currently be guaranteed.

• Further research into a compound fertilizer optimised for sesame would be helpful.

• Assess, with entrepreneurs, the opportunity of value addition through sesame hulling.

• Sesame variety selection is worth the effort to search for adapted large grain white varieties, varieties with high oil

• Support sesame exporters’ investment in cleaning equipment through:

content, longer season varieties for the Southern parts of Mali and Burkina Faso. • Research into pest and disease management is required. As sesame has become a major crop in Burkina Faso, risks

Co-funding investment in equipment;

Technical support during the installation and pilot use of cleaning equipment.

of pest and disease outbreaks are mounting. • The FFS approach was effective and can be further promoted, provided efforts are made to reach farmers who have

Photo: Mahamane Touré

not yet been trained.

Sesame farmer field school in process, Mali

18 | Common Fund for Commodities Annual Report 2014

Authors: Gildemacher, P., Audet-Bélanger, G., Mangnus, E., Van de Pol, F., Tiombiano, D., Sanogo, K.,

Photo: Joseph Intitative

The Joseph Initiative and Agricultural Transformation Introduction

JI is focused on delivering the highest quality produce to East African food manufacturers, with a vision to establish and

In Masindi, one of the leading maize producing districts in

manage “the first structurally-aligned, regionally-integrated,

Uganda, change is in the winds. The Joseph Initiative (JI), a

efficiently-capitalised and formal system for East African food

grain management and trading company, has in just three years

production and trade”1. The Joseph Initiative is nothing if not

established itself as a major actor in the area and is transforming

ambitious. The company wishes to not only turn a profit, but

the maize value chain.

also transform the maize value chain, promote food security, improve rural livelihoods and maximises stakeholder value.

The Common Fund (with resources from its Dutch Trust Fund) is supporting JI in response to its request under the Fund’s Third

Already, the experiences of JI offer an informative case study

Call for Proposals. CFC was an early seed funder for JI, provid-

of how innovative small-medium enterprises (SMEs) can drive

ing US$ 500,000 in longer term financing which enabled the

positive change across the chain.

company to finance its infrastructure investments. CFC’s loan to JI was crucial to its rapid growth because the company’s invest-

Maize is not typically thought of as a particularly interesting

ments have a longer income generating horizon than regular

or exotic value chain and is often incorrectly characterized as

trade and inventory finance. CFC’s commitment to invest also

a subsistence crop. Whilst certainly important for household

had spinoff effects – other investors were subsequently more

food security, in reality maize doubles as a cash crop for most

willing to offer the company shorter term financing.

smallholder farmers. It is integral to smallholder’s livelihood http://www.josephinitiativeltd.com/

The Joseph Initiative and Agricultural Transformation | 19

strategies and often one of the main sources of agricultural

maize chain in Uganda. Often these projects are important for

income for the household.

building the basic capacity of producers to move from subsistence farming towards farming as a business. For example some

In fact, maize is the most widely traded agricultural commodity

projects focus on seed, or on agronomic practices, and others

throughout East Africa, facilitated by the free trade agreement

on the provision of small loans. However, very few projects – or

between East African Community (EAC) states. Therefore, the

government extension services – have the capital and human

performance of grain markets has a significant impact on peo-

resources to tackle the various segments of the maize value

ple’s welfare, and is critical to inducing pro-poor growth .

chain at scale over the long term.

The demand for quality maize continues to grow with a fast

For JI, with its local presence and long-term outlook, value

urbanising East Africa. This is driven by cities such as Kigali,

chain development is precisely the aim. The reason is clear –

Nairobi, and Kampala and, according to JI, this demand is set to

improving the chain is good for both for the company, small-

continue growing strongly in the coming years. This presents an

holder producers and consumers.

opportunity for both JI and the maize farmers of Masindi. Traders However, to seize this opportunity considerable challenges

Traders are a feature of agricultural value chains throughout East

must be overcome. It is therefore worthwhile to begin with a

Africa. Most smallholder farmers have little choice but to deal

brief look at the context in which JI is operating.

with traders due to a lack of reliable formal buyers and a lack of strong farmer cooperatives engaging in group marketing.

Features of the maize landscape

Sometimes portrayed as the ‘bad-guys’ in the chain, traders play a vital role in the absence of other formal buyers. They

Development projects and extension services

too face significant challenges in aggregating and transporting

Many development projects or programmes have undoubtedly

maize from remote corners of the country and marketing it

contributed to incremental positive changes in aspects of the

through their networks.

Photo: Roger Bymolt

Joseph Center, demonstration plot

World Bank. (2010). Eastern Africa - A study of the regional maize market and marketing costs. Available at http://documents.worldbank.org/curated/en/2009/12/11620725/eastern-africa-study-regional-maize-market-marketing-costs

20 | Common Fund for Commodities Annual Report 2014

costs, and face numerous risks including theft (of cash or maize), poor grain quality (containing foreign matter or being contaminated with aflatoxin), transport issues (vehicle breakdowns on poor and remote roads), market price fluctuations, and being

Photo: Roger Bymolt

Traders incur considerable transport and financial transaction

short-changed by other larger traders that they on-sell to. Understanding the challenges and risks that traders deal with helps to explain why there is often an absence of formal buyers in rural areas who trade with smallholders, and why group marketing by cooperatives is often fraught with difficulties. Traders’ margins are typically small, cited at around 50 UGX/ kg (US$0.013/kg), which is roughly 10% of the farm gate price at present. Traders achieve profits only through efficiency and moving bulk quantities. Unfortunately, according to smallholders, traders sometimes engage in unscrupulous practices. They are accused of not using accurate scales to ‘cheat’, or fixing low prices amongst themselves. In short, a volatile combination of high risks and low margins leads to low prices for producers and a lack of trust between producers and traders. Farmers face an unenviable decision when a trader comes knocking – to sell or not to sell at the price the trader is offering. Individual farmers are price takers, not price makers. Outside of the harvest season farmers cannot be sure when another

Joseph Initiative processing and storage facility

trader will be in the area and what price they will offer. Since JI has emerged on the scene, farmers have a reliable market op-

below 14%) that is free of foreign matter and contains

tion they never had before.

the minimum of broken grains.

Quality and price

Farmer production knowledge and use of inputs

Another challenge in the chain is the lack of price responsive-

Smallholder farmers typically lack the production knowledge to

ness to quality. For the most part, maize is just traded up to

achieve high yields, such as optimal plant spacing and timeli-

the final buyer (often a large miller). Where quality is re-

ness of weeding and application of inputs (if used). Farmer

quired, a few large traders have drying and cleaning facilities,

yields in the area tend to range between 500kg/acre and

however the capacity for this kind of quality differentiation in

2000kg/acre depending on the seeds and inputs used, with

Uganda is limited.

common yields being around 800-1000kg/acre. By comparison, JI’s nearby commercial farm yields over 3000kg/acre. This

Before JI started operations, there was no real incentive for

illustrates the size of the productivity gap that JI hopes to close.

farmers to make additional efforts to supply quality maize. Issues such as moisture levels in the grain or breakages had virtu-

Before JI, most maize farmers tried to get by using the mini-

ally no bearing on the prices that traders would pay. In the view

mum of inputs, often neglecting to use fertilizer or improved

of JI, this lack of price responsiveness to quality is one impor-

seed varieties. The reasons for low input use are varied. Some

tant reason why the chain remains under-developed.

cite a lack of access and availability, whilst others lack of access to finance or savings to invest. Others still describe how low

The business model of JI is based around procuring, process-

prices disincentivise them from investing maize profits back

ing and marketing high quality maize for regional markets,

into the crop, perpetuating a cycle of low input à low output

for which the company receives a premium price. JI requires

à low profit à low investment in inputs the following season.

smallholders to also supply the company with quality maize,

Compounding this, inputs in Uganda are notorious for being

for which they too receive a premium price from JI. This

adulterated and may not perform as expected, leaving many

involves sourcing maize with low moisture levels (preferably

smallholders to simply not take the risk.

The Joseph Initiative and Agricultural Transformation | 21

those of smallholders. By increasing smallholder yields through the use of improved inputs farmers can receive higher profits and JI can procure greater volumes of maize from the areas it is already operating in.

Photo: Joseph Intitative

JI understands that the company’s fortunes are linked with

The investment climate for SMEs in Uganda JI and other SMEs also face various other challenges relating to the investment climate of the country. These challenges include currency exchange rate fluctuations, the quality of infrastructure, and various other issues related to the ease of doing business. By way of reference, Uganda was ranked 150th by the World Bank’s Doing Business index in 20153. One of the biggest issues for SMEs in emerging economies generally – and in Africa specifically – is access to finance. SMEs are often regarded as having a high risk profile by formal lenders. This makes it difficult and expensive to raise the necessary capital at rates which are commercially reasonable in order to operate efficiently. Furthermore, the agricultural sector is generally regarded by financial institutions as one of the highest risk sectors. This constrains many entrepreneurs from succeeding in the market. To overcome the challenge of finance JI was able to secure financing from CFC and later from other ‘impact investment’

A Network of Joseph Centers

funds4. CFC and other investors have assessed the company

The critical backbone of the JI’s supply chain is an established

to be a financially sustainable business with excellent growth

and rapidly expanding network of village-level grain procure-

prospects which can achieve wider impact on smallholders

ment and service distribution centres, known as Joseph Cent-

and the local economy.

ers. Essentially they offer smallholders an ‘ecosystem’ where farmers can procure inputs, obtain knowledge through demonstration plots and extension services, apply for rural finance, and

Value Chain Development with the Joseph Initiative

of course trade their maize with JI. Joseph Centers are located in rural communities, and have

With the context in mind, this section describes how JI has

been strategically situated around 2.5 – 4kms from each other

managed to overcome numerous challenges on its way to be-

in order to conveniently serve smallholders. Currently JI man-

coming a sustainable company capable of transforming

ages a network of 60 Joseph Centers, with 40 around Masindi

the maize value chain.

and a further 20 in Mubende. Joseph Centers give JI a very local presence, and are each staffed by two trained Village Procure-

JI launched operations during the January 2013 harvest

ment Officers from the same village.

season. The main difference between JI and competitors is that JI’s operations span across the agricultural value chain,

As the JI managing director described, this local presence al-

including farm-gate procurement, logistics, drying, clean-

lows JI to make a demand signal to smallholders to invest in

ing, bagging, storage, warehousing, and distribution. JIs core

their maize. “We are saying, we will pay for quality, we will be

business is aggregating and procuring maize from smallhold-

your stable buyer, we have local presence, and we will support

ers in difficult to reach and dispersed places, where no other

you with knowledge, access to inputs. If you want to grow,

formal buyers go, and where even traders are infrequent

we’ll show you how, if you need advice we are here for you –

between seasons.

because we will both benefit”.

The Doing Business index rankings take into account several indicators across ten topics: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. See http://www.doingbusiness.org/rankings In addition to CFC, JI lists the following as partners: Agilis Partners Ltd., DOB Equity and DFID. See http://www.josephinitiativeltd.com/#partners

22 | Common Fund for Commodities Annual Report 2014

To remedy this situation, JI procures quality inputs at source in Kampala and markets these to farmers through the Joseph Centres. These quality inputs have a substantial effect on yields, as farmers themselves observe in Joseph Center demonstration plots5. Demonstration plots and Asili Farms Maize demonstration plots have been established adjoining each Joseph Centre. The JI Agronomist explained: “Village procurement Officers provide extension services to farmers from the demo plots, offering advice on production practices and demonstrating the effectiveness of quality inputs in different combinations. Farmers are offered a set of six trainings each at the demo plots. The trainings focus on land preparation, planting, weeding, fertilizer application, spraying, and harvesting. Each training targets up to fifty farmers at one time”. Demonstration plots are central to transferring technologies to farmers and encouraging them to invest and professionalise. The demonstration plots use only technologies that are readily available to smallholders, such as different combinations of improved hybrid seeds, quality fertilizers, herbicides and pesticides. Many of these technologies are tested at the 1000 hectare

Shelling maize at a Joseph Center

(2471 acre) Asili Farms, a sister company of JI. The Asili Farms Joseph Centers feature a basic ‘crib’ storage facility where

manager explained: “Asili Farms is like a training site. We test

purchased maize is aggregated. The advantage of the crib

everything here with our crops under local conditions so it is

storage is that it allows for natural drying and safe storage

like a centre of knowledge. When we introduce these technolo-

of grain until it reaches sufficiently low moisture levels for

gies to farmers we know they work, and it’s not just us preach-

shelling and transportation to the large-scale JI processing

ing”. This knowledge is brought together by the Agronomist in

facility. Joseph Centers also sell inputs such as improved

a protocol document on best practices for local conditions.

seed and quality fertilizer, which smallholders can purchase at competitive prices. There is also the option for smallholders

Asili Farms applies conservation agriculture (CA) practices6.

to buy these with a small loan.

JI is serious about promoting sustainable land management practices, soil diversification, watershed management and crop diversification in order to achieve long-term sustainability.

“We are saying, we will pay for quality, we will be your stable buyer, we have local presence, and we will support

The JI agronomist explained how changes in plant spacing

you with knowledge , finance and access to inputs. If you

practices have probably been the simplest to implement.

want to grow, we’ll show you how, if you need advice we

Farmers were previously broadcasting maize, but now

are here for you – because we will both benefit”.

are planting in 25cm x 75cm rows. This has increased the plant population per acre from around 17000 to 21000 for practicing farmers.

As mentioned above, adulterated inputs is a real problem in Uganda (and throughout the region), affecting a farmer’s deci-

The agronomist discussed why some farmers might not

sion to invest. JI says that in recent tests fertilizer purchased at

follow best practices – “some have been burned by others

village level showed nitrogen levels to be only 40% of what they

when encouraged to change practices.” Farmers agreed:

are packaged to be. Likewise, maize seed germination rates

“Yes the demo plot is very important. It gives us confidence,

were found to be 60-65% rather than 95%.

because seeing is believing”.

The quality hybrid seed varieties offered to supplying farmers are Pannar 15, Pannar 67, FICA 6H, FICA 9H and Naseco 10H. See http://www.fao.org/ag/ca/

The Joseph Initiative and Agricultural Transformation | 23

Smallholder access to credit

group members repay their loans. Therefore, farmers need to

A major issue constraining smallholders from achieving much

choose group members they feel they can trust and should be

higher yields and profits is their ability to afford inputs and farm-

of a similar capacity.

ers often need to raise credit. Loans are typically in the range of 100,000 UGX (US$27) to However, microfinance interest rates are high and can often

1,000,000 UGX (US$270) for farmers without credit history and

exceed 50% p/a for smallholders in rural areas. Such interest

without collateral. For those with a credit history and collateral

rates reflect both the cost of reaching smallholders and manag-

larger loans are possible through the JI and Opportunity Bank

ing smallholder accounts, as well as high default rates and the

partnership. Farmers taking loans are also required to take the

challenges of securing smallholder loans. From the perspec-

prudent step of crop insurance against extreme weather, for

tive of banks and microfinance institutes, high interest rates are

which a 3.5% premium is added.

justified because they represent the real cost of working with smallholders and the performance of microfinance loan portfo-

Procurement

lios. Unfortunately, it also makes lending an expensive and risky

JIs strategy to procure from smallholders might not seem

prospect for most smallholders.

exceptional at first, however consider that very few SMEs source maize directly from smallholders. JI must have an exceptionally

JI offers a route to more affordable and accessible smallholder

efficient system to be able to consolidate, clean, store and mar-

financing through its partnership with Opportunity Bank. JI is

ket high volumes of grain. In its first year of operation, 80% of

able to track smallholderâ&#x20AC;&#x2122;s maize farming performance over

all JIs transactions with smallholders involved less than 200kgs

several seasons and judge their ability to repay the loan, thereby

of maize at one time. Indeed, JI claims to be the only SME

reducing risk for both lender and borrower. This enables Op-

operating at this end of the market who sources their maize in

portunity Bank to offer loans at a lower interest rate of 30% p/a

such small quantities at origin. Last season 15,000 farmers sup-

(15% over a six month season)7.

plied JI, and by the end of 2015 JI expects this number to reach 50,000 smallholders supplying up to 30,000 MT.

A common cause of non-performing loans is when farmers divert money that they have borrowed from inputs to consumâ&#x20AC;&#x153;The demo plot is very important. It gives

able items. For obvious reasons, using loans for consumable

us confidence, because seeing is believingâ&#x20AC;?.

items does not generate a return on investment and can leave a farmer in a vulnerable situation when it comes to repayment . 8

To avoid such a situation, JI Village Procurement Officers help to facilitate the loan process between smallholders and Oppor-

JI takes an innovative approach to its maize procurement from

tunity Bank. JI has developed a pricelist of common inputs and

smallholders. Unlike all other buyers, JI prefers to buy cob maize

services that a farmer may wish to get a loan for and smallhold-

and do the shelling themselves. This is to avoid losses and deg-

ers must indicate what the loan is actually for. After making

radation which can occur during the shelling process using local

an application for a loan, farmers do not actually receive the

methods. JI uses a scientific formula to calculate maize cob to

money, but rather a credit note for the inputs or service that the

grain conversions and make payments to smallholders accord-

loan was requested for. This is redeemed at the Joseph Centres.

ingly. Shelled grain weight is approximately 80% of the weight

In this way, farmers are not tempted to divert the loan for other

of cob maize. JI prefers to buy cob maize so that it can manage

purposes. When farmers sell the maize back to JI, the loan

and maintain quality from the source. In this way, the company

money is deducted.

is able to monitor maize moisture levels before shelling the grain, and is able to avoid foreign matter (such as small stones)

Side-selling to traders and not making the loan repayment is of

and possible aflatoxin contamination.

course another risk. This is mitigated in several ways. First, the local presence of the JI Village Procurement Officers means

The maize in the Joseph Center crib is sorted according to

that borrowers are known personally, so cannot easily disap-

its moisture content. Compartment A has maize of between

pear. Second, farmers are required to take loans as a small

12-16% moisture, B 16-20%, and C 20-24%. Compartmentalis-

group of 10-15 members, with the group guaranteeing the

ing the maize helps the company to know how long to leave

loans of each member. A deposit of 25% is required to secure

it in the crib for further drying. In this way, JI can ensure that

a loan and members do not get their 25% deposit back until all

the maize is only shelled when it is sufficiently dry, with the

This is very close to commercial lending rates of major banks to businesses in Kampala See Centre for Financial Inclusion. (2014). Microfinance Banana Skins 2014: The CSFI Survey of Microfinance Risk. Available at http://www.centerforfinancialinclusion.org/publications-a-resources/browse-publications/610-microfinance-banana-skins-2014

24 | Common Fund for Commodities Annual Report 2014

minimum of breakages, and is not contaminated with stones

500 UGX/kg at harvest time. It is obviously difficult to attribute all

and dust. Obtaining quality maize at source is vital for JI to

of this increase to JI. However, in effect JI acts like a floor price

be able to transform it into grade 1 maize at its processing facil-

in the market with which traders have to compete. This improves

ity and market it at a premium in regional centres.

the system, and farmers always have a good market option.

This shelling arrangement is positive for farmers too. Smallhold-

JI Technology Platform

ers save time and labour costs incurred by manual threshing

All of the elements of JI need intense coordination, which

or by taking their maize into town to shell with another small

requires systems and technology. This technological edge is

operator. JI charges farmers for this maize shelling service at

paramount to efficiently working with smallholders, and is an

the same rate of town operators, or slightly less due to volumes

area where other SMEs sometimes fall down.

(3500 UGX per bag). The JI Technology Platform (JITP) is the technological backbone However, smallholders did express some ‘fears’ about selling

of JI enabling it to effectively monitor operations in real time. The

cob maize rather than grain. Bad experiences with traders in

customised software ‘Grains Chain’ is designed to run on smart-

the past has many cautious of being cheated. Whilst farmers

phones and tablets in the field. It allows JI to update prices, track

are confident that the JI scales are accurate, there is more

transactions with smallholders, monitor inventory across all 60

uncertainty around how final prices to farmers are calculated

Joseph Centres, monitor stocks in the JI processing and storage

with the cob-grain conversion ratios. This is further compli-

facility, and quickly compile company reports for analysis.

cated when JI pays different prices for quality (a premium is paid for low moisture levels), and when loans for inputs and

When farmers bring their maize to the Joseph Centre for the

shelling costs are deducted. Said one farmer, “We don’t un-

first time they are registered in the system on smartphones.

derstand how the deduction are done, and moisture meters

The purchase order includes the number of kilograms sold,

are new to us too”.

the moisture content of the maize (as measured with moisture meters on site) and several other data points. The software then

This highlights the importance of good sensitisation with

calculates how much the farmer should be paid based on the

smallholders to explain how prices are calculated. The strong

number of bags, the current market price, and the maize quality

growth in supply to JI suggests that this sensitisation is going

(particularly relating to a low moisture content).

well. Sensitisation will be an ongoing process as JI continues to scale its operations.

The Joseph Initiative’s supply network is coordinated entirely on the Joseph Initiative Technology Platform. JI is now rapidly integrat-

Farmers report that since JI has begun its operations the price

ing advanced management practices including mobile payments,

of maize has increased significantly from around 300 UGX/kg to

forward contracting capabilities, and biometric identification.

Kampala

Juba

Nairobi

Kigali

local Retail and Consumer

JI Processing Factory

Joseph Center 1

JI Village Agent

Joseph Center 2

JI Village Agent

Distribution

Joseph Center 3

JI Village Agent

Joseph Center n

Aggregating and Processing

Joseph Initiative Technology Platform Primary Production

Value Chain Ugandan Farmers

The Joseph Initiative and Agricultural Transformation | 25

All of the aggregated maize procured from smallholders in the Joseph Centres gets transported to the JI processing facility outside Masindi. Here, up to 500 MT of maize can be efficiently cleaned per day (although JI is not currently running at full ca-

Photo: Roger Bymolt

Processing and marketing to large buyers

pacity). Maize that still retains excess moisture levels is diverted to industrial dryers. This is the final stage before storage in JIs silos, which can handle up to 7000 MT. CFC has played an important role in financing the upscaling of the processing and storage facilities with a long term loan of US$ 500,000 over seven years. Until recently, JI supplied large brokers who on-sold to millers. However in recent months JI has made tremendous in-roads

Smallholder farmers outside a maize crib just before harvest time

to dealing with large millers directly. Today, Nairobi Milers, Minimex (Rwanda) and the World Food Programme are among

Technology: Integral to making systems work is technology.

JIs biggest customers.

The JI Technology Platform allows JI management to remotely track every component of the business even when in Kampala

Success factors

or out of the country.

In such a challenging business environment, the JI Managing Director was asked what he considers to be the key success

Capital: Others who have tried this business model tend to be

factors. Why has JI succeeded where others have failed to kick

under-capitalised and fragmented. Some can manage a piece or

on and scale up?

two of the puzzle, but it is very difficult to address the entire chain to drive change. This is precisely what JI is trying to achieve.

â&#x20AC;&#x153;A bottom up approach was taken from the very beginning. In fact, we started out first raising pigs, and then became interested in sourcing animal feed. It was only when we started producing

Changing the chain

our own feed that we encountered the maize value chain and became attracted to the idea of creating change in the chain. So

JI has had considerable impact on the maize value chain in

we started off from the position of maize consumers, before be-

just three years, and is establishing itself for the long term. JI is

coming small maize traders ourselves. We then spent 6 months

illustrative of how an SME can play a powerful role in transform-

with farmers before doing anything further to develop the JI

ing agricultural value chains and improving the livelihoods of

vision. This experience was the basis for successâ&#x20AC;?.

smallholder farmers.

Now, with operations rapidly expanding, JI offer the following

To be sure, not all SMEs will perform as JI has done and be able

factors for success:

to successfully overcome the challenges of working in a developing country context. It is for this reason that conventional

People: The modular approach of JI and its Joseph Centers

lenders are wary of lending to SMEs.

requires an excellent team to manage the system and actively troubleshoot on a regular basis. Clear roles and responsibilities

However, CFC recognises the transformative potential of SMEs

and employee accountability are important in this regard. JI also

such as JI and is willing to take calculated risks in financing

succeeds due to its excellent knowledge of the area and move-

enterprises it believes in â&#x20AC;&#x201C; even when other financial institutions

ments in regional maize markets. By the end of 2015, JI expects

are unwilling. As the case of JI illustrates, when CFC acts, other

to be employing 720 people.

financiers are more willing to follow.

Systems: Aggregating and procuring maize from smallholders

With support of partners such as CFC there is every reason to

in difficult to reach areas requires well-functioning systems to

think JI can continue to scale up, delivering not only value for

be efficient and competitive. Joseph Centers are integral to the

shareholders, but also impact for smallholder farmers.

system, as are the Village Procurement Officers that staff them. Efficiency is a necessity at every stage, particularly in procurement, credit, transportation to the processing facility, and

Author: Roger Bymolt, Senior Advisor at the Royal Tropical

ultimately in regional sales.

Institute (KIT), Amsterdam. r.bymolt@kit.nl

26 | Common Fund for Commodities Annual Report 2014

Photo: INBAR

CFC and INBAR: fifteen years of cooperation on Âbamboo and rattan development Local development and research grants have created innovation and value chains for bamboo and rattan in 10 countries, and raised awareness with many more.

building standards in Peru and Ecuador, with regional standards for Latin America as a whole; facility centres for rattan processors in Ghana, with improved products and greater market competition; government commitments to use bamboo in development plans in Ethiopia and Kenya; and a broad portfolio of develop-

For fifteen years, the Common Fund for Commodities has been

ment results that show clearly how bamboo and rattan can be

instrumental in furthering the development of bamboo and rat-

used effectively for green, sustainable development, and which

tan in Asia, Africa and Latin America. Through its support to the

serve as models for further development in the future.

International Network for Bamboo and Rattan (INBAR) in some eleven projects totaling US$5.58m, new knowledge and tools

Since INBAR became the International Commodity Body for Bam-

have been created in how bamboo and rattan can be harnessed

boo and Rattan in 2001, it has developed a strong partnership with

to improved livelihoods in rural areas and protect the environ-

the Common Fund. Work has focused on fostering and testing in

ment. CFC has supported work by INBAR in its member countries

situ innovations on value chain development in the bamboo and

on topics ranging from value chain development and enterprise

rattan sectors throughout the bamboo and rattan growing regions

establishment to policy advice and development of national

of the globe, working in partnership with a wide range of interna-

standards. Key results of this work that are in action today include

tional, national and local organizations, to build capacity to inno-

improved tracking of international trade in bamboo and rattan via

vate with bamboo and rattan, and implement appropriate support

better World Customs Organisationâ&#x20AC;&#x2122;s Harmonised System Codes;

mechanisms and infrastructure for the sector in the longer term.

CFC and INBAR: fifteen years of cooperation on bamboo and rattan development | 27

20t/ha of bamboo culms per year, whilst in the tropical region, yields can top 40t/ha. China is the largest producer of bam-

Photo: INBAR

A well managed subtropical bamboo stand can yield about

boo products, and has the largest area of bamboo stands, with a domestic market of about $20 bn USD per annum, and exports of a little less than 2bn per year. Growing and harvesting bamboo is not a full time occupation, but usually focused around particular times of the year – August and September for soil cultivation and forest maintenance, October and November for harvesting culms, and spring for harvesting bamboo shoots. For a producer, bamboo provides on average about 30 – 50%

Since 2001, the International Network for Bamboo and

of their income, whilst allowing them considerable flexibility

Rattan (INBAR) has been one of the commodity organiza-

to explore other income sources. A full time bamboo factory

tions designated by CFC as an International Commodity

worker in Eastern China earns about 3000 RMB per year, and

Body (ICB). Throughout the fifteen years of cooperation

again, processing is often not all year round and so they have

with INBAR, CFC has provided financial support to five

opportunities to explore other income sources, too. In total,

regular INBAR projects and to six smaller, so-called Fast

7.75 million people work in the bamboo sector in China –

Track, projects. In this contribution from INBAR, highlights

though few are full time. In India, roughly 8.6 million people are

are presented from some projects, focusing specifically

dependent on bamboo for their livelihoods.

on the value chain development and substantive income impact of these projects. Important thereby is the facilitat-

Rattans are usually collected from the wild. The availability of

ing and innovative nature of these activities, resulting in

rattan varies widely in different countries – Indonesia has over

wider uptake at Government and commercial level.

three quarters of the world’s rattan stocks, but a few years ago the government introduced a ban on exporting raw rattan to

Bamboo and rattan are two of the most important Non-

encourage value addition in country, and the effects of this

Timber Forest Products (NFTP), with an estimated global

have been mixed, with some suggesting that it has driven

trade value (national and international) of about $60bn per

exports into the informal sector. Countries such as China have

year. Both have been used as a source of softwood and

very little rattan left, and processers there use mostly im-

poles for centuries and bamboo, and to a lesser extent

ported rattan. South Asia still has considerable rattan, as does

rattan, objects from musical instruments to religious

Myanmar, where the informal rattan trade sector is thought to

artifacts, housing to agricultural implements and baskets,

be large. In Indonesia, the Philippines and Vietnam production

are integral to many indigenous cultures. Bamboos are

of rattan furniture is big business, usually involving small-scale

woody grasses that produce annually a new crop of poles.

producers in large export orientated production chains. Over

Their poles (called “culms”) can be used whole for uses such

80, 000 people in Indonesia earn their livings from producing

as construction and agricultural implements, or split to

rattan furniture alone.

produce strips of softwood that can be laminated into boards and other fabricated wood products or for weaving. Bamboo leaves are also used for livestock fodder, tar-oil for

Bamboo Supply chains in Africa

medicine, and charcoal for purification and latterly as a substitute for timber-wood fuel charcoal.

The CFC-funded East Africa Bamboo Project (EABP) focused on bamboo development in Ethiopia and Kenya and was super-

There is an estimated 37 m hectares of bamboo in the

vised by INBAR and implemented by UNIDO. The project ended

world, approximately 3% of the world’s forest cover. Rattan

in 2010 and is regarded by the Government of Ethiopia as one

is a climbing palm that grows in the tropical forests of Asia

of the most successful under the Ministry of Agriculture and

and Africa, and its survival depends upon that of the forests

Rural Development. Its long-term objective was to promote the

in which it grows – certified rattan products have recently

development of the sustainable production and use of bamboo

reached European markets. It has been traditionally used for

products in East African countries, with a focus on markets as

weaving and for furniture, for which the international

the driving force behind such development, and is thought

market remains strong. Over the past thirty years, under-

to have been the first ever to do this. The project has enabled

standing of the potential of bamboo and rattan to contrib-

INBAR, CFC, UNIDO and government partners in Ethiopia and

ute to international development has grown, and in 1997,

Kenya to reach out with bamboo to many national partners,

the “International Network for Bamboo and Rattan” was

and to demonstrate the huge difference bamboo can make.

established as an intergovernmental organization.

28 | Common Fund for Commodities Annual Report 2014

The project trained over 1500 people in Ethiopia and Kenya,

Subsequent to EABP, a follow-up CFC/EC-funded INBAR project

and set up nurseries, a training center, processing facilities and

looked at producing bamboo charcoal and bamboo firewood

provided equipment. By the end of the four year project, the

in Ghana and Ethiopia, as a substitute for timber. Working with

incomes of participants had increased over 100% on aver-

communities, hundreds of tree wood-charcoal producers

age, whilst 10 of the 50 urban participants in Addis Ababa had

were trained in bamboo charcoal production, and the ben-

opened their own shops to sell their wares. The sudden demand

efits of bamboo charcoal promoted, as initial perceptions of

for bamboo caused by the project also initially caused a rise of

bamboo charcoal as not as good as wood charcoal because it

400% in the price of raw bamboo, something that the project

was lighter, needed to be addressed. In fact, bamboo charcoal

has addressed in the long term by supporting the development

burns hotter than wood charcoal, and produces fewer noxious

of both community-based and privately owned bamboo nurs-

fumes, and is thought that it may help reduce the incidences

eries and plantations.

of respiratory problems for those living in homes with little or no ventilation. Longer term results show that one family of five

The project was a result of the CFC-funded 2003 “Workshop

needs just over 1 hectare of bamboo per year to meet their fuel

on Market Based Development with Bamboo in East Africa”,

needs, rather than using timber or other plant-based woody

which brought together bamboo researchers, government of-

biomass, and given that about 80% of residents in Sub-Saharan

ficials and bamboo practitioners from Ethiopia, Kenya, Uganda

Africa still use fuelwood or charcoal as their main fuel source,

and Tanzania to discuss and reach agreement on the compo-

this offers huge potential for reducing forest destruction.

nents of the East Africa Bamboo Project. Today, the inherent economic value of bamboo is now recognized in Ethiopia, and

The project ran policy workshops with governments to promote

is increasingly so in Kenya, with relevant government agencies

development and implementation of policies that support

encouraging farmers to pay due attention to this resource.

bamboo charcoal business development, opened a technology

Investors, from individual small scale bamboo entrepreneurs

centre in conjunction with the Ministry of Mines and Energy

to large companies, have become keenly interested in the

in Ethiopia, whilst the Government of Ghana’s Bamboo and

bamboo sector.

Rattan Development Programme is supporting the establish-

Roadside rattan furniture makers in Accra and Kumasi now have access to facility centres

Photo: INBAR

and training as a result of inbar/cfc’s collaboration

CFC and INBAR: fifteen years of cooperation on bamboo and rattan development | 29

ment of a National Bamboo Charcoal Technology Centre. The

centres for rattan producers, where they can work using high

project built a huge amount of capacity and belief in bamboo

quality tools, get training and support, share opportunities

in government ministries – this was demonstrated clearly at the

with fellow producers, and have a safe place to sell their wares,

Bamboo Summit in Addis Ababa in November 2014, the first of

one that could develop over time as “the” place to go to buy

its kind in Africa, which was attended by ministers from many

high-quality rattan products. Concurrently, the rattan producers

of INBAR’s African member nations, with the opening address

set up a rattan producers association, and INBAR coordinated

by the President of Ethiopia, H.E. Mulatu Teshome. In April, the

and produced proposals for technical support for the centres,

Kenya Bamboo Workshop discussed ways of ensuring bamboo

including establishment costs and the procurement of tools

is included in Kenya’s Vision 2030 – the Governments plan for

and equipment.

sustainable growth and development for the next 15 years – a result of the increased interest and awareness of bamboo gen-

The two centres are operational and act as training cum facilita-

erated initially by the EABP.

tion centres. There are now many improved rattan designs in the market, and competition has been created amongst the

Currently, INBAR is offering assistance to the Ministry of Agricul-

producers leading to an increase in quality. Consumers are

ture, Ethiopia, and its China partner the International Centre for

reportedly more satisfied with the products and sales have

Bamboo and Rattan, for the establishment of the Ministry-run

increased – and there has been an appreciable increase in ac-

“Africa Bamboo Centre”, a technical and training base that is

ceptance of local rattan products compared to before the CFC

intended to provide significant support for bamboo-based de-

project started. Moreover, the government now sees the rattan

velopment in the entire continent. INBAR is also in discussions

sector as an avenue for job creation for youth and the unem-

with the Worldbank and Ethiopia’s Ministry of Agriculture to run

ployed, and is preparing to work with other partners including

the bamboo component of the Sustainable Land Management

donors to help realize this.

Programme II initiative in Ethiopia. The CFC-funded 2003 Workshop and the EABP have clearly

HS codes

been instrumental in fostering this commitment to bamboo for long term green development at the highest levels in Ethiopia

One of INBAR’s key responsibilities as an International

and Kenya, and more and more countries are taking note.

Commodity Body (ICB) is the collation and provision of trade data on bamboo and rattan products. INBAR has been working on the identification of bamboo and rattan in the

Innovating with rattan in West Africa

WCO Harmonized Commodity Description and Coding System (Harmonized System or HS) since 2002, in order that more

In 2008, INBAR and CFC collaborated on a Fast Track project

bamboo and rattan-specific HS codes will contribute to the

entitled “Assessment of the feasibility of rattan processing and

development of healthy bamboo and rattan sectors and sus-

marketing for sustainable income generation in West Africa”

tainable development – bamboo and rattan had hitherto been

to build the capacity of rattan processors in Ghana to innovate

lumped with wood products, and so it was not possible to track

higher-value products and to market them well. Most rattan

their trade. In 2007, a set of more specific codes proposed by

producers in Ghana work by roadsides where they can easily

INBAR were introduced by WCO making 16 6-digit HS codes for

sell to passers-by, but there has been little attempt to improve

bamboo and rattan commodities, covering 7 categories, among

the relatively basic production methods used, and the quality

of them 10 codes for bamboo, 4 for rattan, and 2 codes for

of the products could be improved. To help, this small project

mixed bamboo and rattan, and these are still in use today.

trained 24 rattan producers in better methods of production, and in design, as quality and innovation for rattan products is

The enhanced recognition of bamboo and rattan products in the

essential to opening market presence – rattan products are not

international market will provide the possibility for developing

essential, and the market depends on their marketability. The

countries to monitor, assess and stimulate the evolving trade and

work was complemented by a review of the rattan sector in

developing markets of bamboo and rattan. Accurate and timely

Ghana and Togo, with recommendations for its improvement.

monitoring of international trade in bamboo and rattan enables policy makers and researchers to better understand the effects

Once the project had ended, producers continued to ask re-

of their decisions and recommendations on the sectors and

lated agencies in Ghana, as well as INBAR, for more training and

their participants, and to take appropriate steps to support them

help with developing their businesses. As a result, the govern-

further. Entrepreneurs and investors can understand the potential

ment of Ghana decided to invest in Common Facility Centres

of overseas markets, whilst producers can use the data to inform

for rattan producers in Accra and Kumasi, to act as incubation

development of products targeted to specific markets.

30 | Common Fund for Commodities Annual Report 2014

Photo: INBAR

Figure 1: World exports of bamboo and rattan in 2012 in US$ million US$ million Bamboo and rattan raw materials

Industrialized bamboo products

541

Bamboo woven products

476

Bamboo and rattan furniture/seats

291

Preserved bamboo shoots

276

Rattan woven products World export of bamboo and rattan in 2012

209

1889

100

15 25

Figure 2: World exports of bamboo and rattan products from 2007 to 2012 in US$ million 2.521 2.572

2007 2008 2009 2010 2011 2012

1.824 1.966 1.858 1.889 200

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

Bamboo and rattan raw materials

Bamboo woven products

Industrialized bamboo products

Preserved bamboo shoots

Rattan woven products

Bamboo and rattan furniture/seats

2600

Figure 3 Main trading areas of Bamboo and rattan products in 2012 in US$ million 2 2 7

Central America South America Oceania Africa North America Europe Asia

19 38 216 1.605 17 28 30 39

Central America South America Africa Oceania North America Asia Europe 679

Percentage (%)

550

600

650

700

344 482 679 1000 300 1050 350 1100 400 1150 450 1200 500 1250 550 1300 600 1350 650 1400 700 1450 750 0 750 50800 100850 150900 200950 250

World export in 2012: 1889 US$ million

800 1550 850 1600 900 1650 950 17001000

World import in 2012: 1619 US$ million1

The $270m difference between the import and export values is due to differing levels of costs such as transportation and taxes levied on imports and/or exports in different countries.

CFC and INBAR: fifteen years of cooperation on bamboo and rattan development | 31

1050

Figure 4 Major exporters and importers of bamboo and rattan products in US$ million 3 4 6 7 8 8 10 18 20 31 36

Mexico Canada Malaysia New Zealand Myanmar Hong Kong, China Nigeria Thailand Singapore USA Philippines Vietnam Indonesia EU-27 China

86 176 214 1,238 9 12 14 15 19 24 27 30 30 32 38 46

Thailand Hong Kong, China Brunei Darussalam South Africa Switzerland India China Korea Russia Australia Singapore Canada Japan USA EU-27 450

500

289 607

5500

600 50

607 650 100

700 150

750 200

800 250

World export in 2012: 1889 US$ million

850 300

900 350

950 400

1000 450

1050 500

1100 550

1150 600

1200 650

1250 700

1300 750

World import in 2012: 1619 US$ million1

The $270m difference between the import and export values is due to differing levels of costs such as transportation and taxes levied on imports and/or exports in different countries.

Bamboo construction in Latin America

Photo: INBAR

400

256

INBAR’s CFC-funded work on bamboo in Latin America with the EC takes an inter-commodity approach to promote more diversified sources of income for the rural poor and avoid dependence on one commodity only. The project, with complementary funds from the EC and the Worldbank, works in Ecuador and Peru and aims to develop and improve bamboo-based businesses. Construction is the main production chain for bamboo in Ecuador and Peru – more than 1.2 million people live in bamboo homes in Ecuador and a similar number in Peru. However, despite its ubiquity, construction with bamboo has been illegal in both countries until recently – meaning that bamboo homes cannot be insured, and neither can those building them, and so the sector is unregulated and standards are non-existent, resulting in potentially dangerous structures and limited investment. The project has so far set up a value chain for construction covering 2,000 people and built over 200 homes. As a result, the government of Peru approved national construction codes for bamboo in 2012, and in 2013 the project organized a regional conference to update these national codes – and a manual for In Ecuador, the project has innovated modern versions of the traditional “pack-flat” bamboo homes of the charity Viviendas del Hogar de Cristo

32 | Common Fund for Commodities Annual Report 2014

800

constructing with bamboo in Peru is now available. In Ecuador, a

potential of bamboo in the Wenchuan area, and we have sub-

similar approval process is reaching its climax – formal approval

sequently worked with EC and Citi Foundation and EU Switch

by the Ministry of Housing. The project has also developed a

Asia Programme-funding to develop an integrated programme

regional construction code for bamboo, as the bamboo species

of bamboo-based livelihood enhancement schemes that have

used for construction in the region are the same, which can

helped create over 50,000 jobs.

be used by other countries in the region to develop their own national codes. As a result of the project, and the training and

In Bhutan, CFC Fast Track funding has enabled INBAR to work

capacity building in technical and management aspects of bam-

on substituting timber components of traditional Bhutanese

boo forests, and the development and use of a simple financial

housing with bamboo, and building capacity of government

model that producers and growers can use, bamboo is now seen

agencies to consider bamboo as an alternative. As well as build-

as a valuable crop with much potential, and has been included in

ing demonstration houses, we have developed demonstration

national plans in relevant ministries in both Ecuador and Peru.

nurseries – the first in the country – where best practice bamboo cultivation is demonstrated, and conducted a market study

This is just a part of INBAR’s work to boost bamboo for con-

for bamboo in Bhutan, which has recently been published. Over

struction worldwide, much of which has been funded by CFC.

178 ha of bamboo have been planted. In partnership with the

INBAR’s first CFC-funded housing project was implemented by

Social Forest and Extension Division (SFED) of the Royal Gov-

its partner the International Center for Bamboo and Rattan in

ernment of Bhutan, INBAR worked with District Forestry Offices

earthquake-hit Sichuan province in 2008. The Wenchuan earth-

to build local capacity on bamboo production, as well as en-

quake killed 80,000 people and destroyed the homes of many

hance the local resource base. Before 2010, no modern houses

more. INBAR and ICBR took steps with CFC to build a series

using bamboo as the primary structural element had been

of prefabricated bamboo houses that could be erected rapidly

constructed in Bhutan. However, following the initial house, the

and provided warmer and quieter homes than the alternatives

country has now built an additional three bamboo structures.

in use. This itself encouraged INBAR to look deeper into the

New technologies, such as portable “boucherie” preservation

There is growing interest in the substitution of wood charcoal with bamboo charcoal in many nations,

Photo: INBAR

as countries seek greener ways to fuel their development

CFC and INBAR: fifteen years of cooperation on bamboo and rattan development | 33

bamboo construction in the Kingdom. Modern construction techniques for building bamboo-framed structures have been

Photo: INBAR

technology have helped to overcome traditional barriers to

adopted by community forest management groups. INBAR has also worked with CFC on a project to develop pre-fabricated bamboo housing in Ethiopia â&#x20AC;&#x201C; INBAR takes its catalyst role in bamboo housing very seriously, and CFC has been an important partner in enabling us to do so. Recently, and building on our work with CFC, INBAR became a founding partner in the Global Housing Sustainability Network, a new initiative of UN Habitat. INBAR has also been instrumental in operationalising a Technical Committee of the International Standards Organisation (#TC165) that covers the development of international standards for engineered bamboo construction. A new CFC Fast Track programme currently under development will support the Nepalese private sector to work with disasteraffected communities to develop bamboo resources and supply chains so that they can significantly contribute towards postdisaster, earthquake-resistant reconstruction, renewed local livelihoods, and mountainous area restoration. The programme will respond to the enormous demand for rebuilding materials following the devastating earthquake that struck on the 25th April adversely affecting over 8 million people, by contributing to environmentally sustainable post-disaster reconstruction in Nepal. The programme will support two agencies, Himalayan

Photo: INBAR

Bamboo and the Adobe and Bamboo Research Institute, to

develop their bamboo supply chain models, creating vertical linkages to rural smallholder farmers, in disaster affected areas. Ten demonstration school structures and 150 houses will be built, and awareness raised amongst relevant groups to encourage the inclusion of bamboo housing in public procurement, development agency and humanitarian relief programmes. Specific information on the outcomes of the projects mentioned in the article or others in the growing CFC/INBAR project portfolio can be obtained from INBAR: info@inbar.int

Authors: Andrew Benton, with assistance from Michael Devlin and Wu Junqi, International Network for Bamboo and Rattan (INBAR)

Chinaâ&#x20AC;&#x2122;s domestic market in bamboo and bamboo products is worth some 20 bn usd per year

34 | Common Fund for Commodities Annual Report 2014

Photo: KIT

Balancing risk and striving for impact – Providing finance to SMEs in developing countries The CFC’s mission is to develop commodity value chains and

The private sector is widely recognised as an important partner

contribute to broader development objectives. The Fund has proven

in development efforts. In particular, studies emphasise the im-

throughout its existence to be a leader in its market driven approach.

portance of small and medium enterprises (SMEs) as key drivers of economic growth, diversification and employment creation1,2.

The demand for financial support for Small and Medium

SMEs play an important role in the formalizing of an economy

Enterprises (SMEs) in the commodity sector seen by the CFC in

through value chain development, often transacting with large

its Open Call for proposals is overwhelming. To maximize the

corporations as well as linking with micro-entrepreneurs and

effective use of its resources, from 2013 the CFC has begun ex-

small-scale producers. SMEs are active at various points in the

panding the proportion of loan financing in its portfolio of pro-

value chain as producers, suppliers, distributors, retailers, and

jects and is facing new challenges and opportunities. Balancing

service providers3.

different types of risks to ensure CFC’s impact, sustainability and relevance is part and parcel of the new operating modalities of

In high-income countries’ economies SMEs typically account

the Fund. This article discusses how different types of risk may

for over half of all income and added value, yet in developing

affect projects implemented by SMEs in the commodity sector.

countries their capacity to spur growth and foster job creation

World Bank (2013). Evaluation of the World Bank Group’s Targeted Support for Small and Medium Enterprises. Available from http://ieg.worldbank.org/Data/reports/ap_evaluationof_smes.pdf 2 IFC. (2013). Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises. World Bank Group. 3 IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. 1

Balancing risk and striving for impact – Providing finance to SMEs in developing countries | 35

is constrained by their ability to access finance4,5. Overcoming

tions for undertaking business by addressing legal and regulatory

obstacles to increase the economic role of SMEs in developing

barriers and building credit infrastructure11. It may be noted that,

countries is regarded as an essential instrument of economic

compared with grants, loan based financing instruments directly

development. This acknowledgement has elevated SME finance

targeting SMEs greatly reduce the scope for rent-seeking and

to one of the key issues on the global development agenda6.

other market distortions.

SMEs in the commodity sector are well positioned to drive Africa’s expected return to pre-crisis growth rates of around 5%

The development of new financing instruments suited to the

by 2016, with agriculture cited as one of the driving factors .

needs of SMEs go hand in hand with a new dimension of risks

which development financiers face. The balance of impact and SMEs are vital to the agricultural commodity sector as it is a

financial sustainability of projects is closely linked to the finan-

major feature of developing country economies and central

cial parameters of returnable forms of financing such as loans.

to food security. For the 70 percent of the world’s poor who

The ‘missing middle’ and the importance of finance for SMEs

live in rural areas, agriculture is the main source of income and employment8. The two biggest challenges relating to SMEs in the agricultural commodity sector are commodity price volatility and climate change9. Climate factors (such as crop failure due to

SME finance is referred to as the ‘missing middle’, as SME finan-

irregular and erratic weather conditions or pest and disease out-

cial requirements are too large for most microfinance institu-

breaks) are believed to have a larger effect on economic capital

tions, yet are viewed as too small, risky, or costly by traditional

than commodity price volatility .

commercial banks15,16. SMEs seek loans or equity investments of

considerable size – perhaps from $100,000 to $1,500,00017 – at Developing country governments around the world now recog-

competitive commercial rates. These ‘missing middle’ SMEs are

nize the importance of the SME sector for long-term growth and

not sufficiently served by existing financing institutions, yet they

have worked to improve their investment climate and condi-

are a key driver of development.

Maximizing impact of CFC’s resources through financing for SMEs The Fund’s emphasis on loans is consistent with a more

The Fund concentrates its resources on SMEs so that they

general trend towards greater development collaboration

can realize the potential of commodity production, process-

with the private sector. In recent years, an increasing

ing, manufacturing, and trade to make ensure that commod-

proportion of official development assistance (ODA)

ity markets can generate economic growth in developing

has been given in the form of loans rather than grants12.

countries for the benefit of the poor14. CFC has expanded its

The OECD notes that while most ODA continues to be

capacity to finance loans for a period of five to seven years,

provided as grants, loans and blended finance will play

giving SMEs sufficient time to grow and repay the loan. The

a key role in mobilising resources in support of the post-

Fund’s interest rates typically range between 5 to 10 percent

2015 Sustainable Development Goals (SDGs)13.

depending on its risk assessment, which is extremely competitive compared with commercial banks.

IFC. (2013). Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises. World Bank Group. Kushnir, M. et al. (2010). Micro, Small, and Medium Enterprises Around the World: How Many Are There, and What Affects the Count? IFC/World Bank. 6 For example, At their September 2009 meeting in Pittsburgh, the G-20 Leaders announced the creation of the Financial Inclusion Experts Group (FIEG), tasked with: (i) supporting innovative modes of financial service delivery capable of reaching the poor; and (ii) scaling up models of small and medium enterprise (SME) financing. In the constituent meeting of the SME Finance Sub-Group on December 3rd 2009, the G-20 FIEG members agreed to follow a development agenda on SME Finance, focusing on providing SME Finance solutions for developing countries in particular. See IFC. (2010). Scaling-Up SME Access to Financial Services in the Developing World 7 African Economic Outlook. (2015). African Economic Outlook 2015, Regional Development and Spatial Inclusion. Available at http://www.africaneconomicoutlook. org/fileadmin/uploads/aeo/2015/PDF_Chapters/Overview_AEO2015_EN-web.pdf 8 World Bank. (n.d.) Agriculture & Rural Development, World Development Indicators. Available at http://data.worldbank.org/topic/agriculture-and-rural-development 9 For shorter loans one can add the challenges of seasonality with long gestation periods. The result is that cash flows are highly seasonal and sometimes irregular, with earnings concentrated in certain times of the year. As such, there is a slow rotation of the invested capital as investments are spread over longer time horizons 4

36 | Common Fund for Commodities Annual Report 2014

than for non-seasonal businesses. See IFC and GPFI. (2012) Innovative Agricultural SME Finance Models. Castro, C., Garcia, K. (2014). Default Risk in Agricultural Lending The Effects of Commodity Price Volatility and Climate. Inter-American Development Bank (IDB), Discussion Paper No. IDB-DP-362 11 IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. 12 ODA loans have risen faster than grants and now account for over a quarter of total ODA disbursements to developing countries. Gross ODA lending from DAC donors increased by 73%, whereas ODA grants from DAC donors (excluding debt relief) grew at a much slower pace, rising by just 25%. See Tew, R. (2015). ODA loans: tracking a growing source of development financing. Available from http://devinit.org/wp-content/uploads/2015/06/ODA-loans-tracking-a-growing-source-of-development-financing.pdf 13 OECD. (2014) Modernising Official Development Assistance (ODA). Concessional loans before and after the HLM . Available at http://www.oecd.org/dac/stats/documentupload/ODA%20Before%20and%20After.pdf 14 See http://common-fund.org/about-us/organisation-and-profile/ 15 World Bank. (2006). Making Finance work for Africa. World Bank, Washington 16 IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. 17 SMEs are defined in different ways by different actors. In this paper we use World Bank definitions (see table 1). For other definitions see Dalberg Global Development Advisors. (2011). Report on Support to SMEs in Developing Countries Through Financial Intermediaries. Geneva. 10

Table 1: World Bank deﬁnitions of MSMEs

In Africa, for example, credit registries are either completely absent

(enterprise must meet at least 2 of 3 characteristics)

or are in their infancy, so screening loan applicants is extremely challenging for commercial banks. The absence of systematic

Firm size

Employees

Assets

Annual sales

credit history records implies that default does not have any

Micro

< 10

< $ 100,000

serious impact on credit ratings. Combined with weak contract

Small

< 50

< $ 3 million

enforcement, the cost of default to borrowers is relatively low,

Medium

< 300

< $ 15 million

creating a ‘moral hazard’ problem in the form of strategic loan defaults23. This is an example of how ‘information asymmetries’

Firm size

Loan size proxies

create risks - business owners have privileged information about

Micro

< $ 10,000

the enterprise and it is difficult and expensive for financial institu-

Small

< $ 100,000

tions to access in order to gauge the creditworthiness of SMEs24.

Medium

< $ 1 million (< $ 2 million for s ome advanced countries)

Another issue related to information asymmetries is that financial institutions find it difficult to differentiate between risky and

Source: IFC. (2009). The SME Banking Knowledge Guide

non-risky projects. This creates an ‘adverse selection’ problem leading banks to make excessively conservative risk estimates

Finance is the biggest constraint to SME growth

and apply high interest rates to SMEs across the board.

Finance is often cited as the primary obstacle constraining

Figure 1: Typical business landscape in emerging economies

SME growth and operations in developing counties, and has real

(percentages represent the number of companies)

consequences18,19,20. SME owners struggle to make the investments they need to increase productivity and the competitiveness of their business, develop new markets, and hire more

0.1%

Corporate & multinationals

people. Therefore, a lack of SME finance acts as a constraint on the economies of developing countries.

Identifying risks – Why SMEs lack access to finance The enabling environment and weak financial infrastructure

0.9%

Large enterprises

5–10%

Medium enterprises

20%

Small enterprises

65–75%

Microenterprises

Banks’ primary target

THE SME FINANCE GAP

The most important issue constraining bank lending to SMEs results from deficiencies in the enabling environment for financial services21. Developing countries tend to have comparatively

Micro finance

weak financial infrastructure (accounting and auditing standards, credit reporting systems, and collateral and insolvency regimes), and weak legal and regulatory frameworks. Studies

Source: IFC. (2009). The SME Banking Knowledge Guide

have shown that loan defaults are a major factor inhibiting bank lending to SMEs when the quality of regulation is poor22.

Unfortunately, the problem of credit is not the only challenge. There are significant nonfinancial barriers that also constrain SME growth: infrastructure-related (for example, lack of electricity), regulatory, tax-structure-related, and corruption-related. See: Stein, P. (2010). Two trillion and counting - Assessing the credit gap for micro, small, and medium-size enterprises in the developing world. IFC. In Africa, other factors cited include small local markets, undeveloped regional integration and very difficult business conditions, (including cumbersome official procedures), poor infrastructure, dubious legal systems, inadequate financial systems and unattractive tax regimes. See: Andrianova, S., et al. (2011). Why Do African Banks Lend so Little? University of Leicester, Department of Economics 19 Meghana, A., et al. (2011). Small vs. Young Firms Across the World: Contribution to Employment, Job Creation, and Growth. Policy Research Working Paper 5631. World Bank, Washington, DC. 20 In global surveys, including the World Bank’s Enterprise Surveys and Investment Climate Assessments, SMEs report that the cost of finance is their greatest obstacle 18

to growth and rank access to finance as another key obstacle, and this is most acute in developing countries. IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. 21 IFC. (2010). Scaling-Up SME Access to Financial Services in the Developing World 22 However, once a threshold level of regulatory quality (guaranteeing contract enforcement) has been reached, improvements in the default rate or regulatory quality do not matter. See: Andrianova, S., et al. (2011).Why Do African Banks Lend so Little? University of Leicester, Department of Economics. 23 Andrianova, S., et al. (2011).Why Do African Banks Lend so Little? University of Leicester, Department of Economics 24 In Kenya, Tanzania, Uganda and Zambia, a large majority of banks (88 percent) consider the lack of adequate information the most important deterrent to their involvement with the SME segment. See: Calice et al. (2012). Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia. African Development Bank Group

Balancing risk and striving for impact – Providing finance to SMEs in developing countries | 37

Figure 2: Credit gap in the SME sector: Unserved and underserved (percent)

Percent of SMEs: > 70%

50-60%

< 40%

60-70%

40-50%

No data

Source: IFC. (2013). Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises

Bank capacity for due diligence, monitoring

manding and charging higher interest rates. Unfortunately, strin-

and management

gent collateral requirements are a primary barrier to SMEs ability

SMEs are heterogeneous and tend to have complex needs. They

to access finance28. This is particularly an issue for SMEs in Africa

also operate in different ways than large enterprises and may be

where the type of collateral required by many banks is land title.

less sophisticated financially, lacking in business planning and

This can be an issue in African countries where there are lower

cash flow management expertise25. This means that financial

rates of property ownership and lack of appropriate titling29.

institutions need to have the resources and capacity to carry out sufficient due diligence as well as ongoing monitoring and

SMEs also take issue with high interest rates asked by banks.

management of their SME portfolio. This may not be optimal

Interest rates on SME clients in Africa are 5-6 percentage points

from a cost perspective, especially when compared with large

higher than elsewhere in the developing world. Banks in Africa

corporations which have established credit histories and require

charge on average close to 15.6% for loans to their best small

relatively less effort26,27.

firm borrowers, compared with 11% in other developing countries30. Whilst there is an argument that banks may overestimate

Response to risk by financial institutions

the riskiness of the SME market, in many cases the pricing of

Banks typically offset the risks of lending to SMEs in two ways: by

loans by banks appears rational given expected inflation and

insisting on and applying greater collateral requirements and de-

high historical default rates31.

IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. IFC. (2013). Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises. World Bank Group. 27 Hansen et al. (2012). Assessing Credit Guarantee Schemes for SME Finance in Africa Evidence from Ghana, Kenya, South Africa and Tanzania. Agence Française de Développement Working paper 28 While some banks offer unsecured loans to SMEs, based on cash flow rather than collateral, these loans often come with shorter maturities; in general, collateral requirements have been the norm. IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. 29 One study by Hansen et al (2012) of SME borrowing in Ghana, Kenya, Tanzania and South Africa found that average collateral levels ranged from 106%-120% for small firms, and 101%-130% for medium-sized firms. However, note that collateral

requirements in Germany are 124% for small firms and 130% for medium sized firms, yet access to finance is not considered a major barrier to SMEs there. The authors suggest that it is not the level of collateral required that appears to be the problem for the African countries, but the inflexibility of capital requirements and difficulty in obtaining collateral that particularly affect SMEs. See: Hansen et al. (2012). Assessing Credit Guarantee Schemes for SME Finance in Africa Evidence from Ghana, Kenya, South Africa and Tanzania. Agence Française de Développement Working paper 30 Peria, M. (2009). Bank financing to SMEs: what are Africa’s specificities? Private Sector & Development, Proparco’s Magazine, Issue 1, SME Financing in Sub-Saharan Africa 31 Hansen et al. (2012). Assessing Credit Guarantee Schemes for SME Finance in Africa Evidence from Ghana, Kenya, South Africa and Tanzania. Agence Française de Développement Working paper

38 | Common Fund for Commodities Annual Report 2014

SME banking in developing countries is changing

securing creditors’ rights by allowing out-of-court enforce-

Nevertheless, SME banking is an industry in transition and the

ment of security rights and protecting secured creditors during

missing middle is slowly shrinking. SME banking appears to be

insolvency processes. The annual Doing Business reports pub-

growing the fastest in emerging markets where more banks are

lished by the World Bank Group36 highlight elements of a legal

creating SME units and developing tailored approaches to come

and regulatory framework that encourages lending by financial

to terms with the particular needs and preferences of SMEs and

institutions to the private sector.

the historical challenges of high credit risk and cost to serve32. Banks consider that the SME lending market is large, not satu-

Default rates among SMEs in developing countries

rated and with a positive outlook33.

Reliable data on rates of default (i.e. non-performing loans) among SMEs in developing countries are also difficult to come

However, it is important to note that banks favour some forms

by in the literature37. One large study from 2007-08 with 91

of financing to SMEs over others. Banks may provide overdraft

banks in 45 countries found the average share of non-perform-

facilities or short-term working capital but hesitate to offer

ing loans to total loans for SMEs to be 6.5 percent in developing

loans with longer maturities that SMEs need for infrastructure

countries compared with 4.1% for large firm loans38. However,

investments and growth .

averages conceal the reality across regions. The share of non-

performing loans among SMEs in Africa was found to average In the medium to long term, the recipe to close the SME credit

14.5%, compared with 5.5% among developing countries out-

gap is for governments in developing countries to enact further

side of Africa39. Another study by IFC puts the share of non-per-

regulatory reform to support the enabling environment and

forming loans in Sub-Saharan Africa at 11% for small enterprises

strengthen financial infrastructure35. Key elements include

and 9% for medium enterprises40.

Gluing veneer sheets

Photo: Roger Bymolt

at a mill in Cianjur, Java

IFC. (2009). The SME Banking Knowledge Guide. World Bank Group. Calice et al. (2012) Bank Financing to Small and Medium Enterprises in East Africa: Findings of a Survey in Kenya, Tanzania, Uganda and Zambia. African Development Bank Group 34 Hansen et al. (2012). Assessing Credit Guarantee Schemes for SME Finance in Africa Evidence from Ghana, Kenya, South Africa and Tanzania. Agence Française de Développement Working paper 35 IFC. (2013). Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises. World Bank Group. 36 World Bank. (2015). Doing Business 2015, Going Beyond Efficiency. Available at 32 33

http://www.doingbusiness.org/reports/global-reports/doing-business-2015 Definitions of what constitutes a non-performing loan can also differ between banks, although most banks classify this as missed loan repayment 90 days after the due date. 38 Among banks operating in developed countries, the average share of non-performing loans is 6.93% for SME loans and 2.54% for large firm loans. See: Beck et al. (2008). Banking SMEs around the world: Lending practices, business models, drivers and obstacles. World Bank. 39 Peria, M. (2009). Bank financing to SMEs: what are Africa’s specificities? Private Sector & Development, Proparco’s Magazine, Issue 1, SME Financing in Sub-Saharan Africa 40 IFC. (2013). Financing to Micro, Small, and Medium Enterprises in Sub-Saharan Africa. 37

Balancing risk and striving for impact – Providing finance to SMEs in developing countries | 39

Unfortunately for development financiers, there is a dearth of

Devising a risk management strategy

available data specifically on default rates for long-term loans to SMEs in the agricultural commodity sector in developing countries. Given the additional risks and challenges of com-

Due diligence

modity price volatility and climate factors, it is probably safe to assume that average default rates associated with this profile of SME are higher still.

What the CFC can do

Portfolio management

Risk Mitigation

Credit management

The CFC is an innovator. While there are some positive trends in terms of SME finance in developing countries generally, there are two specific areas of SME financing where others fear to tread: longer term loan provision and the agricultural commodity sector. This is precisely Collateral management

where CFC demonstrates its added value. CFC deals with longer-term loans as they are vital for core infrastructural and other growth investments. However, they have a longer repayment horizon than

A model risk-management strategy needs to cover four main

commercial banks are willing to consider and thus

components: due diligence, credit management, collateral

carry an extended period of risk.

management and portfolio diversification. The underlying premise is that the financier can continuously adapt its

The literature on risk management specifically for

mitigation strategy based on insights it gains from practice. It

long-term lending to SMEs in the agricultural commodity

is well understood that the scope of innovative and develop-

sector lending is scarce. However, as the IFC notes, the challenges of lending to SMEs in agriculture are not insurmountable for institutions that rely on innovative and targeted approaches41. This is what CFC does best. The Fund seeks to understand the challenges and implements strategies which mitigate the risks while achieving impact in agricultural commodity chains and help drive socio-economic development. The Fund particularly targets those SMEs working in production and quality improvements, processing and value addition, technology transfer, product differentiation, and marketing. The Fund looks favourably on those SMEs which are able to take prudent measures to minimise risk whilst striving for growth in a difficult sector. The main criterion for selection of SMEs for support are quality, potential impact, beneficiary focus, replicability, sustainability, cost effectiveness, manageability and dissemination42.

ment impact oriented financing for SMEs in the commodity sector is far from that of commercial banks and mainstream funds who can apply proven predictive models to their lending with a good degree of confidence. The commodities sector is more heterogeneous, fluid and less predictable. This necessitates adaptive learning alongside the use of formal risk modelling approaches. Due diligence Due diligence involves a thorough analysis of the risks relating to a proposed loan agreement and is carried out on all of its potential investments. Many financial institutes, both local, national and even international, suffer from a lack of technical knowledge and experience in the agricultural sector in emerging economies. Any institution implementing a risk management strategy in this sector needs to possess or have access to knowledge on all aspects of production and trade of agricultural commodities. The critical issues one needs to look at during the due diligence process includes the companyâ&#x20AC;&#x2122;s financial position and reporting, its management and ownership structures, its profitability, issues related to processing (such as technology, volume and electricity supply), legal and compliance issues

IFC and GPFI. (2012) Innovative Agricultural SME Finance Models See http://common-fund.org/about-us/organisation-and-profile/

40 | Common Fund for Commodities Annual Report 2014

related to the companyâ&#x20AC;&#x2122;s operation, and its collateral arrangements and value (Table 2).

Table 2: Summary of due diligence issues Critical issues

Description

Finance

• Financial position (solvency, liquidity and profitability and off-balance liabilities) • Financial Reporting (debt service capacity, later stage investment and finance, solvency position and the underlying commercial assumptions)

Management, governance and ownership

• Managing director (entrepreneurial / managerial skills and reputation, financial engagement) • Management team, the board, ownership

Profitability

• Sales side • Supply side (small-holder and plantation set-up)

Processing

• Technology • Volume • Power supply

Legal issues and compliance

• Registration and compliance with laws and regulations • Reputation of managing director and beneficial owners • Loan and security arrangements

Assessment of collateral

• Existing collateral arrangements and collateral value

CFC in agricultural value chains The CFC has more than 25 years of experience in

Collateral management

commodity sector development. CFC is also supported

Collateral management is preferred over charging higher inter-

by a technical advisory committee, consisting of

est rates because it does not risk undermining the project’s fi-

renowned independent commodity experts with long

nancial viability and development impact. However, an SME may

experience in developing countries who understand the

lack the level of collateral desired by the financier to secure the

local context of any relevant SME. The committee reviews

loan, particularly in the case of a start-up enterprise. When col-

project proposals on both financial and technical aspects.

lateral is secured, it is strongly preferred not to have to execute this option in the case of a non-performing loan, but rather to explore all other solutions of restructuring or recuperation of

Credit risk management

funds, albeit from a strong negotiation position. The reasons

Credit risk management is a particular challenge for a com-

are clear – there are costs involved in such execution and legal

modity-based development fund dealing with SMEs operating

procedures can become complicated and drawn out. Moreo-

in volatile markets. Proper identification of credit risk is mainly

ver, seizing assets of an SME would likely threaten the ongoing

done through the due diligence process (described above).

operations of the company as well as threaten the upstream

However, quantifying risk is often hampered by a lack of reliable

stakeholders in the value chain.

and up-to-date data. Considerable effort is required to collect information from public and proprietary databases and from

Collateral also plays a more subtle role in the relationship

partners and clients, in order to make decisions based on the

between the financier and an SME. It confirms a commitment

best data available, however imperfect.

from the borrower, requiring them to ‘put some skin in the game’ and provides a way to exert pressure if need be, although

Credit risk management requires the financier to link its toler-

the latter should be taken with a great degree of responsibility

ance of defaults with the average rate of return and the avail-

so as not to undermine the development goals of the project.

ability of collateral. There is a fine line to tread when a development financier considers the interest rate to charge to an SME:

Table 3 is illustrative of what constitutes an acceptable default

if interest rates are too high then the SME would not be able

rate, based on the collateral ratio versus the portfolio margin.

take the loan, and may look for other stop-gap financing solu-

For example, the table shows that if the collateral ratio of the

tions elsewhere. This is a lose-lose situation because the SME

portfolio is 50% and the portfolio margin is 6%, then the finan-

will likely struggle to find better long term financing elsewhere

cier could tolerate a default rate up to 12% across its portfolio.

and the development financier would miss an opportunity to

The development financier’s main concern is to cover risks,

contribute to its mission of achieving development impact.

rather than to profit from returns on investment.

Balancing risk and striving for impact – Providing finance to SMEs in developing countries | 41

Table 3 Default rate tolerance (%) based on collateral ratio and portfolio margins

Portfolio margin

Collateral ratio 25%

35%

50%

55%

60%

65%

70%

10%

11%

13%

14%

17%

12%

13%

15%

17%

20%

11%

14%

16%

18%

20%

23%

7.5%

10%

12%

15%

17%

19%

21%

25%

11%

12%

16%

18%

20%

23%

27%

12%

14%

18%

20%

23%

26%

30%

10%

13%

15%

20%

22%

25%

29%

33%

Portfolio management A portfolio management strategy should, in principle, aim

Author: Roger Bymolt, Senior Advisor, r.bymolt@kit.nl

to achieve a well-balanced, diversified loan portfolio while

and Wouter Kleijn, Advisor, The Royal Tropical Institute (KIT),

minimizing risk. This implies soft limits on loans to specific SME

Amsterdam.

profiles in each sub-sector, and a spread across the countries and regions included in the portfolio. This reduces overall risk to

Acknowledgements: The authors would like to acknowledge

the financier in the case of a price crash in a given commodity

Parvindar Singh, Axel Gruber, Sietse van der Werff, Andrey

or an economic crisis in a country.

Kuleshov and Nicolaus Cromme of CFC for their contributions to this article.

Photo: Shutterstock

Staying true to the aim of development impact A development financier is required to take a prudent position on risk. It can, however, take a degree of risk in the expectation of development impact, whilst avoiding taking an overly risk adverse position at the expense of achieving its core vision. A development financier failing to see risks as opportunities for development innovation would find itself in territory already occupied by conventional lenders, leaving the ‘missing middle’ of high potential SMEs under-served in the commodity sector. Agricultural commodity value chains offer great opportunities for such risk taking in the interest of development, although careful assessment of risks in this sector still requires much work on the details within the general principles identified above. It is essential that SMEs gain access to longer-term loans, but the implementation of workable modalities to provide such support for SMEs entails new challenges. As this paper clearly illustrates, there is a degree of uncertainty that one must manage to achieve sufficient returns to compensate for inevitable defaults. Rather than take an ‘ostrich policy’, a constructive and practical approach should be based on the principles of transparency about risk so that the entire sector may benefit from adaptive learning and experiences in the years ahead. With proactive management and a strong learning philosophy, financial innovation in agricultural value chains can be a winning strategy, benefiting development financiers, SMEs and commodity dependent developing countries.

42 | Common Fund for Commodities Annual Report 2014

Farming red tilapia on the Mekong Delta, Vietnam

Photo: ©FAO/Asim Hafeez / FAO

III Report on progress of projects under i mplementation This chapter focuses on progress of projects and highlights

of projects and CFC contributions there in). Of the total

trends, patterns and constraints emerging during project im-

cost of USD 73.1 million, the Fund financed USD 22.6 million

plementation in 2014. The overview brings out salient features,

(about 31%) comprising of USD 20.2 million in loans (89%)

patterns and/or trends with respect to:

and USD 2.4 million (11%) in grants. The balance amount was paid as co-financing and/or counterpart contribution

• commitments, financing and disbursements;

by the proponents.

• commodity coverage, project types and beneficiaries; and • project start-up, execution, monitoring and supervision.

Under the old guidelines until 31 December 2012, the Fund had approved 198 regular projects plus a further 150 Fast Track projects, together 348 projects, with an overall cost

Commitments, financing and disbursements

of USD 602.9 million, of which the Fund financed USD 304.1 million (about 50%). The balance of project costs is co-financed by other institutions (USD 130.4 million or 22%)

The new operational guidelines became effective on 1 January

and by counterpart contributions in cash and/or in kind (USD

2013. During the year 2013 and 2014, the Fund approved

168.4 million or about 28%), provided either by the Project

29 regular projects plus a further 14 Fast Track projects, to-

Executing Agencies, collaborating institutions, governments

gether 43 projects, with an overall cost of USD 73.1 million,

or International Commodity Bodies (ICBs). Common Fund

(excluding 4 Investment Funds, as their inclusion of joint

financing comprises USD 275.1 million in grant (90%) and

project total of USD 113.0 million greatly distorts presentation

USD 29.0 million (10%) in loans.

III Report on progress of projects under implementation | 43

According to the Fundâ&#x20AC;&#x2122;s audited statements the direct project

Participation of Private Sector: Private companies contribute

related disbursements in 2014 stood at USD 5.42 million as

technical, commercial and financial inputs to CFC-funded pro-

grant and USD 2.07 million as loan, which adds up to a total of

jects. Moreover, in order to promote dissemination, replicability

USD 7.5 million. In 2015 special efforts will be made to stream-

and sustainability of project results, within and across countries,

line the components of the Agreements between the Fund and

representatives of relevant private companies are often invited

the Recipient of resources to reduce the delays between the

to final review and evaluation workshops organised for most

approval of project and commencement of actual implementa-

projects. Overall, more than 150 private firms have shared the

tion on the ground.

results of the CFC projects through technology dissemination workshops, while over 80 private sector companies are directly

As at 31 December 2014, 164 regular projects had been op-

participating or have participated in the implementation of

erationally completed. In several cases these projects were

approved projects. The interest of the private sector in techni-

completed with some savings from the CFC grants originally

cal cooperation with CFC projects increases by the day. Offers

approved by the Board. The savings are returned to the pool of

from the private sector to seek finance for specific commodity

Second Account resources or the First Account Net Earning Ini-

development activities are increasing.

tiative once the project account is closed. A total of 39 regular projects are currently under implementation or are in various

The ten regular projects approved by CFC in 2014 cover (inter

stages of start-up.

alia) activities in the field of innovative maize trading arrangement, support for cashew crop financing, sisal-based biogas

CFC-funded projects now cover over 40 commodities includ-

production, improved seed production and distribution systems,

ing abaca, arachis, bamboo & rattan, bananas, cashew, cassava,

and value chain strengthening for crops like maize, coffee and

citrus, cocoa, coconut, coffee, coir, copper, cotton, fish, fonio,

shea butter. For each project, strong support and financing is

groundnuts, gum arabic, hides & skins, jute, lead, meat and

secured from private sector partners.

livestock, medicinal herbs and plants, olive, palm oil, paprika, potatoes, rice, natural rubber, shea nut, sisal, sorghum & millet, cane sugar, tea, timber, tropical fruits, spices and zinc, most of which are produced almost entirely in Developing Countries.

CFC-supported regular Projects by Type (100% is total of approved projects) In 2013, project types were reclassified as a result of the new operational guidelines involving more public and private sector participation. The following is the new classification of projects approved in 2013 and in 2014:

Type Production

Number of Projects

Percentage (%)

31.0

Processing

24.1

Market Access / Extension

10.3

Finance

10.3

Partnership

13.8

Economic Development

6.9

Technical Assistance Total

3.4

100

44 | Common Fund for Commodities Annual Report 2014

6.9 13.8

3.4 31

10.3 10.3

24.1

IV Regular Projects Approved in 2014 – by type of financing IV.1 Loans CFC/2013/03/0073: Production & Export of Fresh Vegetables for European Markets

Submitting Institution Location Commodity Total Cost CFC Financing

This project was developed for financing infrastructure and equipment to operationalize facilities for vegetable production and packaging for export to Europe and the Middle-East, thereby creating employment for 500 farm/plant workers and developing an out grower scheme with approx. 1,500

Durabilis/Koga Veg Agricultural Development Plc, Ethiopia Ethiopia Vegetables USD 3,000,000 USD 750,000 (Loan) out growers. The focus will be on the development of horticultural products. Producing high value vegetables with packaging on location is putting to use the dedicated agricultural development area (irrigation) near the regional capital Bahir Dar. It

will add value to primary products and contribute to economic and social development of the various stakeholders in the value chain (increase in production, income, expertise). Promotion of sea freight as transportation modality contributes to sustainable transport and local and regional income.

CFC/2013/03/0038: Expansion of the Dairy Farm and Value Addition Submitting Institution Mosse Melese Dairy Farm Location Ethiopia Commodity Dairy Total Cost USD 576,875 CFC Financing USD 272,000 This project aims to meet the demand for dairy products in the region, especially from two universities near the farm which require hygienic, packaged milk and cheese for the students and staff. Proposed investments

in processing, packing and labelling would add value by improving the hygiene, quality and range of the farm’s products. Introducing improved cattle breeds would increase productivity and the farm’s overall turnover.

By implementing the project, the farm could serve the region’s increasing demand for affordable, high quality dairy products and contribute to greater food security for the local population.

CFC/2013/03/0120: Rural Injini (Engine) Inclusive Maize Trading & Processing

Submitting Institution Location Commodity Total Cost CFC Financing

Joseph Initiative Ltd. Uganda Maize USD 1,929,000 USD 500,000 (Financed from the Dutch Trust Fund)

Please see Chapter VI: Summary of Ongoing Regular Projects 2014, Page 71. CFC/2013/03/0128: Commodity Value Chain Finance Program

Submitting Institution Location Commodity Total Cost CFC Financing

The project aims to stimulate smallholder cashew production by expanding a microcredit program with the CFC’s support. The requesting organization ACFIME is a registered micro-finance institution operating in Burkina Faso. The ACFIME focuses on micro-credit for smallholder farmers and

ACFIME (Agence Communautaire pour le Financement de la MicroEnterprise) Burkina Faso Cashew USD 800,000 USD 400,000 (Financed from the OPEC Fund for International Development (OFID)) farmer groups, in particular women. As of 2012, about 80% of its 8000 clients were women. ACFIME now intends to expand by targeting 3000 cashew producers. Collaboration between producers, processing facto-

ries, traders and ACFIME will sustain the development of the cashew value chain. Incluvest BV in the Netherlands has provided restricted capital to the pilot Cashew Value Chain Finance Program and will assist ACFIME in developing new product/market combinations.

IV Regular Projects Approved in 2014 | 45

CFC/2013/03/0129: Reach Sustainability of Social Business Star-Shea Ltd. Submitting Institution Location Commodity Total Cost CFC Financing

The company StarShea Ltd was established as a social business in Ghana supporting sheanut producers by providing them with access to international markets for shea nuts and butter. Through its linkage with the StarShea network, the company reaches a supply base of more than 10,000 (mainly women) producers. The company procures quality shea nuts at premium prices and provides services for production and marketing. The company requested CFC support for

Star Shea Ltd. Ghana Shea Nut USD 1,560,000 USD 560,000 (Financed from OPEC Fund for International Development (OFID)) the expansion of its program, both in scale and range of services. The project will pursue three main lines of operations: 1 expanding purchases of sheanuts from smallholder women. The company will use its working capital to offer better payment terms and buy sheanuts with a premium against low seasonal price;

2 buying sheanut butter produced at the village level, supplying it to social buyers with organic and/or Fair Trade certification where applicable, direct in unrefined form, or after refining in Europe. 3 implementation of centralized environmentally friendly sheanut processing unit. The processing of sheanuts into butter at a central location would improve quality and significantly reduce environmental pollution compared to smallholder processing.

CFC/2013/03/0147: Milk Fractionation Process as Alternative to Use of Raw Milk Submitting Institution Productos Naturales de la Sabana S.A. ALQUERÍA Location Colombia Commodity Dairy Project Cost USD 9,332,000 CFC financing USD 1,500,000 (Loan) With the aim to offer a market alternative to small scale milk producers, contributing at the same time to milk price stabilization and the modernization of the Colombian dairy sector, the project foresees the development of a milk fractionation plant, which uses

membrane filtration technology (Ultrafiltration, Microfiltration and Reverse Osmosis) for the production of premium price dairy ingredients such as Milk Protein Concentrate (MPC) and Lactose by the Colombian dairy company Alquería S.A. The company will

focus on a business to business marketing, targeting companies of food ingredients. The project is intended to play an important role in offering a market alternative for some 200 small scale milk producers in the region of Cesar, in Northern Columbia.

CFC/2014/04/0038: Mwelya Biogas Plant Tanga – Tanzania

Submitting Institution Katani Ltd, Tanzania Location Tanzania Commodity Sisal Total Cost USD 6,500,000 CFC Financing USD 1,500,000 (of which USD 1 million financed from OPEC Fund for International Development (OFID) and USD 500,000 from the Dutch Trust Fund)

The project entails the construction of two biogas plants in Mwelya sisal estate, in Tanga Tanzania for a total capacity of 1 MW. Katani Ltd (the “Promoter” or “Katani”) is a privately owned company with head office in Tanga City. Katani currently operates sisal decor-

tication factories in five estates in Tanga, Tanzania. The proposed project is expected to have a significant development impact, both in terms of innovation and environment. The

project is at an early stage of development; the project implementation plan is being discussed with the Promoter, as well as the conditionality to the CFC loan. A fully fledged due diligence should be performed before signature.

CFC/2014/04/0064: Revival of the Robusta Coffee Chain, Madagascar

Submitting Institution Location Commodity Total Cost CFC Financing

Sangany Café aims to improve Robusta coffee production and quality in Madagascar, targeting European and domestic

Sangany Café Madagascar (Least Developed Country) Coffee USD 2,336,000 USD 1,078,000 (of which USD 0.5 million will be financed by the OPEC Fund for International Development and USD 375,000 by the Dutch Trust Fund) markets for high-quality green, roasted and wet-processed coffee. The main activities include improving production,

46 | Common Fund for Commodities Annual Report 2014

processing and marketing of Robusta coffee (inter)nationally.

CFC/2014/04/0082: Strengthening of Getco Agro Vision Limited by Establishing Seed Storage, Processing, Packaging and Quality Control Equipmentâ&#x20AC;&#x2122;s Submitting Institution GETCO LTD Location Bangladesh Commodity Spices & Herbs Total Cost USD 1,666,000 CFC Financing USD 833,000 (Financed from OPEC Fund for International Development (OFID)) The project foresees the modernization and up scaling of an existing seed producer company established in Dhaka, Bangladesh, enhancing its R&D, processing and packaging facilities by setting up new infrastructure and purchasing modern equipment. GETCO LTD started

its business in 2006 supplying quality seeds to the national market. Currently this company is successfully implementing small scale breeding, production and marketing of vegetable and cereal seeds in Bangladesh and the development of new seed varieties. CFC intervention will

Stichting ICS Kenya Maize USD 453,200 USD 226,000

enable the optimization of a fully integrated business model for developing, testing, breeding, producing, preserving, packaging and marketing of a higher volume of high quality vegetable and rice seeds to be sold mainly on the national market.

CFC/2014/04/0094: Optimizing the Smallholder Maize Value Chain in Western Kenya

The Dutch development organisation ICS is active in the maize value chain in Western Kenya through two subsidiary companies. Agrics Ltd sells high quality agricultural inputs to smallholder maize

farmers, whilst Nafics Ltd. offers farmers professional storage capacity for their maize as well as guaranteed offtake. With CFC financing, ICS aims to upscale its maize trading business enlarging the

supply network of smallholder maize farmers, enhancing their production, allowing farmers to sell their maize in close proximity to their farms and providing them with certified storage services.

Photo: ÂŠFAO/Ami Vitale / FAO

Submitting Institution Location Commodity Total Cost CFC Financing

IV Regular Projects Approved in 2014 | 47

Photo: ÂŠFAO/IFADWFP/Petterik Wiggers / FAO 48 | Common Fund for Commodities Annual Report 2014

V Fast Track Projects Approved in 2014 CFC/2013/03/0072FT: Commencement of Processing and Milling of Castor Seed into Castor Oil and its By-products

Submitting Institution Location Commodity Total Cost CFC Financing

The Tranquil Mazabs Farms Ltd aims to produce and process castor seeds at a large scale in Nigeria. It currently owns a 40ha plantation, the seeds of which are sold to traders for export. The objective of the investment plan is to expand production of the seeds on a 1000ha farm and to establish a unique processing facility in Nigeria for

Tranquil Mazabs Farms Ltd Nigeria Castor seeds USD 1,875,000 investment USD 58,500 as start-up Grant seed processing (oil extraction and byproducts). It is envisaged that the company will be able to obtain a reasonable share of the market of (imported) castor oil to supply existing pharmaceutical and chemical (paint) industries in Nigeria. The CFCâ&#x20AC;&#x2122;s support aims at supporting initial

technical analysis, in particular with regard to the envisaged expansion of production, introduction of improved planting seeds and production methods, and subsequent quality analysis of the oil obtained after trial processing. This should provide a more sound perspective for the potential of up-scaling of the activities.

CFC/2013/03/0107FT: The SME Impact Investment Opportunities Submitting Institution Financial Alliance for Sustainable Trade Location Peru, Guatemala, Honduras, Nicaragua, Costa Rica, Kenya and Tanzania Commodity Fruits, vegetables, coffee, cocoa Total Cost USD574,536 CFC Financing USD120,000 Co-financing USD249,853 MasterCard Foundation (Cash) USD85,530 CBI (Cash) USD119.153 FAST (counterpart) The project focuses on the development and pilot testing of instruments facilitating impact investment. These instruments facilitating impact investment will support the upscaling of the positive outcomes of commodity projects through financial sources external to the CFC. The project provides practical facilities to bridge the gap between technically successful project results and their financial viability after completion of CFC project financing. Project stakeholders would be assisted in approaching private financiers with interest in commodity sector to determine financial

viability of the project outcomes. The overall objective of the project is to increase access to finance and technical assistance for sustainable agriculture producers and SMEs by improving both the quality and quantity of SME-level data available to potential financiers. The specific objectives of the proposed work relate to the development, testing and dissemination of innovative online instruments that will facilitate the collection of and access to relevant information for impact investment. The beneficiaries of this project are commodity producer cooperatives and SMEs,

their employees and members and their communities. This project will directly support 30 pilot group SME commodity producers by improving their access to credit and appropriate technical assistance. Based on data collected from FASTâ&#x20AC;&#x2122;s previous work, each of these 30 SMEs represents a median 285 smallholder farmers and other individual beneficiaries; this translates into an estimated 8,550 direct project beneficiaries, as well as their families and communities. In terms of gender, each SME has amedian56 female beneficiaries, resulting in approximately 1,680 female beneficiaries across the 30 pilot group SMEs.

CFC/2013/03/0139FT: Autonomous and Sustainable Cocoa and Coffee Production by Indigenous Ashaninka People Submitting Institution Rainforest Foundation UK (RFUK) Location Peru Commodity Coffee and cocoa Total Cost USD 650,000 CFC Financing USD 120,000 Co-financing USD 540,000

V Fast Track Projects Approved in 2014 | 49

The project addresses a support program for indigenous people in Peru to help them establish a sound production and marketing system for coffee and cocoa. Key support activities focus on productivity improvement, quality development/improvement and increasing marketing skills/market access through linking the cooperative with organic and fair trade marketing partners. Key partner is the Peruvian “Pangoa Cooperative” which provides organic and fair trade certifications. Those activities

(which ran from 2009 – 2012) resulted in an established structure and the development of income generating activities for the cooperative members. The current phase of the project (2013 – 2015) aims at strengthening the production process targeting increased production volumes, improved quality of production and more secured market access. The project has been structured as a Development Impact Bond signed in

ebruary 2015, where the CFC is the F grant donor and the Schmidt Family Foundation is the investor. The Schmidt Family Foundation advanced the grant amount to the project implementing agency, Rainforest Foundation UK. Upon the achievement of key project performance indicators, contractually set and verified by KIT, the CFC will disburse the grant. KIT evaluation mission is planned for December 2015.

CFC/2013/03/0165FT: Cotton Contamination Regional Seminar

Submitting Institution Location Commodity Total Cost CFC Financing

The project entails the organization of a regional workshop, as follow-up to a completed project on the prevention of seed cotton

National Coordinator for CFC projects in Burkina Faso Bobo-Dioulasso, Burkina Faso Cotton USD 92,500 USD 80,000 contamination. It is proposed to be a two day workshop, bringing together lead stakeholders in the project to review project experiences and

results, and to discuss and develop appropriate strategies to add value to cleaner cotton, such to the benefit of all parties in the supply chain.

CFC/2014/04/006FT: Preparation of a Technical Dossier for Geographical Indication (GI) for Ceylon Cinnamon in the EU

Submitting Institution Location Commodity Total Cost CFC Financing

The project will support the preparation of a technical dossier to obtain Geographical Indication (GI) registration for Ceylon Cinnamon in the EU.

Sri Lanka Export Development Board Sri Lanka Cinnamon USD 100,000 USD 60,000 (grant) The specific national markets targeted by the Sri Lanka Export Development Board for the promotion of Ceylon Cinnamon within EU are Spain, France and Germany.

The potential buyers are companies engaged in food ingredients, cosmetic & pharmaceutical industries.

CFC/2014/04/0039FT: Sisal Value Chain Development for Inclusive Economic Growth on La Gonave Island, Haiti Submitting Institution Concern Worldwide Location Haiti Commodity Sisal Total Cost USD 240,490 CFC Financing USD 120,000 (grant) The project entails the development of sisal production and primary processing, using decorticating machines, for subsequent supply to SiSALCO, which is one of the main sisal material manufacturer in Haiti. The project promoter is Concern Worldwide, an international humanitarian organization. Concern World Wide will facilitate the development of a network of 200 sisal small-holder farmers

and decortication machinery operators in the Island of La Gonave and will organize them in sisal producer groups. Concern Worldwide has already established 40 sisal nurseries in the western part of la Gonâve. The project has economic and social impact since will promote inclusive growth by giving access to small farmers to sisal produc-

tion and decortication and will introduce a value-chain approach by promoting linkages between producers and processors, such as SISALCO. The project will increase incomes of poor farmers, create new jobs and contribute to food security. The role of Concern Worldwide is key in promoting the value chain approach. Moreover, the project will develop sisal waste as viable animal feed.

CFC/2014/04/0047FT: Commodity Value Chain Tropical Timber from Community Forest Submitting Institution Community Forest Group BV (CFGBV) Location Cameroon Commodity Tropical Timber Total Cost USD 280,000 CFC Financing USD 120,000 (Funded from the Dutch Trust Fund) Co-financing USD 160,000 (provided by FTT BV from the IDH grant)

50 | Common Fund for Commodities Annual Report 2014

The project is based on the experience of CFG BV in sourcing timber from forest communities in Cameroon and take advantage of the new opportunities created by the Forest Community sourcing scheme. The proponent, CFGBV, has developed a model for marketing of community-sourced tropical timber from Cameroon to developed markets. The model involves (I) training of forest communities in sustainable forest man-

agement practices, (II) licensing and certification of their timber under relevant certification schemes (e.g. the FSC), and (III) setting up a physical logistics chain to export certified timber. The operational model is being developed as a social business and will include impact measurement as a separate activity. The project will make a record of the baseline situation in its target communities, noting, in particular whether any formal

“monetary” economic activity is taking place. The project will measure the effects of its activities in the target communities as part of its estimates of the total project contribution to the economic life of Cameroon. The potential impact base of the project is very large, with 182 communities holding Community Forest rights already in 2011. The project will directly involve 4 communities with approximately 1300 inhabitants.

CFC/2014/04/0066FT: Preservation of Coffee Pulp Biomass for further Use as Raw Material in a Bio-refinery Process

Submitting Institution Location Commodity Total Cost CFC Financing

This project is focusing on developing technologies to make use of the coffee byproducts, such as the production of a soluble dietary fiber from coffee biomass which has a high market potential amongst food

Pectcof B.V. private company Wageningen, The Netherlands Coffee USD 273,000 USD 120,000 (returnable grant) ingredient companies. After the approval of this project, the proponent changed the production strategy for their activities in The Netherlands and in Colombia and consequently their investment strategy. They then

decided to withdraw the CFC Fast Track project. PECTOF is working on an investment proposition for the next three phases of the company and might submit a new proposal to CFC for a next CFC Call for proposals.

CFC/2014/04/0103FT: Moringa Agroforestry Technical Assistance Fund

Submitting Institution Location Commodity Total Cost CFC Financing

The Moringa Agroforestry Technical Assistance Fund (ATAF) is a grant-based fund that supports the development impact of investments made by the Moringa Agroforestry Investment Fund. The funds finance programs for training, capacity building and land management.

Moringa Agroforestry Fund Africa/Latin America Agroforestry USD 4,100,000 USD 100,000 (grant) The associated ATAF has been established to mitigate risks and to increase the development impact of Moringa Fund investments. The overall objective of the ATAF is to strengthen the capacity of Moringa Investees to include and integrate

interested members of the local population into agroforestry production systems, so as to improve their standard of living, their agricultural practices, and, thus, to protect the environment.

CFC/2014/04/0107FT: Modern Processing & Value Chain Development for Prosopis Charcoal and Nutritious Animal Feeds, Kenya Submitting Institution Start!e Limited (Social Enterprise) Location Kenya Commodity Timber Total Cost USD 214,000 CFC Financing USD 100,000 (returnable grant, financed from the Dutch Trust Fund) Co-financing Own Contribution USD 99,000 Co-financing USD 15,000 This project intends to produce charcoal of the invasive tree Prosopis Juliflora in Kenya by using an efficient mobile carbonization unit, thus turning a pest into a valuable resource. Local communities will earn a cash income by exclusively harvesting Prosopis wood. Monthly, around 80 tons of Prosopis charcoal will be produced, offering consumers affordably

priced charcoal of predictable high quality, packaged in clean and conveniently-sized bags and available from nearby outlets. An annual collection of 100 tons of Prosopis seeds will be processed into animal feed. This seed collection will benefit women and youth especially, providing them with cash income earning opportunities in an area where jobs are scarce.

The activities will be conducted by Tinder EcoFuels, the company created by the social enterprise Start!e for this purpose, in collaboration with the Kenya Forestry Research Institute. The project will have a duration of 6 years (2015-2021), during which expansion and replication will take place in other Prosopis invaded areas, thereby increasing the number of mobile carbonizing units.

V Fast Track Projects Approved in 2014 | 51

CFC/2014/04/0122FT: Request for support to CFC/2013/03/0128 Commodity Value Chain Finance Program (Cashew)

Submitting Institution Location Commodity Total Cost CFC Financing Own contribution

ACFIME Burkina Faso Cashew USD 30,000 USD 30,000 In kind (land, local labour)

Photo: FreeImages.com/Jose Assenco

The project will establish two secured field offices of ACFIME (Agence Communautaire pour le Financement de la Micro-Entreprise) in the rural area as a complement to the loan project approved by the CFC.

52 | Common Fund for Commodities Annual Report 2014

VI Summary of

Ongoing Regular Projects 2014 Bamboo and Rattan CFC/INBAR/07: Development and Commoditization of the Pre-Fabricated Modular Bamboo Housing in Asia and Africa

Submitting ICB International Network for Bamboo and Rattan (INBAR) Project Executing Agency The International Centre for Bamboo and Rattan (ICBR) Countries Directly Benefiting Nepal, Ethiopia, China Project Cost USD 2,617,930 Common Fund for Commodities USD 1,884,630(Grant) (of which USD 1 million from the OPEC Fund for International Development - OFID) Counterpart Contribution USD 733,300

The project objectives are: 1 to enhance the design and technology of pre-fabricated modular bamboo housing; 2 to establish pre-fabricated bamboo housing production centres in Asia 足(Nepal) and Africa (Ethiopia) by building local capacities and transferring the technology developed in China; to develop community-based production chains by developing linkages between community-owned pre-processing enterprises with processing centres. The project aims at maximising the benefits to the poor, to build capacity of local communities to cultivate, manage, harvest and pre-process bamboo for the housing industry, and to promote bamboo in the housing market in Asia and Africa as a reliable and environmentally friendly building material. The project provides technical and marketing support to rural communities involved with bamboo related income generating activities in Nepal and Ethiopia, on the production and assembly of pre-fabricated bamboo housing panels, by commercializing the technology developed through an INBAR project in China.

The project is implemented by The International Centre for Bamboo and Rattan (ICBR) and supervised by the International Network for Bamboo and Rattan (INBAR). The project, started in February 2009. The total project costs amount to USD 2,617,930, and CFC budget for the project is USD 1,884,630, of which OPEC Fund is contributing USD 1,000,000. The project is fully operational since 2009 and around 84% of CFC funds or USD 1,578,000 have been disbursed as of the date of this report. In accordance with the work plan, bamboo species from both Nepal and Ethiopia have been sent to the PEA in China for strength and durability tests. A consultant was hired to carry out the study on bamboo house design, cost, and marketing channels and his conclusions reveal a promising market in two countries. The project is progressing well, although some retards have been reported in both countries, Nepal and Ethiopia. In Nepal three processing centers were established (Dharan, Nayamill, Butwal). Dharan processing center produces bamboo mats and bamboo curtains. The access to the

local power grid was secured in 2014. The processing centers of Nayamill and Butwal, although having been completed and all the equipment installed, are not operating yet. The delay is due the fact that additional training on commercial and value chain matters should be provided to the labor force. The old bamboo factory is upgraded and is currently is producing bamboo mat and plywood. The construction of the first 40m2 bamboo panel demonstration house was completed. In 2014 the Technical Manual for Prefabricated Modular Bamboo Houses was completed. In Ethiopia the project activities are proceeding at a slower pace. A demonstration house, assembled in China was sent to Ethiopia and exposed to local universities. Three processing centers are currently under construction, the equipment assembly and test run were done in May 2014. Due to the reported delay in project implementation, the PEA has requested a one year extension of the deadline to complete the project activities. This is currently under discussion.

VI Summary of Ongoing Regular Projects 2014 | 53

CFC/INBAR/09: South-South Initiative to Develop an Integrated Bamboo based-development Alternative in Latin America Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution

International Network for Bamboo and Rattan (INBAR) International Tropical Timber Organization (ITTO) International Network for Bamboo and Rattan (INBAR) Ecuador and Peru USD 2,007,300 USD 1,256,470 (Grant) USD 750,830

This project is a market driven initiative targeted for poverty reduction and designed to function effectively in a rapidly evolving market place. The project’s primary investment justification is based on strong market assessment of current and medium term competitiveness which shows that poor communities which grow bamboo in the region are in potentially strong competitive positions against other global producers. It will support Ecuadorian and Peruvian smallholders to produce bamboo efficiently and competitively by training and field trials. The project will support businesses at all levels of the market chain by mobilizing start-ups, technology and management transfer, business services and information, international and domestic business facilitation, credit lines, trade fairs. Besides, it will support government at local and national levels to create Sector Enabling Environments for business and farmers through exchange visits, training

of officials, support to national and local policy development. The project is being implemented at pilot sites covering 6 provinces in Ecuador and 4 departments in Peru. The pilot demonstration sites are equipped with simple processing machines and technological training is provided to farmers, investment events are being organized and based on the project experience, the project team will make policy recommendations to the local and central governments. The project is progressing well. Most activities were implemented directly by INBAR regional office in Ecuador. Five pilot sites in Ecuador and three in Peru finally have been identified and partially equipped with basic machinery, and training workshops were held on bamboo cultivation, harvesting and processing. During a total of 168 workshops about 3,703 people have been trained, of which 1,213 are women. A training manual and a document on bamboo

construction were published and distributed. Four bamboo houses and three bamboo bus stops were built for demonstration purposes during workshops in Ecuador and Peru. New bamboo products were designed and presented. A partnership with the private sector for designing of new production collections in each country following global market trends incorporating local identity, will be further developed. Four platforms were created to promote links between the private sectors processing companies and producers. The link between urban buyers and rural suppliers will be further developed. Moreover, in Ecuador a national bamboo brand will be developed in cooperation with the Ministry of Agriculture. Two round table meetings were organized in two countries to discuss social housing programs and the possible role of bamboo in them. The project completion date is April 2015, although the PEA has requested a one year extension, which is currently under discussion.

Cocoa ICCO/43: Integrated Management of Cocoa Pest and Pathogens in Africa: Controlling Indigenous Pests and Diseases and Preventing the Introduction of Exogenous Ones

Submitting ICB International Cocoa Organization (ICCO) Project Executing Agency The responsible PEA will be the Ghana Cocoa Board while the duties of the PEA will be performed by Cocoa Research Institute of Ghana (CRIG) Countries Directly Benefiting Cameroon, Côte d’Ivoire, Ghana, Nigeria and Togo Project Cost USD 3,121,073 Common Fund for Commodities USD 1,232,102 (Grant) of which USD 615,000 will be provided from the contribution of the OPEC Fund for International Development (OFID) to the CFC Counterpart Contribution USD 937,724 (cash) USD 275,205 (in kind) Co-financing USD 676,043 (from the Cocoa/Chocolate private industry)

The project was approved in April 2012. This project concerns pest and disease management and prevention of major prevailing cocoa diseases which have the potential to destroy the entire cocoa economy in West and Central Africa. In 2012 Africa produced about 70% of the world cocoa output, corresponding to 2.8 million tonnes out of a total of 4 million tonnes. The five countries participating in this project (Cameroon, Côte d’Ivoire, Ghana, Nigeria and Togo) represent 98% of the African cocoa production. These countries face the continuous challenge to

protect their crop against indigenous and exogenous pests and diseases, which constitute one of the major constraints to farm yield maximization, which in turn calls for the implementation of an effective regional strategy on Integrated Pest Management (IPM). The overall goal of the project is to implement a coordinated capacity building program among the major African cocoa growing countries so as to mitigate the negative impact of pests and pathogens on the productivity of cocoa plantation and the quality of cocoa, which every year is estimated to produce an average loss of about 35% of the total marketable cocoa

54 | Common Fund for Commodities Annual Report 2014

production. The project, implemented by the Ghana Cocoa Board through the Cocoa Research Institute of Ghana (CRIG), aims at improving the productivity of cocoa farms by reducing crop losses to indigenous cocoa pests and diseases through awarenessraising and capacity building on environmentally sustainable and cost effective IPM techniques. In addition, the project intend to strengthen in-country and regional capacity for improved pest surveillance for prevention, early detection, eradication and continued control of invasive exogenous pests and pathogens endemic to cocoa growing areas in Asia and South America. >>

The project has been launched on 15 April 2013 in Accra, Ghana and it is currently operational in all the targeted countries. Though each country is at a different level of implementation of project activities, there are common approaches to implementation strategies. The project is operational in Cameroon and Ghana since the last quarter of 2013, while in Nigeria and Togo activities started in the first quarter of 2014 and Cote d’Ivoire was able to start activities only in December 2014 due to administrative difficulties. Despite the initial problems, Ghana, Nigeria and

Togo developed manuals, pamphlets and brochures on major pests and diseases to facilitate training of field staff, extension agents and farmers on the effective use of recommended plant protection products and equipment. The number of farmers and extension agents so far trained in the newly developed demonstration plots overcame the set targets in Togo, Nigeria and Ghana, where the training sessions often attracted more participants than expected confirming the strong project awareness of the beneficiaries. So far 636 farmers and 35 extension workers were

trained on black pod disease prevention against a target of 400. Up to 326 farmers were trained on the efficient use of fungicides against a target of 250 and 585 farmers were trained on the safe use of insecticides against a target of 420, while training on CSSVD control reached so far 95% of its target of 400 farmers. 585 farmers were also trained on spraying machine calibration to avoid over dozing which could lead to serious pesticide residue problems, an emerging food safety problem common in the whole cocoa growing region.

CFC/ICCO/44FA: Capacity Building on Price Risk Management Strategy for Cocoa Smallholder Farmers in Africa Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution Co-financing

International Cocoa Organization (ICCO) TWIN Ltd. (UK) Cameroon, Nigeria, Sierra Leone, Togo USD 654,217 USD 313,828 (Grant) USD125,580 (cash) USD127,365 (in kind) USD52,647 (AFD) USD34,797 (others)

Commodity market volatility has increasingly become a challenge for governments of developing countries which have progressively withdrawn their price stabilization programmes from the agricultural sector as part of trade liberalization and reform programmes. However, while advanced economies can trade and mitigate their risks via financial markets, developing countries have been struggling to adopt similar strategies. The project will equip cocoa producers in West Africa with knowledge and skills necessary to implement a risk mitigation strategies with a mix of instruments to reduce the costs of volatility in the global cocoa markets.

set of integrated risk mitigation techniques to improve the producer situation and the overall efficiency of the value chain. To understand the effects of price volatility, cocoa cooperatives will be trained to pay attention to factors affecting price formation and to take advantage of market information available in the country to form an adequate risk assessment in terms of its costs and the need for mitigation.

The knowledge and instruments necessary to mitigate the effects of global price volatility are, generally, the greatest impediment. In their earlier activities, the CFC and ICCO concluded that local cocoa sector stakeholders needed adequate and practical training in the implementation of hedging transactions in the countries. Based on this understanding, the project would seek to (I) focus on segments of the value chain vulnerable to risk; and (II) develop the local capacity to apply specially designed

The projects achieves its goal of more predictable incomes for cocoa farmers and, eventually, more sustainable long-term outlook for the cocoa sector in West Africa by working towards three practical objectives as shown below. • As its first practical objective, the project has investigated and identified the impact of price volatility on cocoa producers and traders in Cameroon and Sierra Leone where detailed surveys have been carried out. Surveys were targeted at key stakeholders in the cocoa value chain, namely cocoa producers, producer organisations and exporters. In Sierra Leone, local cocoa traders were also surveyed given they are affected by price volatility.

• As its second objective, the project has completed a detailed analysis of price risk management strategies and instruments available to cocoa producers based on the survey results from Cameroon. The project is continuing with the assessment of the results from Sierra Leone. The final assessment that draws on the two data sets, will be verified with cocoa value chain stakeholders and potential users of the strategies during awareness raising workshops in Cameroon and Nigeria, as well as potentially in Sierra Leone and Togo. The project implementation was hampered by the Ebola outbreak in Sierra Leone, and the timing completion of the work there is under review. • The third and final objective of the project concerns the review of price risk management strategies. Based on the results of the review, training will be delivered to selected potential users encouraging the adoption of more effective risk management strategies in the cocoa sector. The project intends to complete the first round of training before the 2015 cocoa harvest.

VI Summary of Ongoing Regular Projects 2014 | 55

Coffee CFC/ICO/45: Building Capacity in Coffee Certification and Verification for Specialty Coffee Farmers in Eastern Africa Submitting ICB International Coffee Organization (ICO) Project Executing Agency African Fine Coffee Association (EAFCA) Countries Directly Benefiting Ethiopia, Kenya, Uganda, Tanzania, Rwanda, Burundi, Malawi, Zambia and Zimbabwe Project Cost USD 4,495,725 Common Fund for Commodities USD 2,000,000 (Grant) (of which USD1 million from the OPEC Fund for International Development - OFID) Co-financing USD 1,500,000 (EU/AAACP Commodities Programme) Counterpart Contribution USD 995,725 The rationale of the project is to build certification and verification capacity within the national institutions. Ultimately the project purpose will be to increase the quality and quantity of certified / verified coffee produced and processed within the AFCA region through training of master trainers, trainer of trainers, certifiers / verifiers (auditors) and farmers. The process of building capacity for good agricultural practices and sustainable production will lead to socially acceptable, environmentally friendly and economically successful coffee production among producers.

The project is tailored to enhance coffee productivity and quality in order to have viable access to premium markets upstream. The farmers trained in the project have their coffee certified with respect to the various certification schemes being applied in the project countries. To this end, a multiple certification approach is being employed to provide the beneficiary farmers with access to market options and better terms of trade. Multiple certification capabilities provide farmers with leverage to switch market options for better terms of trade. The concept does not emphasize better prices but market options. In addition existing new

and emerging coffee sustainability initiatives will improve market efficiency, raise value addition in production and processing and ensure improved coordination between coffee producers and final coffee market. The implementation of project activities has been quite successful. In total, 8,029 farmers, 45 Master Trainers, 111 trainer-of-trainers and 36 auditors have been trained. In addition, 2,500 farmers have been certified/verified 4C. An end-of-projectstakeholders meeting was held in November 2014, where an IT platform was launched.

CFC/ICO/46: Competitive Coffee Enterprises Programme (Guatemala and Jamaica)

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Common Fund for Commodities Co-financing Loan Counterpart Contribution

The main objective of this project is to improve the competitiveness of small coffee producers in two selected regions in Guatemala (Fraijanes and CobĂĄn) and in two selected regions in Jamaica (the Central and Northern regions in the NonBlue Mountain- Lowland). This objective will be achieved through improving quality and productivity as well as organizational and management capabilities. In addition to grant financing for capacity building,

International Coffee Organization (ICO) National Coffee Association of Guatemala (ANACAFE) Guatemala and Jamaica USD 4,750,000 USD 1,500,000 (Grant) USD 1,000,000 (Loan) USD 1,000,000 (Oikocredit) USD 1,250,000 which is being pursued in both countries, the project also envisaged the provision of lines of credit through a combination of loans from CFC and the Dutch-based micro-finance institution Oikocredit. In Guatemala the loan funds would be made available to small holder coffee farmers through collaboration with Banco Rural (Rural Bank) of Guatemala. Positive developments within the countries enabled provision of local loans as required. This

resulted in both countries not effectively pursing the loan facility offered by the project. The identification of Cooperatives and Producer Organizations/ Federations in Guatemala and Jamaica has been completed and activities related to institutional strengthening are underway in both countries utilising the proceeds of the CFC grant. The projectâ&#x20AC;&#x2122;s operational activities ended in the second half of 2014. The final reports are being prepared.

CFC/ICO/48: Sustainable Credit Guarantee Scheme to Promote Scaling up of Enhanced Coffee Processing Practices in Ethiopia and Rwanda

Submitting ICB International Coffee Organization (ICO) Project Executing Agency CABI and Rabobank International Advisory Services (RIAS) Countries Directly Benefiting Rwanda and Ethiopia Project Cost USD 8,013,240 Common Fund for Commodities USD 1,240,210 (Grant) (of which 600,000 USD from the OPEC Fund for International Development- OFID) Common Fund for Commodities USD 2,000,000 (Loan Guarantee) Co-financing Loan Guarantee USD 4,421,780 (Rabobank, Banque populaire du Rwanda, Oromia Bank) Counterpart Contribution USD 351,250 >>

56 | Common Fund for Commodities Annual Report 2014

The project seeks to design and implement a credit guarantee scheme to enable smallholder farmers to gain access to commercial loans necessary to purchase and install improved coffee processing equipment and to enable the cooperative societies to more effectively purchase and export the resulting high quality coffee produced through the improved processing practices. The project addresses the emerging challenges to sustainable production of high quality coffee by promoting good agronomic and processing practices. The accelerated flow of market information to all players in the coffee chain promotes good governance of the cooperatives. Primary beneficiaries are the farmers who benefit from technical and credit support to purchase inputs and farm equipment for coffee production. CABI coordinates grant based activities while Rabobank coordinates the loan operations and also provides co-financing. ILLYCafe is

also expected to provide co-financing to the project. The local participating banks (Cooperative Bank of Oromia and the Banque Populaire du Rwanda) will benefit from capacity building in credit assessment and management. The cooperatives will also be able to export their coffee directly to the consuming markets. Key project outputs/results to date are summarised as follows: i) The process of identifying the cooperatives in both Ethiopia and Rwanda is completed. This exercise was undertaken in a participatory manner based on criteria agreed between the key stakeholders in the project including the participating banks. ii) Capacity building of banks: Training of the bank officers in at the Cooperative Bank of Oromia (CBO) in Ethiopia and the Banque Populaire du Rwanda (BPR) has been completed and an evaluation report prepared. Final hands-on

support will be provided by Rabo Development once the banks start processing loan application by the cooperatives. iii) Capacity building in agronomy-The agronomic training has been initiated in Ethiopia. This involved the Training of Trainers (ToT) in both the Oromia and the SNNP regions of Ethiopia. In total, 105 participants drawn from eight Zones and 11 Woredas of Oromia and SNNP were in attendance. The participants included coffee agronomists, coffee marketing and cooperative promotion experts at zonal and woreda levels, supervisors/development agents and cooperative promotion agents at field level. The trainers were drawn from CABI, MoA, Regional Cooperative Promotion Bureau and Agricultural Development Bureau. Similar training was organised in 2012 for Rwanda in collaboration with NAEB and other NGOs involved in capacity building of coffee cooperatives.

CFC/ICO/49FA: Economic Crises and Commodity Dependent LDCs: Mapping the exposure to market volatility and building resilience to future crises

Submitting ICB International Coffee Organization (ICO) Project Executing Agency UNCTAD Country Directly Benefiting Least Developed Countries Project Cost USD 532,250 Common Fund for Commodities USD 429,250 (First Account Net Earnings Initiative) Counterpart Contribution USD 113,000 (UN OHRLLS and UNCTAD)

The project looks into the impact of the economic crisis on LDCs with a view to proposing policy responses for recovery and measures to insulate / reduce impact of such crisis on their economies in future. In particular, attention is given to the vulnerability of commodity dependent LDCs resulting from their large exposure to external markets, limited diversification, and poor capital base. This vulnerability is particularly important in the context of the volatility of the global markets, exemplified by the current economic and financial crisis. The project looks to elaborate on the relationship between commodity dependence and global market volatility as the underlying cause of issues attracting world attention, e.g. poor economic growth, food insecurity, enhanced poverty, curtailment of expenditures on social sectors etc. As its main outcome the project looks to suggest possible policy measures / interventions areas in the major international events concerned with development challenges facing the Least Developed Countries (LDCs).

The project carried out case studies in selected countries in Africa and Asia with the objectives of: a) closely examining the role of commodities and agricultural productivity in contributing to the graduation objective of the Istanbul Programme of Action (IPoA) for LDCs for the decade 2011-2020; b) assessing the structural weakness, excessive fragility and vulnerability to shocks of the economies of LDCs; and c) reviewing and documenting the challenges arising from volatility of the commodities markets and the recent global economic, financial and food crises on LDCsâ&#x20AC;&#x2122; prospect to meet internationally agreed goals, including those contained in the IPoA. Expert meetings following the conclusion of these studies deliberated on key issues of strategic interest to LDCs with emphasis on the challenges, opportunities and prospects for graduation. The project contributed to the preparatory process for the Ministerial Meeting of LDCs which deliberated on the development challenges of LDCs including graduation and the role of commodities in economic development. The key recommendations have been reflected in outcomes of the 13th United

Nations Conference on Trade and Development (UNCTADXIII),-the Doha Declaration (Doha Manar) and the Doha Mandate. The project further organized the publication of a major study by UNCTAD combining the case studies (synthesis of major findings and conclusions) as well as the essence of deliberations at the expert level and the ministerial meetings. The publication assesses the challenges, opportunities and prospects for meeting the criteria for graduation, particularly by harnessing the role of commodities and improving agricultural productivity. It contains a synthesis of several case studies on sectoral and thematic issues of strategic significance to LDCs and provides policy analysis together with recommendations for action at the national, regional and international levels. The study is, therefore, expected to advance ongoing deliberations on issues of LDCs, including graduation, by the Trade and Development Board of UNCTAD and other relevant bodies of the United Nations system. The project activities are due to be closed in 2015.

VI Summary of Ongoing Regular Projects 2014 | 57

CFC/ICO/51: Rehabilitation of Coffee Production in the DR Congo

Submitting ICB International Coffee Organization (ICO) Project Executing Agency Vredeseilanden Country Office (VECO) Country Directly Benefiting Democratic Republic of Congo (DRC) Project Cost USD 1,611,447 Common Fund for Commodities USD 1,368,990 (Grant) (of which USD 700,000 from the OPEC Fund for International Development- OFID) Counterpart Contribution USD 242,457

The overall goal of the project is to revive the coffee sector in the DRC and reduce the rural poverty at the national level. More specifically, the project seeks to improve sustainable livelihoods of coffee producers affected and/or displaced by war in three Eastern provinces of DRC (Orientale, North Kivu, and South Kivu) thus contributing to supporting their economic integration in their communities of origin through coffee farming. The project will serve as a model for resettlement of persons displaced by war through providing a sustainable income base which will contribute to overall economic gains for the country at large. The establishment of mother gardens and seed gardens in collaboration with national research institutions will allow for the pro-

duction of improved planting material (high yield and disease resistant) which will be disseminated through a network of local nurseries. Well-trained coffee extension services (Office National du Café (ONC)) will ensure that local coffee farmers are supported in the adoption of good agricultural practices which will lead to an increase in productivity. The project will support the creation of linkages between the various actors of the value chain so as to improve quality, marketing efficiency and coffee farm gate prices. Finally the sustainability of the project will be promoted by enhancing of the coffee sector in the DRC through a multi-stakeholder consultative process. The project start was delayed due to problems related to the selection of a suitable

Project Execution Agency. In consultation with the ICO, this was finally concluded in 2013 and CFC signed a Project Agreement with the Belgian NGO Vredeseilanden. In 2014, 60 persons were trained as facilitators for Farmer Field Schools. Nursery development is promising and a total of 2 million seedlings are expected. At Idji 8 Micro-Washing Stations (MWS) are being constructed and preparations are ongoing for 23 MWS in North Kivu. Farmers each contribute USD 50 for the construction of the MWS at cooperative level. The project already enabled the production of excellent coffee with SCAA (Specialty Coffee Association of America) as high as 87% and several containers have been sold to exporters. The challenge for 2015 will be to produce the same coffee quality in bigger quantities.

Cotton CFC/ICAC/44: Development of National Cotton Classing Systems in Kenya and Mozambique

Submitting ICB International Cotton Advisory Committee (ICAC) Project Executing Agency Wakefield Inspection Services Ltd. Project Cost USD 3,051,430 Common Fund for Commodities USD 1,160,000 (Grant) (incl. USD 580,000 from the OPEC Fund for International Development – OFID) Counterpart Contribution USD 1,891,430

The project aims to provide support to the initiative taken by Kenya and Mozambique to develop a 100% bale classing scheme. Such a comprehensive classing scheme will provide all cotton producers (roughly estimated at 30,000 in Kenya and some 250,000 in Mozambique) with an objective description of the quality of their produce and will thus enable them to link their cotton to international standards and prices, resulting in better negotiation positions when selling the cotton. Instrument-based cotton classing is the market-enforced future of cotton classification. The two project countries have initiated investment in the classification instruments and in the required physical and technical supporting infrastructure. The project will ultimately result in both countries having set-up effective classing structures, including the required staff training and organizational aspects of 100% bale testing. The proposed project has a direct link with the

earlier funded project Commercial Standardization of Instrument Testing of Cotton (CFC/ICAC/33). The “Regional Technical Centre”, established in Dar es Salaam, will provide major technical expertise and backstopping to the testing centers which will become operational in both countries within the framework of the proposed project. The project effectively started in March 2012. Effective start-up of foreseen activities was delayed due to the less advanced stage of finalization of operational physical infrastructure. This has to a certain extent gradually been overcome, but its impact still remains. While regional and international expertise development moved satisfactorily, the institutional embedment of the project proved more difficult. Progress during 2014 was satisfactory, be it that delays have been encountered in establishing the required database systems and management structures to secure continuous sample delivery and

58 | Common Fund for Commodities Annual Report 2014

provision of feedback to the ginners/traders. Recently it appears also as if the reduced levels of cotton production in Kenya will provide a major hurdle to ensuring that the foreseen cotton testing structure can operate on a sound cost-recovery basis. In Mozambique, problems focus more on the remaining cumbersome progress in establishing the operational laboratories which should form the basis of an operational system. Current reportings indicate that progress is being made on developing financially sound operating models to enable the running of the systems in both countries on a sound cost-recovery basis and that these models will be industry-wide accepted. Whereas the technical and knowledge components of the national testing systems now have reached a reasonably completed status, final efforts in the coming year will be focused on ensuring finalization of the formal incorporation of the classification procedures and mandatory participation in national legislation.

Fish CFC/FSCFT/29: Promotion of Processing and Marketing of Freshwater Fish Products: Bangladesh, India, Indonesia, Pakistan and Sri Lanka

Submitting ICB FAO Sub Committee on Fish Trade Project Executing Agency Centre for Marketing Information and Advisory Services for Fishery Products in Asia and Pacific (INFOFISH) Countries Directly Benefiting Bangladesh, India, Indonesia, Pakistan and Sri Lanka Project Cost USD 1,498,331.00 Common Fund for Commodities USD 901,574.00 (Grant) (of which USD 450,000 from the OPEC Fund for International Development - OFID) Counterpart Contribution USD 596,757.00

The project is designed to encourage sustainable utilization of freshwater fish resources in the five target countries through appropriate product/market diversification strategies, taking into account the food security and wellbeing of the populations as a whole and the inland communities in the five target countries (Bangladesh, India, Indonesia, Pakistan and Sri Lanka). The project provides support for both export and domestic marketing of freshwater fish and their products from the Asia-Pacific Region in a sustainable manner. Technical assistance will be available to facilitate market development through, and ensuring quality of freshwater fish products marketed. Small and medium scale operators received support from the project for the production and marketing of freshwater fishery products for export and domestic markets. Activities range from training in innovative packaging and presentation to primary fish handling after unloading, value added fishery products production, training on quality

Common Fund for Commodities, of which the OPEC Fund for International Development (OFID) contributed USD 450,000.

and safety, trade promotion events, trade matching missions, investment promotion events and final dissemination workshops. Experiences learned from the project will be replicated by other private companies and in other countries.

The project was approved in July 2010 to be implemented in five countries: Bangladesh, India, Indonesia, Sri Lanka and Pakistan. The Project Agreement was subsequently signed in March 2011.

The project brings direct benefits to fishermen, fish farmers and processors in the five participating countries. With the incorporation of a strong dissemination component in the project, other countries in the region were be able to learn from most of the project outcomes. The project was submitted by INFOFISH (Center for Marketing Information and Advisory Services for Fishery Products in Asia and Pacific Region). INFOFISH is in charge of the project implementation under the technical supervision of the FAO Sub-Committee on Fish Trade. The total project costs amount to USD 1,498,331; USD 901,574 provided by the

In India, Indonesia and Bangladesh, the project activities have been progressing well. In Sri Lanka, identification of participating farms was completed, however in Sri Lanka and Pakistan project progresses have been extremely limited. During the year 2013 efforts were made for the techno-economic study of selected value added products that were disseminated during workshops and dedicated meeting to be held in 2014. The project activities were completed at the end of the fourth quarter 2014, however an extension of the project implementation deadline is under consideration, since the project activities are not yet completed.

Grains/Roots and Tubers CFC/FIGG/46: Sorghum Value Chain Development, East Africa Submitting ICB FAO Intergovernmental Sub-Group on Grains Project Executing Agency European Development Co-operative (EUCORD) Countries Directly Benefiting Tanzania, Uganda, Kenya Project Cost USD 4,044,667 Common Fund for Commodities USD 1,000,000 (Grant) (of which USD 500,000 from the OPEC Fund for International Development - OFID) Counterpart Contributions USD 1,661,667 Co-financing USD 1,383,000

Main goal of the project is to improve the level of food security and living standards of sorghum farmers in Eastern Africa by a quantitative and qualitative increase in sorghum production and the simultaneous provision of a sustainable market. Among other activities, a Public Private Partnership (PPP) will be initiated in order to substantially enhance the sorghum supply chain from primary producers to large scale agroindustrial processors. The strategic goal of the private sector partner East African

Breweries Ltd. (EABL) is to substitute a considerable amount of imported grains through locally produced sorghum. As an outcome of the project, sorghum farmers will be able to improve productivity and increase their net incomes through greater access to improved inputs, processing technologies, and marketing options provided through commercial agribusinesses and producer associations. The project builds upon substantial experiences gained within the CFC financed project

â&#x20AC;&#x153;West African Sorghum Supply Chainâ&#x20AC;? (FIGG/34) that has been awarded with the 2010 World Business & Development Award issued jointly by the International Chamber of Commerce, the United Nations Development Programme (UNDP) and the International Business Leaders Forum. On the basis of the successful implementation of FIGG/34, the proposed project seeks to make a decisive step forward; that is by introducing new beverage brands that are marketed on the basis of their 100% >>

VI Summary of Ongoing Regular Projects 2014 | 59

content of locally sourced raw materials. EABL’s intention is to launch such a new exclusively sorghum based beverage brand as soon as a reliable regional sorghum supply chain is established. Overall progress of the project continues to be very satisfactory. Project related sorghum sales already led to an accumulated increased income for the over 52,000 participating farmers by more than 24 mln USD, realized through 74,000 MT of sorghum sold to EABLby end of 2014. The higher

than expected participation of smallholder farmers is thereby compensating the lack of large-scale commercial farmers so far engaging in sorghum production. One challenging issue remaining is the persistent low sorghum yield achieved by farmers, which is being addressed through the introduction of “ready to use” fertilizer boxes and increased provision of mechanized land preparation services. Due to anticipated yield increases on smallholder farms in the last year of implementation, the PEA is confident that the ambitious end of project production related

targets will be reached, while many of the other targets, e.g. number of smallholder families being reached, have already been reached or have been surpassed. The collaboration and support of the private sector partners remains very good. As a result of a brief discontinuation of sorghum purchases by EABL due to a temporary change in Kenyan tax legislation, the project is now also actively diversifying into alternative sorghum markets (i.e. poultry feed industry and school food programs), to mitigate marketing risk.

Jute CFC/IJSG/21: Development and Application of Potentially Important Jute Geo-textiles

Submitting ICB International Jute Study Group (IJSG) Project Executing Agency National Jute Board (India) Countries Directly Benefiting Bangladesh, India Project Cost USD 3,962,826 Common Fund for Commodities USD 2,045,000 (Grant) (incl. USD 1,000,000 from the OPEC Fund for International Development – OFID) Counterpart contribution USD 1,917,826

The five year project was developed by the International Jute Study Group (IJSG) and jute-sector stakeholders in both countries. Based on earlier research work funded by the Common Fund, the current project strengthens the commercial viability of two important of jute-based end products. These products have the common denominator of jute geo-textiles and they are suitable for use in two identified end-uses namely soil erosion control (river bank protection and hill slope management) and rural road construction under conditions prevalent in Bangladesh and India. In cooperation with local authorities, initially 26 sites for field trials were identified (generally stretching out over several hundreds of meters within regular rehabilitation activities), of which 16 in India and 10 in Bangladesh. To these numbers an additional 10 sites have been added. The project included development of material specifications, field application, formulation of installation protocols and design methodologies for these applications in compli-

ance with requirements and standards set by public and private sector users. Market needs assessments and compliance studies are also included in the project. After an initial cumbersome start-up, as of January 2010, the project has gained momentum, which lasted through-out this year. The mix of research, field trials and marketing studies and analysis has yielded useful results but increasingly the insight grew that the original five year duration was not sufficient to secure adequate results analysis. Based thereon a request for a CFC-budget neutral extension with 18 months (up to end June 2016) was approved. Activities through-out 2014 therefore focused on continuing a number of extensive monitoring activities for each of the 36 field locations in both countries as well as research activities in the technical centres in the two countries and the corroborative trials in the affiliated research station in the UK where trial conditions were simulated under controlled conditions. Market studies and international demand assessments are ongoing. Meetings with eminent researchers and decision

makers in the “standardization committees” which were established by the project have proven to be useful to comment on project activities and provisional results, and seem the appropriate project-advisory bodies to target an as effective as feasible uptake at project end. In addition, numerous promotional activities for jute geotextiles are being held, addressing general public, technical experts at decision making bodies, scientists at universities and technical institutes as well as researchers and managers at jute mills. The combined efforts have already resulted in several governmental bodies in India, formally announcing the acceptance of described jute materials and products in public tender documents for specific infrastructure contracts. Details on 2014 efforts and experiences have been provided in the 2014 Annual Progress Report. Continuous updates on project activities and results can be accessed through the project’s website (www.jutegeotech.com).

CFC/IJSG/25: Increased Production Efficiency in Small-holder Kenaf Production Systems for Specific Industrial Applications

Submitting ICB International Jute Study Group (IJSG) Project Executing Agency United Nations Industrial Development Organization (UNIDO), Vienna Countries Directly Benefiting Bangladesh, China, Malaysia Project Cost USD 3,204,177 Common Fund for Commodities USD 2,107,746 (Grant) (incl. USD 1,000,000 from the OPEC Fund for International Development – OFID) Counterpart contribution USD 1,096,431 >>

60 | Common Fund for Commodities Annual Report 2014

The project set out to develop a sustainable, operational link between on the one hand improved production and processing practices for kenaf and on the other hand contribute to the development of increased uptake of the fibre by the private industry. Included in the project were factory-based trials for identified promising novel uses of the fibre. The project was designed jointly by the International Jute Study Group and UNIDO in close collaboration with national stakeholders in the three project countries. It was envisaged that successful introduction of novel kenaf production and process-

ing techniques and applications would contribute to substantive income increases (possibly 50% or higher) for the more than 150,000 kenaf producers in the project countries, many of which are living below the poverty line. Project results were tol be shared with other kenaf producing countries like India, Myanmar, Nepal and Thailand. Project implementation effectively started in 2010 but was from the beginning hampered by delays, related to both managerial as well as technical issues. In spite of early consultation in 2012 regarding the need for

a possible project extension, no effective measures were taken at that time by the projectâ&#x20AC;&#x2122;s lead agency. Only in mid-2013 an extension request was received and approved. Unfortunately no substantive activities have been (reported to be) initiated since then. The PEA (UNIDO) requested in June 2014 CFC acceptance of project cessation which was conditionally approved. Since then, however, no information on follow-up by UNIDO has been received. In view of the practical impossibility to get the project on track again, it is envisaged that the project will be closed in 2015.

Meat and Dairy CFC/FIGMDP/18: Improving the Productivity and Market Access of Smallholder Cattle Farmers in Mozambique and Zambia

FAO Intergovernmental Group on Meat and Dairy Products Golden Valley Agricultural Research Trust (GART), Zambia Mozambique and Zambia USD 1,798,000 USD 999,000 (Grant) (of which USD 500,000 from the OPEC Fund for International Development) Counterpart Contribution USD 799,000

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities

The project is aimed at improving the volume and value of the marketable off-take of live beef cattle through the enhanced productivity and quality of livestock, thereby increasing the incomes and livelihoods of traditional small and medium scale cattle farmers in the selected regions of Mozambique and Zambia. A total of 1500 cattle farmers, evenly spread between the two implementing countries are directly targeted by the project. The project undertakes numerous training courses on a broad range of topics linked to livestock productivity and marketing. Other activities include training of farmers, lead-farmers and facilitators, especially on areas of market access, improved feeds and feeding and animal health services. The combination of training and extension services will offer small & medium scale farmers the opportunity to market their cattle to the best advantage, thus benefiting of increased incomes, as a result of improved productivity of livestock and improved access to the formal market for their live cattle. The project was launched in August 2011 in Maputo. Field visits and progress reports up to the for the quarter of 2014 indicate that

under the cattle productivity improvement component, 250 farmers were trained in beef production and value addition, while 80 farmers were trained in feed lot management in Zambia. The production of supplementary feed crops and the use of crop by products that are richer in proteins and minerals is being demonstrated to farmer groups in 5 demo centres set up by the project. 120 farmers participated in local field days and exchange visits and have adopted supplementary feeding techniques. Two bush cutters, motorized portable cutting tools for harvesting grass to make hay, were bought for initial testing by farmers. The purpose is to demonstrate the feasibility of this faster mechanized system of collecting grass from the plains for conservation of roughage during the rainy season when the plains are flooded and the animal need additional feeding. The project is also supplying AI services to farmer groups with the result that 65 cattle belonging to 15 farmers have been so far inseminated. Under the market access component, the project could have an important role in stimulating the dialogue taking place at Government level on strengthening the position of the traditional cattle producers in the value chain through the introduction of a

transparent cattle grading system. A grading system of better pay for better quality that could work as an incentive to farmers and could be endorsed by meat processors in Zambia is currently being development as a policy paper to be enforced as a law by the Parliament; The project is expected to contribute in the decision making process through the organization of a national workshop on ante and post-slaughter grading. This activity will be a priority during 2015. In Mozambique, a strong delay in the release of the project vehicle have hampered the implementation of several on-field activities such as training, feed management demonstrations, field days and project monitoring. A monitoring mission held by GART in Mozambique during July 2014 indicated that on field progress has been limited to the setting up of demonstration sites in the project target area for feed and improved fodder production with seed provided by GART and the local production of Leucaena and Moringa seedlings to be distributed to farmers for planting during the 2014-2015 agricultural season with seeds obtained from IIAM (the agricultural research institute of Mozambique) in Maputo.

VI Summary of Ongoing Regular Projects 2014 | 61

CFC/FIGMDP/19: Smallholder Dairy Development in Bangladesh, Myanmar and Thailand: Improving the Bargaining Power and Sustainable Livelihood of Smallholder Dairy Farmers, through the Enhancement of Productivity and Market Access in Dairy Submitting ICB FAO Intergovernmental Group on Meat and Dairy Products Project Executing Agency FAO Regional Office for Asia and the Pacific Countries Directly Benefiting Bangladesh, Myanmar and Thailand Project Cost USD 7,237,229 Common Fund for Commodities USD 1,999,778 (Grant) (of which USD 1 million from the OPEC Fund for International Development - OFID) Co-financing USD 508,901 Counterpart Contribution USD 4,728,550

The project is aimed at improving the bargaining power and sustainable livelihoods of smallholder milk producers in Bangladesh, Myanmar and Thailand and enhancing the production and marketing of quality milk and dairy products. The project interventions focus on improving the quality, productivity and market access of smallholder dairy farmers in the 3 targeted countries. Organization of activities along the value chain including mechanisms for milk collection, processing, pricing, marketing and payment to farmers will vary across project locations to suit the local conditions. The value derived from dairy production will substantially improve. While the project targets specific country interventions based on nationally identified priorities, it also includes a regional element that aims at establishing the Asian Dairy Network to share knowledge and disseminate market information about smallholder dairy across the region. 5000 smallholder milk producers organized in Milk Producersâ&#x20AC;&#x2122; Organisations (MPOs) in 6 selected pilot milk-shed areas are expected to directly benefit from the project in terms of improved market access and milk productivity, reduced post-harvest losses and improved quality and shelf-life of milk and dairy products, leading to higher incomes and food security through increased milk consumption and sales. The availability of more and safer milk is also expected to benefit a further 6,000 children under pilot school milk nutrition schemes. The inception meeting of the project was held in Bangkok and Chiang Mai in February

2011. The third Coordination Meeting of the Asia Dairy Project took place in Bangkok, Thailand in May 2014. Key highlights in Thailand included dairy feeding interventions and dairy extension service provision; monitoring and improvement of milk quality and the spreading among dairy farmers of grass stock production of Napier Pakchong 1, introduced by the project as a new protein rich feeding. As a result, milk yields in Thailand are showing average gains of 10-15% from the beginning of the project, indicating that the 20% sustainable increase milk productivity should be achievable. In Myanmar, the excellent results of the Pilot School Milk Schemes far exceed expectations reaching more than 20,000 primary school students. Key progress highlights in Myanmar included strengthening of farmer groups and enhanced dairy sustainable service delivery, improved forage production and hygienic milk handling; targeted milk processors have made substantial improvements in milk processing and testing technology and protocols for the improvement of milk quality, setting up milk testing laboratories and receiving the certificate of good hygiene from Myanmarâ&#x20AC;&#x2122;s Food and Drug Administration (FDA). As a result of improved availability of grasses and technical training, data from 895 dairy farms in 7 townships reported an average 30% improvement in milk production and the increase of collected milk volume at MCCs. In Bangladesh, activities present a general delay due to numerous nation-wide strikes that limited the number of work days. However, due to the coordination of partners,

several of the project activities have moved forward, among others: the completion of farmer training with a total of 3000 farmers; topics included rearing and management of dairy cows, feeding, hygienic management of cow sheds, hygienic milking, milk handling, grass cultivation; the setting up of a feed mill producing about 250 kg feed / day for the supply of quality, affordable feed to dairy farmers; the dissemination of hybrid Napier and Jumbo grass fodder to farmers; the introduction of milk quality testing with 6 Milk Analyzers; the successful implementation of school milk pilots with appropriate testing, quality control and monitoring procedures in place to ensure quality and safety of milk served to children. For this purpose, the quality control lab of Dhaka dairy plant was upgraded and a guideline document prepared outlining procedures for milk testing, processing and distribution; preliminary data showing an increase in milk productivity from 4 to 7 Lit/day among targeted farmers. Within activities of the regional component, the Asian Dairy Network (www.dairyasia.org) has been launched and currently has approximately 200 members. The Dairy Training Centre in Chiang Mai has been upgraded to a regional training center with the capacity to offer training in (I) milk pasteurization, (II) milk packaging, (III) drinking yoghurt, ice cream, butter and cheese making, and (IV) milk quality testing and management. It continues to play an important role in providing training and expertise to processors, students and other interested stakeholders.

CFC/FIGMDP/20: Diversification of the Caribbean Livestock Sector through the Production of Small Ruminants Submitting ICB FAO Intergovernmental Group on Meat and Dairy Products Project Executing Agency Caribbean Agricultural Research and Development Institute (CARDI), Trinidad & Tobago Directly Benefiting Countries Jamaica and Trinidad &Tobago Project Cost USD 4,031,000 Common Fund for Commodities USD 1,428,750 (Grant) Counterpart Contribution USD 2,443,259 Co-financing USD 159,000 >>

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The project aims at improving the production, productivity and quality of small ruminant meat and the availability of breeding stock in order to enhance the income and food security of small scale mutton & chevron farmers and meat processors in Jamaica and Trinidad &Tobago, reducing, at the same time, the dependency from food imports into the targeted countries. The meat quality will be improved by enhancing safety and quality of livestock through the systematic training of farmers in hygiene and sanitary standards, improved animal husbandry and linkages with service providers, private meat processors and traders. The increase in livestock productivity will be accomplished as a result of strengthening feed management and veterinary services and implementing training activities on improved animal nutrition. A medium scale abattoir will be refurbished in each target country as a training tool for best practices for meat processing storage and packaging.

The project was launched in December 2011 in Kingston, Jamaica and since then it is fully operative in the 2 implementing countries. The project conducted a MTR in January 2014. Some delays have been recorded in the completion of the animal breeding nucleus, mainly due to the complexity and the bureaucratic hurdles of international procurement in Jamaica and to an ORF (Contagious Ecthyma) outbreak in Trinidad &Tobago that required the isolation and the replacement of several animals. In Jamaica the animal stock for breeding and multiplication has been completed only in August 2014 with the local acquisition of 61 improved breed animals (mainly goats). For further multiplication of the stock using assisted breeding technologies, 200 frozen embryos (Katahdin and Dorper) have been imported into Jamaica. 100 sheep to act as recipients have been sourced locally using GOJ counterpart funding. An embryo transfer specialist has

been selected to perform the implantation. At December 2014, including the offspring, the overall project herd counted of 254 sheep and 152 goats for a total of 406 animals. In T&T the animals infected by ORP disease have been fully replaced by government stock animals.The delays in the build-up of the breeding stock led to subsequent delays in the implementation of the over-all program distribution of animals to farmers. The construction of the Training Facility, Farm Office and related facilities has been completed, while training of trainers and training of farmers has started in both countries. In Trinidad & Tobago there has been some progress in pasture development and construction and refurbishment of animal housing and barns. In Jamaica, maintenance works were continued on existing pastures, animal housing and on the abattoir facility located at Bodles Field Station, while construction of the Training Facility has been completed.

Oilseeds, Oils and Fats CFC/FIGOOF/28: Improving the Income Generation Potential of the Oil Palm in Nigeria and Cameroon Submitting ICB FAO Intergovernmental Group on Oilseeds, Oils and Fats Project Executing Agency United Nations Industrial Development Organization (UNIDO) Countries Directly Benefiting Cameroon and Nigeria Project Cost USD 4,656,040 Common Fund for Commodities USD 2,886,040 (Grant) Counterpart Contribution USD 1,300,000 Co-financing USD 470,000 The long-term objective of the project is to promote the development of sustainable production and utilisation of oil palm in West and Central African countries. The project will contribute to poverty reduction in rural areas where palm oil is widely cultivated creating rural and urban employment and value-addition to ultimately improve the economy of the target countries. The focus is on developing small scale palm oil processing enterprises. The project activities have been initiated in 2010.

Cameroon has four selected sites (Sombo, Green Valley, Mkpot and Teze) and Nigeria two sites (Okitipupa, Uyo). At each site, a small-to-medium scale processing capacity will be developed. Progress in 2014 has been less than expected, because of a delay in the establishment of the processing units, also leading to delays in training on operation and effective maintenance programs. Likewise, introduction of new and improved varieties and improved farm management/

agricultural practices have been delayed in both project countries. Once the processing units are fully operational, training activities will intensify both for operators and farmers. At the request of the PEA, the project duration has been extended up till June 2015. The Cameroonian Government formulated a follow-up of this project to sustain the results of the four oil mills and to start up new processing units in other locations.

CFC/FIGOOF/32: Integration of Small Scale Farmers into the Market Economy Through Soybean Value Chains in Malawi and Mozambique

Submitting ICB FAO Intergovernmental Group on Oilseeds, Oils and Fats Project Executing Agency International Institute of Tropical Agriculture (IITA), Nigeria Countries Directly Benefiting Malawi and Mozambique Project Cost USD 2,790,562 Common Fund for Commodities USD 1,756,830 (Grant) (incl. USD 800,000 from the OPEC Fund for International Development â&#x20AC;&#x201C; OFID) Counterpart Contribution USD 1,033,732 Out of which: USD 704,655 (IITA), USD 243,817 (National Institutions) and USD 85,260 (Private Sector)

The project aims to improve soybean productivity and marketing, contributing to the economic welfare of small farmers and processors in Malawi and Mozambique

where the small holder sector commands more than 90% of soybean production. The project targets a 100% increase in soybean productivity to meet the demands for the

food and feed processing industry and to stimulate use of soybean at household level to combat malnutrition. The project was initiated in September 2011. >>

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In Malawi, almost 200MT of certified seeds were produced by members of the National Association of Small Farmers of Malawi (NASFAM) during the 2012/13 and the 2013/14 season. The average yield during the two seasons was 1.55 MT/ha, which is almost double compared to the 0.87 MT/ ha yield achieved by farmers before the project. In total 164 lead farmers (including 64 women) were trained to improve soybean grain production. In Malawi, 147 trained nutrition change agents reached out to more than 1,200 farmer families. Sixteen soy-based recipes were introduced. Two medium scale pilot processing plants were established for food and feed. Various training sessions were organized for participants along the value chain.

In Mozambique, a total of 201 MT of seeds were produced from the 2011/12 season to the 2013/14 season. The yield levels during the three cropping seasons were lower than expected, ranging from 0.50MT (few) to 1.50 MT (majority) although few have attained 2MT/ha and above. In Mozambique, soybean seed production is not yet as efficient in Malawi due to different institutional conditions. More than 3,000 child caregivers (m/w) attended demonstrations how to use soybean in ten local recipes. As a result, 300 malnourished children regained their normal health status. Although soybean is considered as a male cash crop in Mozambique, more than 300 women started to grow soybean for home consumption. Women owned businesses have been incubated and created already more income and independency for

the participant women. Nossara, a women cooperative in Ruace (Gurue district), is recording daily sales of 40 to 50 USD from its bakery, with a total turnover of 12.000 USD in 2014. A similar women group to initiate a bakery has been formed in Lioma and is starting with home based production. Despite the progress made, the overall target of a 100% increase in production will probably not be met by the project, as crop management practices do not yet allow to make optimum use of the new soybean varieties. Women are increasingly taking up soybean cultivation and small-scale processing. Medium scale processing of soybean for food and feed products is developing. The final external evaluation of the project will take place in March 2015, after which the project will be operationally completed.

Olive Oil CFC/IOOC/09: Economic Valorization of Olive Genetic Resources Creation of Pilot Demonstration Nurseries Centres (Quality Enhancement through Nurseries Development) Phase II of Project CFC/IOOC/03

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution

The Board approved the project in October 2012. The total project cost is USD 1,700,000 of which USD 900,000 is requested from CFC as a grant, and USD 800,000 shall be equally apportioned as a counterpart contribution in kind by the four selected partner countries Algeria, Egypt, Morocco and Tunisia. The Project will be implemented by the Institut de l’Olivier (IO), Tunisia. The project is the second phase of the successfully completed project on “Conservation, Characterization, Collection and Utilization of Genetic Resources in Olive”, which had enabled the characterization and conservation of 310 local olive varieties specific to the climatic and environmental conditions of the Mediterranean Basin. The main objective is to increase the productivity and quality of the olive crop, adding value to the commodity and raise the earnings of the olive farmers. There are four specific project outputs: a) establishing a pilot nursery centre in each selected country; b) demonstrating modern methods for the production of certified quality olive plants; c) pilot production of a significant number of top-quality olive plants and disseminating and promoting the use of local genetic material; d) training and technology

The International Olive Oil Council (IOOC) Institut de l’Olivier (IO), Tunisia Algeria, Egypt, Morocco, Tunisia USD 1,700,000 USD 900,000 (Grant) USD 800,000 shall be equally apportioned as a counterpart contribution in kind by the four selected countries dissemination in improved olive orchard management. Each pilot nursery centre, to be developed, will have a minimum production capacity of 25,000 olive plants per year. The pilot nursery will serve as a centre of excellence for the demonstration of modern propagation techniques and updated technologies in nursery based plant production. High quality, high yielding and pest free olive plants of selected local varieties adapted to specific environments, climates and soil proprieties and complying with optimal phyto-sanitary standards, will be propagated and distributed to farmers. Project benefits are derived from the increased value (volume and quality) of olive production and increased skills of farmers and nursery technicians in the four countries. The establishment of pilot nurseries will promote best practices and technologies to other existing nurseries and create a multiplier effect in terms of number of beneficiary farmers and nursery technicians. The project has been launched in September 2013 in Tunis, Tunisia, and it is since then operational in all the four targeted Countries. The First Technical Coordination Meeting and field visit of the project was held in November 2014 in Tunis, Tunisia. The

64 | Common Fund for Commodities Annual Report 2014

monitoring visit to the pilot nursery of the Office National de l’Huile enabled to verify the tangible progress made in purchasing and installing the nursery equipment. It was as well verified the effective set up of the technical procedures required to correctly propagate autochthonous olive cultivars in the pilot nursery. Up to October 2014 the Tunisian nursery produced 21,960 olive plants and the annual target of 25.000 plants will be reached in the beginning of 2015. Several supply requests have been already received from farmers. A similar positive advancement in activity implementation has been reported by the Egyptian collaborating institution, who has been able to propagate 29,000 baby plants in year 1, exceeding the project target. Training of nursery staff is also well advanced as per the given workplan in Tunisia and Egypt. Project activities in Morocco and Algeria experienced delays due to difficulties in finalizing the purchase of nursery equipment, an activity that was completed in Algeria during October 2014 enabling for the propagation of 1500 plants while Morocco indicated the expected completion of equipment supplies and set up of the nurseries by end January 2015. Detailed information and photos are available on the project website: www.olive-pilot-nurs.com.

Rubber (Natural) CFC/IRSG/17: Enhancing Incomes of Smallholder Rubber Farmers in West and Central Africa

Submitting ICB International Rubber Study Group (IRSG) Project Executing Agency International Rubber Research and Development Board Countries Directly Benefiting Cameroon, Côte d’Ivoire and Ghana Project Cost USD 2,980,134 Common Fund for Commodities USD 1,936,701 (Grant) of which USD 1,000,000 from the OPEC Fund for International Development – OFID) Counterpart Contribution USD 1,043,433

The overall objective of the project is to increase the incomes of rubber smallholders in Africa through a process of transfer of technology. To achieve this broader objective the project aims at improving cultivation, harvesting and post harvest handling of raw material; diversification of income base through inter-cropping using the best available technologies; and improvement of the supply chain for natural rubber by developing a network of certified nurseries and introducing the appropriate standards and treatment that would guarantee a better income to the smallholders while meeting the requirements of processors. The project has completed a series of four exposure visits to main rubber producing countries in Asia, namely Malaysia, Indonesia, Thailand and Viet Nam on a “Training of Trainers” basis involving a total of 81 extension agents and leading farmers between the period 2008 - 2012. These exposure visits included familiarization with modern rubber production systems and best agricultural practices which would optimize

the income potential of rubber plantations. Follow up in-country workshops have been conducted in each of the three participating countries and there is evidence of farmers’ adoption of technologies and systems observed in Asia as farmers had developed their plantations following the indicate agronomic practices, established rootstock nurseries for the multiplication and dissemination of higher yielding clones replacing poor quality local seedlings, adopted intercropping of maize, yam and banana during the immature phase of rubber, and developed stronger farmers’ associations. Especially the establishment of rubber farms and rootstock nurseries under private initiatives has developed lead by farmers who participated in the exposure visits. Due to a delay in the replenishment of the project account pending the approval of the Audit report for the period 2007 – 2012, on field activities during 2013 and 2014 have been hampered by the lack of funding. Nevertheless, smallholder baseline studies have been completed and primary (budwood)

and secondary (budded stamp) nurseries have been established for the multiplication and distribution of improved (higher yield and pest resistant) planting material to farmers in all the three implementing countries: 133,300 budded stumps were distributed to 96 farmers in Ghana, while 106,000 were distributed to 56 farmers in Cote d’Ivoire and 280,000 were distributed to 160 farmers in Cameroon. A total of 450 smallholder rubber farmers in the three participating countries have been trained in nursery and propagation management, pest & diseases control, budding techniques, and rubber intercropping. Finally an international clone exchange program was approved in 2014 to be implemented under the coordination of the International Rubber Research and Development Board (IRRDB), executing agency of this project. Under this program, African rubber growing countries, which do not have national breeding programs, will benefit from the exchange of up to 40 improved rubber clones from Asia with the result of enhancing the productivity their rubber plantation.

CFC/IRSG/21: Promoting Development of Economically Viable Rubber Smallholdings in West Africa Submitting ICB International Rubber Study Group (IRSG) Project Executing Agency International Centre for research Agroforestry (ICRAF) Countries Directly Benefiting Nigeria Project Cost USD 2,956,000 Common Fund for Commodities USD 1,941,000 (Grant) Co-financing USD 1,015,000 This is a demonstration project designed to enhance economically viable rubber cultivation in smallholdings through:- planting of good quality planting materials of high yielding clones; reduction of immaturity period; successful integration of high value arable crops with rubber thus providing sustainable income for the smallholder during the immature phase; and diversification of income base and integrating high value agro-forestry tree crops and medicinal plants in rubber based farming systems during the mature phase. The project was launched in 2009 and reached its final completion in July 2014,

following a budget neutral 12 month extension. It was implemented by the Rubber Research Institute of Nigeria (RRIN) in collaboration with ICRAF in five rubber growing states (Akwa Ibom, Delta, Edo, Kaduna and Ogun). Some key project outcomes include: • 2,038 smallholder farmers across 5 states (Edo, Delta, Akwa-Ibom, Ogun and Kaduna) of Nigeria have been trained in nursery and propagation management, pest control, budding techniques, handling of latex, effluent management, rubber processing using sheeting machines for production

of standard rubber, rubber intercropping and mixed farming with indigenous fruit (mango) / medicinal trees; • 16 Ha of rubber rootstock nursery and 3 Ha budwood garden with improved Nigerian and exotic clones established and being used to multiply and distribute improved rubber clones to farmers and other users; • 410,000 certified rubber budded stump of high yielding clones produced and distributed to farmers; • 150,000 high value indigenous trees were produced and planted in Rubber Agroforestry model farms; >>

VI Summary of Ongoing Regular Projects 2014 | 65

• 107 Rubber agroforestry model farms established for demonstration and dissemination of best practices in Rubber Agroforestry (Intercropping to + income during the mat/immature phase of rubber); • One week study tour to India in January 2014 for 5 farmers and 4 government officials (RRIN, Federal Ministries of Trade and Investment and Agriculture and Rural

Development). A report on this activity is available in file; • Following the exposure visit to India, a farmers’ marketing network and a rubber sheeting facility was set up with the purchase of seventeen modern lohashilpi machines delivered to RRIN; • Increased area under rubber cultivation in Nigeria by 159.1ha through the establish-

ment of rubber agroforestry model farms; • Triple fold average annual increment (0.7m) on rubber tree height in Rubber Agroforestry model farms compared to 0.2m in pure rubber stands over 5 years; • Production of a 15 minutes video documentary on Rubber Agroforestry project in Nigeria: www.youtube.com/ watch?v=xU9O5ZYyjWU

Sugar CFC/ISO/32: Development of Sugarcane Variety Improvement and Seed Multiplication Programme for Nigeria and Cote d’Ivoire

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution

The overall objective of the project is to enhance incomes and livelihoods in the sugar sector through the establishment of a sugar cane variety improvement programme. The programme involves the importation, evaluation and selection of adaptable high yielding cane varieties to replace the pool of poorly performing varieties currently in use in both Nigeria and Cote d’Ivoire. This initiative will contribute to a reliable supply of improved sugarcane raw materials to existing and new sugar projects which will in turn generate rural employment and generally enhance the socioeconomic circumstances in the cane growing communities of the participating countries.The project will focus on the provision of improved varieties of sugarcane for farmers. This will ensure the realization of more cane and

International Sugar Organization (ISO) National Sugar Development Council of Nigeria Nigeria and Côte d’Ivoire USD 2,112,175 USD 1,609,803 (Grant) USD 502,372 sugar tonnage per hectare which will in turn lead to enhanced incomes for the farmers. The versatility of the crop makes it very useful for the production of not only sugar but also ethanol and electricity generation which are added advantages of the adoption of this commodity approach. The problem of poorly performing sugarcane varieties affects the whole of the West Africa subregion. Each country has attempted to solve this problem individually. The project will facilitate regional collaboration in addressing this problem. The fourth technical mission took place in July 2014 and revealed that the trials were well underway and that harvest data in plant cane was already available from the trial at Numan, while for those of Ikenne and

Tsaragi growth and development had been quantified, the harvest was in November 2014, and as of the date of this report we have not yet received the relevant data. In Cote d ‘Ivoire, the trial laid down at Ferkessedougou had been subject of a severe infestation by termites and had to be abandoned in 2014, while some of the varieties included in trial at Zuenoula had failed to establish themselves properly, probably due to a delay between preparation of cuttings and actual planting of the trial.” One year extension – until July 2016 - of project activities was granted. The budget neutral extension was necessary due to delay experienced in sourcing test varieties, erosion and termites that affected 2 locations in Nigeria and Cote d’ Ivoire.

Tea CFC/FIGT/05: Capacity Building and Re-Juvenation of Tea Smallholdings in Indonesia and Bangladesh Submitting ICB FAO Intergovernmental Group on Tea Project Executing Agency Indonesian Tea Board Countries Directly Benefiting Indonesia and Bangladesh Project Cost USD 1,994,630 Common Fund for Commodities USD 1,843,030 (Grant) (of which USD 921,515 is contributed by the OPEC Fund for International development) Co-financing USD 151,600

The aim of the project is to strengthen the knowledge-base of tea small-holder farmers and rejuvenate smallholdings in Indonesia and Bangladesh for enhanced productivity and quality improvement by producing high quality leaf that is free of extraneous chemical residues. The project also aims at strengthening the bargaining position of the low income small holder tea farmers in the value chain and will therefore have consequent impact on poverty

alleviation and job creation in the tea sector of the two countries involved in the project. The project provides training to smallholder tea farmers in Indonesia and Bangladesh on technical aspects and leadership skills, for sustainable tea growing in an environmentally friendly manner. The model of Self Help Group, which has successfully developed the tea smallholder sectors in India, has been introduced to the

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selected farmers. The mechanism ensure the sustainable field inputs such as nursery plants, fertilizer, agro-chemicals, compost, sprayers, to the Self Help Groups. Project’s activities in Indonesia were completed in March 2014, with about 1,000 smallholder farmers, distributed in the 3 sites, successfully participating to the project. An international consultant was hired to implement the Self Help Group mechanism. >>

Training for smallholder tea farmers in Indonesia and Bangladesh on technical aspects and leadership skills, for sustainable tea growing in an environmentally friendly manner was provided. The project also monitors in what manner the improved knowledge base as a result of the training, will impact on productivity and leaf quality and the additional income/remuneration generated for the smallholder tea producers.

Self Help Groups were formed to ensure that the sustainable field inputs, such as nursery plants, fertilizer, agro-chemicals, compost, sprayers are provided to those groups, which have the financial resources to sustain or expand small holding production to supply to the growing local and regional markets. In Indonesia the unused project budget amounts to USD 289,000.

In Bangladesh the project activities started with a significant delay due to lengthy Government project approval procedures, and as a consequence the project is at a very early stage of development. As of the date of this report two nursery have been built, but the training activities to tea smallholder farmers have not started yet. As a consequence the operation completion date was extended until June 2015.

Tropical Fruits CFC/FIGTF/24FA: Production of Certified Fruits and Vegetables in the Greater Mekong Sub-Region

Submitting ICB FAO Intergovernmental Group on Tropical Fruits and Vegetables Project Executing Agency FAO, Regional Office in Thailand Countries Directly Benefiting Laos, Myanmar, Thailand and China Indonesia and Bangladesh Project Cost USD 1,800,616 Common Fund for Commodities USD 1,664,866 (Grant) (First Account) (of which a contribution of USD 100,000 from the OPEC Fund for International Development) Co-financing USD 135,750 Parallel Financing USD 709,620

The project objective is to upgrade production, handling and transport technologies to improve product safety and enhanced quality as well as output volume. The project will also aim at helping farmers organise themselves into effective producer-marketing group and clusters; and integrate the supply chain participants with the purpose of extending distribution ranges, improve feedback on market requirements, reduce product wastage, consolidate income levels among producers and share inherent risks. The project is mainly operating in two LDC countries (Laos and Myanmar). The project has completed its core activities in 2014. In Myanmar, the project implemented a wide-ranging programme of fruit fly control, including testing and implementation of cost-effective Integrated Pest Management Packages. In other crops, the project provided support for the introduction of new varieties targeting export markets (e.g. sweet peppers, watermelons) and supported the introduction of integrated supply chain management for organic vegetables. Furthermore, the project supported the establishment and implementation of Good Agricultural Practices system and Sanitary and Phytosanitary Standards for fresh fruits. As the result of this work, SPS and GAP certifications are now available to local producers of fresh fruits and vegetables through the Ministry of Agriculture. With support from the Project, Myanmar Fruit Flower and Vegetable Producer and Exporter Association (MFFVPEA) have started conducting trade events to promote fruits

exports. The first Myanmar Mango Festival was organized professionally from 10th to 12th May 2014 in Yangon. It was organized by MFFVPEA in close consultation and supports from the Department of Agriculture, the Department of Trade Promotion and Department of Tourism, the CFC/FAO project team and FAO Regional Integrated Pest Management / Pesticide Risk Reduction Programme and GIZ Myanmar. In the event about 191 varieties of mango collected countrywide have been demonstrated to potential buyers. The public-private partnership played important role as a platform for all participants to discuss any challenges and share opportunities and solutions. The project has co-organized a seminar as a learning platform for mango stakeholders from growers to consumers to promote awareness on quality mango. The project also presented the opportunities for mango exports at the THAIFEXX exhibition in close collaboration with the Department of International Trade Promotion- Ministry of Commerce of Thailand and Koelnemesse from Germany. The representatives of Big M Group Co., Ltd and Myanmar Golden Produce Co. Ltd., confirmed that this exhibition helped them promote different varieties of mango from Myanmar such as Sein Ta Long, Yinkwe and Shwehintha to the international market. Thanks to THAIFEX exhibition, the two companies are now exporting to Singapore, Brunei Darussalam, and Hong Kong. Thanks to post-harvest practices and packing house technology, their fresh mangoes command MMK70-80/kg as opposed to only MMK40/

kg by the ordinary market-price. Exports to Dubai, Malaysia, Korea, and Germany are now under consideration. In Lao PDR the project maintained the same integrated approach, focussing on the crops with export and development potential. The project trained farmers and started implementing an integrated Pes Management system for production of certified cabbage for export, aiming for the requirements of specific markets, such as Thailand. Green mustard had been introduced as a promising high income crop, taking advantage of the interest from private sector buying companies identified in the earlier years of the project. As part of the projectâ&#x20AC;&#x2122;s ongoing efforts to support integrated supply chain management by the participants of the project, a model small-scale packing house has been built in September at the Lao-China Agricultural Research Centre in Lao PDR. Thai consumers deem Lao products to contain lower levels of chemicals and pesticides. The potential for upscaling the activity horizontally is foreseen as there is strong demands for various vegetables in Thailand. The Project facilitated the formation of production-marketing groups in Boloven Plateau and tested the market development through transport logistics across border between Thailand and Lao PDR with a contract farming model. In collaboration with Department of Agriculture of Lao PDR, the fresh produce will be inspected and certified with LaoGAP Standard. With this certification, the produce is deemed fit for export to international markets.

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CFC/FIGTF/25: Pilot Project on Production of Fruit and Vegetable Chips Using Vacuum Oil-bath Dehydration Technology

Submitting ICB FAO Subgroup on Tropical Fruits of the Intergovernmental Group on Bananas and Tropical Fruits Project Executing Agency All China Federation of Marketing and Supply Cooperatives (ACFMSC) Countries Directly Benefiting China with dissemination to African countries Project Cost USD 1,608,014 Common Fund for Commodities USD 868,595 (Grant) Counterpart Contribution USD 739,419

This pilot project focused on the processing of fruit and vegetable chips with the use of Vacuum Oil-bath Dehydration Technology (VODT). The Nanjing Institute of Comprehensive Utilization for Wild Plants (NJICUWP) has since the late 1990s undertaken VODT development and successfully designed the new VODT equipment offering greater flexibility whilst costing approximately a quarter of the cost of imported equipment. The project achieved the expected results. • A knowledge Centre (KC) was established within the NJICUWP who conducted the research on VODT processing technology for more than 10 varieties of fruits and vegetables including durian; banana; mango; papaya; mushroom and taro. Samples were produced and detailed production processes and parameters for production and training requirements were recorded.

• NJICUWP further carried out extensive R&D resulting in third-generation VODT equipment which was subsequently manufactured by Jinan Newstar Machine Co., Ltd. The prototype has been finetuned and will be produced for further dissemination. The equipment is believe to improve work efficiency; reduce energy consumption; decrease production cost; raise production efficiency; and increase the overall economic benefit. • The VODT production line was established and operational in 2011 and is currently located in a processing facility co-owned by the farmers’ cooperation of Yikan Xuan papaya which was incorporated as part of this project. • A technological training system was also put into place and 5 cooperatives specialized in fruit and vegetables obtained technical support. The farmers of the cooperatives were trained on planting according to the GAP standards, especially with regard

to the use of pesticides and fertilizers. The training achieved good results including the improved cultivation levels of farmers and the increased yield and quality of Xuan papaya and mushroom. • The project resulted in improved sales of Fruit and Vegetable Chips through the use of new marketing approaches; shortened manufacturing periods; and by significantly developing the market. Good economic benefits have been observed with achieved sales volume of up to USD 815,000 and profits of approximately USD 100,000 for 2013 recorded at the newly established processing facility. Farmer productivity per-unit area and incomes from fruit and vegetable chips were improved vis-à-vis the situation in which the farmers sold fresh produce. The project outcomes and experiences have been included in the final completion report that can be accessed at the CFC website.

Tropical Timber CFC/ITTO/80: Marketing Eucalyptus Citriodora Essential Oil

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution

Essential oils are a high value-added byproduct of eucalyptus. The project goal is to put this resource to use for poverty alleviation in rural areas. This will be achieved by reaching out to forest communities and disseminating techniques to extract essential oils from planted Eucalyptus citriodora. Specifically, the project provides village community members with the technologies and expertise to extract essential oils and implements measures to create a marketing chain for essential oils. Having started in 2010, the project has been completed in 2014, achieving its core goal of introducing a semi-industrial process of essential oil extraction to guarantee a more stable level of production, better yield and better and more uniform quality of the oil, resulting in better income for the villagers.

International Tropical Timber Organisation (ITTO) Service National De Reboisement (Snr) – National Reforestation Service Congo and Democratic Republic of Congo USD 622,261 USD 480,511 (Grant) USD 141,750 Five artisanal extractors were placed in the selected sites of Ossio, Odziba, Loudima, Loandjili in the Republic of Congo, and Kinzono in RDC, having each a capacity of 1 m3 or 1,000 liters for the boiler and the tank. These can provide a yield of approximately 6%, translating into the production of some 200 liters of essential oils per village by the end of 2013. Additional advantages of the semi-industrial extractors are the reduction of the time consumed in the extraction process to about 8 hours versus 12-14 hours with the artisanal extractors. The market immediately available for essential oils in Africa is estimated to be 8 times larger than the current levels of production, which gives ample scope for the replication of experience.

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As of today, there are 60 ha of village plantations of Eucalyptus citriodora available thanks to the project in the Republic of Congo, while plants and land have been prepared to establish 37 ha more. During the 3 years implementation of the project, some immediate impacts can be highlighted as follows: • Promoted rural employment, in particular for women, who are involved in the harvesting of biomass and bottling the essential oil; • Increased the area of private and village plantations of Eucalyptus citriodora • Has the potential to substantially increase the income to the rural areas of Congo • If not only training the rural villages in better use of their natural resources, >>

but is also s hifting the way of production of essential oils, from artisanal to a more semi-industrial process â&#x20AC;˘ It can be easily replicated to other rural areas of Congo.

The Congolese government has expressed its commitment towards the sustainability of the project after the financial support provided by CFC, by further promoting the establishment of plantations through its National Afforesta-

tion and Reforestation Programme (ProNAR). The main incentive will be the additional income that the village communities will receive from the sale of the essential oil. The project has been completed in 2014.

CFC/ITTO/81: Promoting Timber Processing in Congo Basin

Submitting ICB International Tropical Timber Organisation (ITTO) Project Executing Agency Economic Community of Central African States (ECCAS) Countries Directly Benefiting Cameroon, Gabon and Central African Republic (LDC) with dissemination to the Democratic Republic of Congo (LDC) and the Republic of Congo Project Cost USD 1,887,714 Common Fund for Commodities USD 1,253,345 (Grant) (of which a contribution of USD 600,000 from the OPEC Fund for International Development) Counterpart Contribution USD 634,369

The specific project objective is the implementation of a support system for the promotion of further timber processing for stakeholders in member countries of the Central African Forests Commission (COMIFAC) and ITTO member countries (Cameroon, Gabon and the Central African Republic) and piloting and dissemination of the approach in the Democratic Republic of the Congo and Congo. The project intends to directly assist the artisans, SMIs/SMEs whose methods of operations are intermediary between those of artisans and the industrialists involved in the value-added processing of timber in the form of sawn wood and veneer. The project furthermore indirectly benefits trade partners of the crafts, SMIs/SMEs, and industrialists (suppliers of consumables, glue, varnish material); forest managers; member states; decision-makers who will have relevant indi-

be operational. The intended mission of the supportive structure is to enable a favourable environment for the further processing of timber by acting as a coordination entity among the relevant stakeholders (private and public sectors, financial sector, academy and training institutions, forest owners, regional and international community, etc.).

cators made available to them for guiding the development of the industrial and craft segments of the sector; and consumers within each country and the region as a whole who will have a broader range of products derived from locally-processed timber offered to them, and international consumers who will have access to new products manufactured from African timber. In terms of employment generation in rural and urban areas, if the countries are benchmarking with Western Africa, additional 37,000 jobs can be created. At the end of the project, the sector of further timber processing will be identified (number of processing plants, operational procedures, stakeholders needs); its economic weight will be assessed and from the identification the various stakeholders needs, its potential for growth will be known, the missions of the supporting structures will be refined, and the supportive structures will

The project effectively started operations in 2013 and was expected to complete by 2015. However, in the course of 2014 the ITTO recognized that adjustments will be required to the project to address the apparent lack of progress with the core activities beyond the inception phase. Upon the request by the ITTO, CFC started consultations with the project stakeholders on amending the project implementation arrangements. The objective is to bring these consultations to conclusion and re-start the project in 2015 pursing its original objectives.

VI Summary of Ongoing Regular Projects 2014 | 69

Projects Approved Under the New Guidelines as of 2013 Grants FC/ILZSG/267: Identifying Growth Opportunities & Supporting Measures to FaciliC tate Investment in Value Chains in Landlocked Countries Submitting Institution Location Commodity Total Cost CFC Financing Co-financing

UN Office of the High Commissioner for LLDC’s Global Various USD 418,000 USD 335,000 (Grant) USD 83,000

The project contributes to the review of the Almaty Programme of Action for Land Locked Developing Countries (LLDC’s) in 2014.

of share of exports, foreign direct investment (FDI) and employment. For instance, the study found that from 2011 to 2013, more than half of all exports from 27 out of 32 LLDCs were primary commodities. Resource-based goods (i.e. primary goods and resource-based manufactures) accounted for some three-quarters of all exports from LLDCs as a group. These and other findings clearly indicate that the commodity sector provides an essential link between LLDCs and the global economy.

Studies undertaken by UNCTAD in preparation for the review revealed the significance of commodity dependence in Landlocked Developing Countries (LLDCs). On 4 November 2014, UNCTAD, CFC and UN-OHRLLS lead a high-level dialogue at the Second United Nations Conference on Landlocked Developing Countries in Vienna, Austria sharing their findings in greater detail. The discussion on “Turning Commodity Dependence into Sustainable and Inclusive Growth”, looked to exchange views on the policies and strategies necessary to enhance the role of commodities in the development of LLDCs. The study confirmed the importance of commodities in LLDCs, especially in terms

Transforming commodity dependence in LLDCs into sustainable, inclusive and equitable economic growth requires action at the regional, national and international level. At the regional level, the study identified transit system improvement as the key priority. Nationally, LLDCs must link the export commodity sector with domestic sectors as part of their national development strategies. This includes, among other things,

putting commodity issues at the heart of domestic development policies, facilitating investment flows to commodities sector, effective participation of LLDCs in regional and global value chains, promoting (non-) traditional exports and acquiring technologies that improve productivity. International support should include transfer of technology and related know-how, as well as forms of financing that encourage commodity diversification and value addition. The outcomes of the project have been integrated into the inter-institutional preparatory process for the review of Almaty Programme and reflected in the Vienna Programme of Action (VPoA). Collaboration in follow-up on the recommendations of VPoA is envisioned with specialist institutions participating in the Inter-Agency Working Group (IAG) preparing the review. This includes UN OHRLLS, UNCTAD, UNDP, UNECA, the World Bank.

CFC/2012/01/0044: Commodity Branding Submitting Institution Windward Strategic ltd. Location Malawi, Zimbabwe, Mozambique, India, other ACP countries Commodity Sugar/Chillies Total Cost USD 1,600,000 CFC Financing USD 475,000 (Grant) (incl. USD 230,000 from the OPEC Fund for International Development – OFID) Co-financing USD 562,500 (Shell Foundation) Counterpart Contribution USD 562,500

The project will establish a portfolio of sustainable consumer brands across two commodity sectors for the benefit of commodity producers. For that, the CFC will provide funds to Windward Strategic Ltd. who will create value-adding consumer brands for the commodities i.e. sugar, pineapple, coffee and chillies which will

then be commercially marketed under licensing agreements. The CFC investment will be limited to the sugar and pineapple value chain. Origin of the branded sugar will be mainly Mozambique and India with the target markets of USA and the EU. Pineapples will be sourced from Ghana for export to the EU. Windward will invest in

70 | Common Fund for Commodities Annual Report 2014

intellectual property that adds value to primary commodities (“brands”) and license these to commercial partners with existing supply chains and product expertise. A share of the added value from branding sugar and pineapple (targeted volume is around USD 6 mln distributed over >>

10,000 farmers) will be channelled directly to small farmers and involved labourers. Social benefits associated with the products will be one of the key brand messages. For sugar this share will be approximately 30% and for pineapples 50%. These figures will be externally audited by recognized and specialized auditors in order to maintain credibility of the brands. The project is financially and technically supported by the Shell Foundation as part of their mission to establish sustainable enterprise-based solutions to development problems. While CFC funds will be provided as a grant, in return, a percentage of all incurred licensing fees

will be transferred to CFC during at least four years to fully recover the funds. The project is operational since November 2013 and developments for sugar are very promising, since the project was successful to win one of the world’s biggest sugar trader) as a powerful commercial partner for distribution and marketing of the sugar brand that has in the meantime been developed. While the brand is currently being fine-tuned according to consumer research, it is planned to launch sales in late 2015. The sugar trader will pay a licensing fee for every ton of sugar marketed through the new brand and this licensing fee will be distributed between the sugar producing farmers, Windward and the CFC.

Efforts to create a pineapple brand however were abandoned since they were hampered by a very difficult market environment in form of an ongoing price war of the two biggest global pineapple traders, and due to internal difficulties within the company of the initially selected pineapple producing partner company in Ghana. The CFC Executive Board therefore approved to reallocate the earmarked funds for pineapples towards the chilli brand development part of the programme. The chili brand has been fully developed and the company Netrade has taken up the license and introduced it into the Zimbabwean market in February 2015. CFC funds are being used to also enter the Malawi and South African market and to differentiate the brand with a broader product packaging range.

Loans CFC/2012/01/0076FA: SME Agribusiness Development in East Africa MatchMaker Fund Management (MMFM) Burundi, Kenya, Malawi, Rwanda, Tanzania, Zambia Financing services Euro 10 mln USD 520,000 (Loan - First Account) USD 26,000 (as a grant provision to cover administration and legal costs) Co-financing Balance to be sourced from other consortium partners

Submitting Institution Location Commodity Total Cost CFC Financing

The SME Impact Fund (SIF) provides mesolevel financing to SMEs in agribusiness in East Africa. SIF provides financing as loans, from USD 65,000 to USD650,000, average loan size USD200,000. Four main types of loans are available: (I) input finance; (II) crop finance; (III) farm investment; (IV) company investment. SIF provides financing for SME’s in local currency, at commercial rates ~18-20%pa, up to 60 months. Target companies: (I) 2-99 employees; (II) currently operating in agricultural value chains; (III) registered in East Africa; (IV) have financial need within

the SIF target product range. Collateral not a precondition, in any case below 125%-140% required by banks. The SIF successfully opened its lending operations upon reaching its initial size of EUR4.0 mln. The target size of the SIF is EUR10.0mln is expected to be reached within 3 years. The SIF expects to close 15-20 loans per year, with average size USD 0.2mln. With average lifespan of a loan of 24 months, repayments will be recycled for new loans. Project partners are currently Dutch NGO’s like Hivos and Cordaid, private investors in-

cluding MatchMaker Associates (MMA). The local banking partner will be NMB Bank of Tanzania, which will give SIF strong outreach to rural districts in in Tanzania. Technical partners include Financial Alliance for Sustainable Trade (FAST), MMA, and Tanzania Horticultural Association (TAHA) with Business Development Services (BDS) project. In 2014, SIF disbursed 14 loans reaching the total loan portfolio size of over USD 800,000 with outreach to nearly 2500 smallholder farmers. The SIF continues its fundraising efforts to reach the target size of 10mln by 2016.

CFC/2013/03/0120: Rural Injini (Engine) Inclusive Maize Trading & Processing

Submitting Institution Location Commodity Total Cost CFC Financing

The project aims to support Ugandan smallholder farmers to efficiently bulk and process maize to sell to regional wholesalers. Joseph Initiative Ltd. takes an integrated approach to trading, combining rural collection centers with village buying agents to collect maize in small quantities from remote farmers and pay them

Joseph Initiative Ltd. Uganda Maize USD 1,929,000 USD 500,000 Dutch Trust Fund on the spot. This trading model provides a predictable market that incentivizes smallholders to improve quality and intensify production. Joseph Initiative’s business model concentrates on farmers producing 1 metric ton or less per year, as they are below the

aggregation thresholds for commercial traders. A reliable market and access to inputs and finance will increase farmers’ incomes. Including a large number of producers, increasing productivity and potentially reducing the current 40% post-harvest losses could lead to substantial improvement in Uganda’s food security.

VI Summary of Ongoing Regular Projects 2014 | 71

Equity CFC/2012/01/0268FA: Partnership with the Africa Agriculture and Trade Investment Fund (AATIF) Submitting Institution AATIF Location Africa Commodity Various Total Cost USD 125 mln (current fund size) CFC Financing USD 2,000,000 (Equity – First Account) Co-financing Main other current investors are KfW and Deutsche Bank. The associated grant based Technical Assistance Facility is being financed by the German Ministry for Development Cooperation and Economic Development (BMZ) AATIF, as an Impact Investing Fund, seeks to realize the potential of Africa’s agricultural production, manufacturing, service provision and trade for the benefit of the poor. The Fund provides tailored financing directly to companies and indirectly via intermediary investment companies/ financial institutions who are engaged in agricultural value chains. The CFC will invest in so called Class C Shares to capitalize the Fund and finance its investment activities. Class C Shares provide a risk buffer for private investors (who invest in more senior Class B or A shares) as they

bear first losses. The current total fund volume of AATIF stands at USD 125 mln available for investments with anticipation of further growth. Individual investments have a target range between USD 1 mln and USD 15 mln. The investment fund itself is complemented through a Technical Assistance Facility that provides grant funding for projects to strengthen the developmental aspects of individual investments. This Technical Assistance Facility is managed under a service agreement by the CFC. Through

its independent Social and Environmental Compliance Advisor (ILO), AATIF is committed to closely monitor the social and environmental impact of each investment. The Commitment Agreement to invest in Class C Shares has been signed in November 2014. So far AATIF has provided debt finance for four direct investments (farming operations) and three indirect investments (credit lines for regional banks that are expanding into agricultural retail lending sector). AATIF managed to produce its first modest operational profit in 2014.

CFC/2013/02/0084FA: Partnership with the Africa Agriculture SME Fund (AAF-SME) Africa Agriculture SME Fund Africa Various USD 36 mln (fund size) USD 2,000,000 (equity), USD 100,000 (as a grant provision to cover administration and legal costs) Co-financing Main other current investors are the Agence Française de Dévéloppement (AFD), PROPARCO, the Spanish Government (AECID) and the African Development Bank (AfDB) The associated grant based Technical Assistance Facility is being financed by the European Union

Submitting Institution Location Commodity Total Cost CFC Financing

The CFC will invest into the AAF-SME fund who supports private sector companies that implement strategies to enhance and diversify food production and distribution in Africa by providing equity or quasi equity funding and strengthening their management. AAF-SME provides finance to enterprises active in the primary, secondary and tertiary sector along agricultural value chains in Africa on the scale of 0.15 million to 4 mln USD. The fund is set up to invest in up to 10 individual investments. AAF-SME will be complemented through a Technical Assistance Facility (TAF) that provides grant funding for complementary projects to strengthen the developmental

aspects of individual investments with an emphasis on the establishment of outgrower schemes. AAF-SME Fund, is Africa’s first equity fund with a focus solely on food producing and processing SME throughout the continent. SME’s active in the African agricultural sector offer significant growth opportunities and have an important impact on economic development and job creation, and are therefore widely regarded as the key for the economic development of Africa. AAF-SME investments will demonstrate that (equity) investment in the African agricultural SME sector is a commercially viable proposition with manageable risks

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associated. AAF and AAF-SME are considered as flag ship Impact Investing Funds in Africa. Success could lead to widespread recognition and replication. The Fund has completed its investment phase and is now invested in 7 different agricultural SME across SSA that focus on different value chain segments from mixed farming operations to organic fertilizer production. As expected, the currently witnessed transition phase from SME type companies towards transparent shareholder entities proves to be difficult for some AAF investees. However after restructuring and reorientation through AAF, the value results should increase substantially.

CFC/2013/02/0085FA: Partnership with the EcoEnterprises II Fund (EcoE II)

EcoEnterprises Partners II L.P. Latin America Various USD 27 mln (current fund size) USD 500,000 (equity), USD 25,000 (as a grant provision to cover administration and legal costs) Co-financing Main other current investors are the Dutch Development Financial Institution FMO, the Interamerican Development Bank (IDB) and the European Investment Bank (EIB)

Submitting Institution Location Commodity Total Cost CFC Financing

EcoE II seeks to invest mezzanine capital in small companies with a proven business model at expansion stage which are active in the sustainable agriculture and forestry (products) sector. The targeted investee companies supply into a continuously growing market for organic food products and certified wood predominantly in the US (through main stream retail channels such as Walmart/ Home Depot and similar dominant food retailers and home improvement stores). The CFC will provide funds to capitalize EcoE II and finance its investment activities. Adding value to primary products that are cultivated and/or processed in an environmentally sustainable way can have a significant development impact when commercial

viability can be proven for all value chain stakeholders. The vast and globally appreciated natural resource base of Latin America can be seen as a comparative advantage that presents a widely untapped opportunity for sustainable food and timer products out of the region. As of to date a similar fund focusing on sustainable food and timber production with a clear commercial focus does not exist. The existing investment pipeline is an outcome of the most successful (predecessor) EcoE I Fund investments in start-up enterprises and informal businesses since the year 2000, which have in the meantime graduated into companies with a proven business model that are ready to expand. EcoE II seeks to consolidate the promising results of EcoE I and bring 12 to 15 suc-

cessful individual investments to a level that will make enterprises interesting for purely commercial investors and banks. Investments will demonstrate that the sustainable use of natural resources can be commercially viable and indeed can prove to be a competitive advantage. Success could lead to widespread recognition and replication by commercial funds and to a more receptive regional banking sector. By the end of 2014, EcoE II has so far invested in six companies, which are engaged in eco/organic niche products such as tea, juices and dried fruit from the Amazon. None of the companies is considered â&#x20AC;&#x153;at riskâ&#x20AC;? and all are showing substantial growth in sales. EcoE II pipeline is substantial with a number of further closings imminent.

CFC/2013/02/0086FA: Partnership with the Moringa Agroforestry Fund

Moringa Agroforestry Fund S.C.R. Latin America/Africa Various EUR 50 mln (current fund size) USD 1,500,000 (equity), USD 75,000 (as a grant provision to cover administration and legal costs) Co-financing Main other current investors are FMO, PROPARCO, the Spanish Government (AECID) and the Latin American Development Bank (CAF)

Submitting Institution Location Commodity Total Cost CFC Financing

The CFC will provide funds to the Moringa Agroforestry Fund which seeks to invest in African and Latin American agroforestry projects that are able to commercially compete with deforestation drivers (like cattle ranching, crop farming and timber harvesting) while generating a clear positive impact on local populations and the environment. Moringa will invest in manageable scale agroforestry projects (between 3-15,000 ha/project) which usually have an industrial nucleus (being the investee company of Moringa) and a wider circle of integrated smallholder farms/value chain partners in its vicinity. The fund seeks to invest in 12 to 15 individual investments. Land degradation and the necessity for further intensification of agricultural production on a sustainable basis are two key issues for development of many countries in Latin America and Africa. Commercially viable agroforestry systems allow for intensified land

use with diversified (risk mitigating) income streams, while at the same time rehabilitating or even improving degraded land. Marginal land is frequently occupied by the poorer strata of the population, which makes investment in commercial agroforestry systems a very powerful tool to alleviate poverty.

through a Technical Assistance Facility (TAF) that will provide grant funding for projects to strengthen the developmental aspects of individual investments. The CFC has been asked to provide remunerated management services for this Facility and is currently developing an appropriate operation structure for TAF.

All Moringa investments are required to have a demonstrable positive impact on the environment and the livelihoods of local populations. Through its investments, Morgina targets a total of 8,000 new jobs created with an income effect on 35,000 dependants. In addition, some 60,000 outgrowers are expected to be associated to commercial investments of Moringa, with a development impact on 340,000 dependants. As an indicator for environmental impact Moringa targets to reforest at least 40,000 ha with 10 mln tons of carbon sequestrated. Impact will be monitored and measured through an internal E&S System Framework. Moringa investments will be complemented

In the meantime Moringa has closed its first deal in the form of an equity investment in an existing coffee plantation in Nicaragua, with the goal of developing an agroforestry based outgrower scheme that will enable participating smallholder to continue to grow coffee despite the devastating coffee leaf rust fungus. A second investment is likely to be made in Tanzania in cooperation the French cement producer Lafarge, who wants to source fast growing wood biomass for its energy consuming processing plant.

It is likely that further institutional investors will enter Moringa in 2015 and substantially increase the overall fund size. VI Summary of Ongoing Regular Projects 2014 | 73

Regular Projects Approved in 2013, but not operational in 2014 The projects mentioned below have been approved by the Fundâ&#x20AC;&#x2122;s Executive Board in 2013 but did not reach the stage of becoming operational in 2014. Consultations

with proponents have not yet resulted in satisfactory meeting possible conditions set by the Executive Board or in reaching mutual agreement on implementation and

financing modalities as at 31 December 2014. Details regarding these projects can be found in the 2013 Annual Report, Chapter IV.

Grants CFC/ICO/53: Revitalization of the Coffee Industry in Yemen Submitting Institution International Coffee Organization (ICO) Location Yemen Commodity Coffee Total Cost USD 4,934,900 CFC Financing USD 250,000 (Grant) incl. USD 125,000 from the OPEC Fund for International Development (OFID) CFC/2013/02/0074: Improvement of production of Paprika in Burkina Faso and Niger for processing and export Submitting Institution National Coordination Unit for CFC projects in Burkina Faso Location Burkina Faso and Niger Commodity Vegetables (dried paprika powder and paprika oleoresin) Total Cost USD 4,410,000 CFC Financing USD 250,000 (Grant) Co-financing Contributions from partners still to be secured

Loans CFC/2012/01/0030: Commercial Farm Development in Central and Northern Ethiopia

Solagrow plc Ethiopia Vegetables USD 6,255,000 USD 1,100,000 (loan), USD 55,000 (as a grant provision to cover administration and legal costs) Counterpart Contribution USD 5,155,000 Submitting Institution Location Commodity Total Cost CFC Financing

CFC/2012/01/0113: Micro Leasing in Commodity Value Chains Submitting Institution Equity For Tanzania Ltd. (EFTA) Location Tanzania Commodity Various Total Cost USD 290,000 (Loan) CFC Financing USD 145,000 (Loan), USD 7,250 (as a grant provision to cover administration and legal costs) Co-financing USD 145,000 (CORDAID)

CFC/2012/01/0237: Integrated Food Management System â&#x20AC;&#x201C; Warehouse Inventory Credit through Commodity Exchange Submitting Institution AMIS InterAg Ltd Location Malawi, Zambia Commodity Grains and other crops Total Cost USD 900,000 CFC Financing USD 400,000 (Loan), USD 20,000 (as a grant provision to cover administration and legal costs) Co-financing USD 500,000 from consortium partners

74 | Common Fund for Commodities Annual Report 2014

CFC/2013/02/0010: YIGFAM Glove Factory

Submitting Institution YIGFAM Glove Factory Location Bahirdar, Ethiopia Commodity Hides and skins Total Cost USD 1,000,000 CFC Financing USD 300,000 (including incl. USD 200,000 from the OPEC Fund for International Development – OFID), USD 15,000 (as a grant provision to cover administration and legal costs) CFC/2013/02/0041: Sustainable and Secure Smallholder Systems at Scale (4S@Scale)

Submitting Institution HIVOS, The Netherlands Location Kenya, Tanzania, Uganda Commodity Coffee Total Cost USD 20,820,000 CFC Financing USD 1,500,000 USD (Loan) (incl. USD 1,000,000 from the OPEC Fund for International Development – OFID), USD 75,000 (as a grant provision to cover administration and legal costs) CFC/PD/2013/02/0051: The taste of Nepal - Community production and processing of Nepalese spices & herbs

Submitting Institution Terwel BV Location Nepal Commodity Spices & Herbs Total Cost USD 763,000 CFC Financing USD 363,000 (Loan) (incl. USD 250,000 contribution from the OPEC Fund for International Development – OFID), USD 10,890 (as a grant provision to cover administration and legal costs)

Equity CFC/2012/01/0067: Organic Tea Marketing and Production Development for Smallholders in Shuangjiang Ethnic Minority Autonomous County of China Submitting Institution Yunnan Shuangjiang Mengku Tea Co. Ltd (‘YSMT”) Location China Commodity Tea Project Cost USD 2,571,429 CFC financing USD 900,000 (direct equity investment in a Chinese JVC), USD 45,000 (as a grant provision to cover administration and legal costs) Counterpart Contribution 1,671,429 CFC/2013/02/0016: Promotion Project for Standardized Flower Cultivation in Chongqing Flowers World

Chongqing Sai-Ying-Si Industrial Co., LTD Chongqing Flower Cultivation USD 3,430,000 USD 1,000,000 (direct equity investment in a Chinese JVC) (incl. USD 500,000 contribution from the OPEC Fund for International Development – OFID), + 5% grant USD 50,000 (as a grant provision to cover administration and legal costs) Counterpart Contribution USD 2,430,000 Submitting Institution Location Commodity Total Cost CFC Financing

VI Summary of Ongoing Regular Projects 2014 | 75

Photo: ÂŠFAO/AFP/Hoang Dinh Nam / FAO 76 | Common Fund for Commodities Annual Report 2014

VII Regular Projects Completed in 2014 Cotton CFC/ICAC/40: ProCotton: Improving Productivity and Marketing of Cotton through Strengthening of Selected Producer Organizations in Eastern Africa

Submitting ICB International Cotton Advisory Committee (ICAC) Project Executing Agency Solidaridad (Netherlands) Project Cost USD 840,000 Common Fund for Commodities USD 500,000 (Grant) (incl. USD 250,000 from the OPEC Fund for International Development – OFID) Counterpart Contribution USD 340,000

The ProCotton program intends to provide a range of services to selected producer organizations, thereby increasing producer incomes in sustainable manner. Based on self-assessments (if need be supported by project expertise) producer organizations can request support from the project in five fields: technical assistance (focus on agronomic practices); access to finance; market access; capacity building; and diversification/ value-addition. The CFC-supported project was a pilot activity to assess the perspectives of using this approach to effectively access and support producer organizations in the African cotton sector, based on successful experiences with other commodities in other regions. The project was approved by CFC in April 2011. The project has made an effective start-up in both project countries (Tanzania and Zambia) in October 2011 and was completed early in 2014. In Tanzania, the main counterpart was Biosustain, a ginning/trading company that

aims to set-up sustainable contract farming systems with producers organized into semi-informal groups (“primary societies”). The project has succeeded in strengthening the company, which in turn led to increased farmer training and support, stronger internal management and administrative capacities and more effective cooperation between farmers and the buying/trading company. Yields for an incremental 5000 farmers are reported to have increased from some 500kg of seed cotton/ha to approximate levels of more than 720 kgs/ ha. In additional rotational crops have been introduced. It is estimated that average farmer income has increased with some USD 500 – 700/ha. The activities in Tanzania have been evaluated by an external team of experts. The report has been placed on the Fund’s website.

the CAZ in assisting and involving increased numbers of farmers in its awareness and training activities, up to levels of 32,000. Training focused on effective farming practices, crop management and achieving input reduction costs due to lower level of pesticide and other chemical usage. Also in the case of Zambia, attention was given to the possibilities of crop rotation and intercropping where feasible. Due to external influences, in particular drought and adverse weather conditions, the activities in Zambia could not provide straightforward results in terms of yield increases. There was, however, broad consensus that the introduced crop differentiation was effective in cushioning against lower cotton yields. Also the Zambia activities were subject to an external evaluation. The report has been placed on the website.

In Zambia, the counterpart was the Cotton Association of Zambia (CAZ). The project was instrumental in increasing the reach of

The PEA’s final report has been published and can be accessed through the CFC website.

Grains/Roots and Tubers CFC/FIGG/41: Enhanced Livelihood Opportunities of Smallholders in Asia: Linking Smallholder Sweet Sorghum Farmers with the Bio Ethanol Industry

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Counterpart Contribution

The project addressed an important issue: to enable smallholder farmers - including those located away from major industrial settlements - to participate in the market of biofuel production. Sweet sorghum has been identified as an effective feedstock for

FAO Intergovernmental Group on Grains ICRISAT China, India and Thailand USD 3,013,601 USD 1,997,579 (Grant) USD 1,016,031 bio-ethanol production. The project mobilised groups of smallholder sweet sorghum farmers in order to improve crop productivity and enhance production and marketing of sweet sorghum to distilleries. It also engaged private seed companies and input suppliers

for effective input delivery mechanisms. Apart from direct delivery arrangements for neighbouring villages, the project linked marginal farmer groups with commercial distilleries through introduction of decentralised processing of sweet sorghum into syrup. >>

VII Regular Projects Completed in 2014 | 77

Overall the project sought to contribute to increased incomes to farmers, without compromising food and fodder security. The participation of the private sector was to ensure a demand driven approach and practical results that could have a considerable demonstration effect for duplication. After a successful first year of implementation in India and China, the Indian private sector cooperating partner closed operations due to unfavourable policies adopted that prevented the processing plant to operate on an economically viable level. This is in contrast to China, where the project has managed to link up with two private sector partners (the large industrial conglomerate

ZTE and a small rural distillery) who both now purchase sweet sorghum on a forward contract basis from surrounding farmers. Cooperation with ZTE was the main driver of success. With assistance of the project the company was encouraged to adopt the commercial production of ethanol with Sweet Sorghum as one of their strategic goals. As a result, by the end of the project ZTE had planted some 3,000 ha of sweet sorghum on own land and with smallholder outgrowers on marginal land in Inner Mongolia which is not suitable for other crops. At the same time ZTE was pursuing the license approval process for commercial ethanol production for blended car fuel

in China after which ZTE will commence commercial production and marketing of ethanol for blending into fuel. This can be regarded a milestone for Chinese ethanol production as it is the first license issued for this purpose in China and possibly only the second one officially issued worldwide. Throughout this process the project assisted with the supply of seeds and establishment of a private sector based seed system, training of 2,000 outgrower farmers, sweet sorghum variety test trials for marginal areas and the development, trial and fine tuning of various outgrower scheme models. The Project Completion Report will be available on our website shortly.

CFC/FIGG/43: Small Scale Cassava Processing and Vertical Integration of the Cassava Subsector in Southern and Eastern Africa – Phase II

Submitting ICB FAO Intergovernmental Group on Grains Project Executing Agency International institute of Tropical Agriculture (IITA) Countries Directly Benefiting Madagascar, Tanzania and Zambia Project Cost USD 4,561,153 Common Fund for Commodities USD 2,298,370 (Grant) (of which USD 1,000,000 from the OPEC Fund for International Development – OFID) Counterpart Contribution USD 2,262,783

The overall objective of the project was to enable the development and commercialisation of good quality and competitive cassava products in a manner that significantly improves the economic welfare of the stakeholders, particularly the small-scale farmers and processors of the targeted countries. Phase I of the project (implemented between 2003 and 2007) successfully identified market opportunities for the development and promotion of primary cassava derivative products, especially High Quality Cassava Flour (HQCF), as tradable commodities in the region. In addition, phase I identified novel cassava processing technologies that are suitable for rural conditions. The following phase II project aimed at providing the needed catalyst to stimulate private sector investment, including credit institutions, in the sector by establishing profitable two-step HQCF pilot supply chains in each of the three project countries. The project sought to serve as a model for investment in HQCF enterprises by local entrepreneurs

and business community across Eastern and Southern Africa. As the main result of the project the model processing facilities were established in each country on different processing levels and successfully interlinked to end new end markets such as bakeries. As a consequence, approximately 15,000 direct beneficiary farmers were included to the supply chain created through the processors and the market. In addition, the project provided technical assistance to many other research and development projects and the private sector, who eventually established many HQCF and starch value chains in the three countries, especially, in Tanzania and Zambia. The number of indirect beneficiary farmers and processors reached by the project is estimated to be more than 40,000. With technical assistance provided by the project, several private investors have by now invested in either commercial production of cassava, or processing facilities, even

78 | Common Fund for Commodities Annual Report 2014

though the initially anticipated provision of credit through the local banking sector did not materialize, which hampered foremost investments in HQCF processing facilities. Therefore, so far only in Tanzania a commercial bakery is now seriously considering in installation of equipment to process cassava flour that is marketable for urban mass markets. As a first time innovation the project developed a HQCF consumer brand according to common “fast moving consumer goods” principles, including market research and package design, in order to further develop cassava into a marketable and accepted urban consumer good comparable to wheat flour (www.mpishimkuu. com). Even though the project is formally completed negotiations are currently ongoing with a French cassava processing company in Tanzania to take on the license for marketing in Tanzanian supermarkets. The project has been subject to undergone an impact evaluation, which will be available on our website shortly.

Oilseeds, Oils and Fats CFC/FIGOOF/27: Development of Export-oriented Sesame Production & Processing in Burkina Faso and Mali Submitting ICB FAO Intergovernmental Group on Oilseeds, Oils and Fats Project Executing Agency Royal Tropical Institute (KIT) Countries Directly Benefiting Burkina Faso and Mali Co-financiers OPEC Fund, KIT, NGO groups in both countries, Governments Project Cost USD 3,889,298 Common Fund for Commodities USD 1,271,920 (Grant) (incl. USD 750,000 from the OPEC Fund for International Development – OFID) Common Fund for Commodities USD 473,025 (Loan) Co-financing Grant USD 1,146,966 Co-financing Loan USD 473,025 Counterpart Contribution Grant USD 524,362 The project had the overall goal to increase income and alleviate poverty of smallholder sesame farmers in Burkina Faso and Mali through improved production and processing of sesame seed and improvement of their position in the value chain. The project aimed at a sustainable production increase, leading to an average 50% increase in income for the participating farmers. The project effectively started in January 2011. In total, 5,800 farmers participated in Farmer Field Schools (FFS) in Burkina Faso (30% women) and 6,900 in Mali (39% women) to

improve sesame production. Yield increases were realized up to 75%. A manual for sesame FFS has been published and 188 facilitators were trained to conduct a FFS. Collection centres have been established in Burkina Faso (4) and in Mali (13 established/ improved). Local commercial sesame storage and processing facilities turned out not to be commercially attractive during the project period, as prices for crude sesame were continuously rising and all sesame could be sold for export as a crude cleaned product with remunerative margins for producers, collectors and exporters. Because of the high demand, prices for conventional

sesame were peaking above prices for organic sesame. Farmer managed trials showed that a modest dose of fertilizer (75 kg NPK 14:23:14 per hectare) increased yields by 75%, providing a return on investment of 320%. The use of quality seed compared to recycled seed gave a return on investment up to 1,900%. The results obtained in Mali are presented by IFDC in a French brochure. The lessons learned from sesame chain development in both Mali and Burkina Faso are presented in the Final Technical Report, which is available in the English and the French language at the CFC website.

CFC/FIGOOF/30: Improving the Competitiveness of Small Scale Oil Palm Farmers and Production in Latin America and the Caribbean: Bridging the Yield Gap

Submitting ICB FAO Intergovernmental Group of Oilseeds, Oils, and Fats Project Executing Agency Latin American and Caribbean Fund for Oil Palm Innovations (FLIPA) Countries Directly Benefiting Colombia, Ecuador Project Cost USD 3,847,314 Common Fund for Commodities USD1,840,794 (Grant) (incl. USD 678,755 from the OPEC Fund for International Development – OFID) Co-financing USD 2,006,520

The project’s objective was to make Latin American palm oil production more competitive and sustainably increase yields by 30%, thereby reducing costs per unit production and processing, thus increasing the incomes of small scale farmers and processors. The project was implemented in Colombia and Ecuador. Prior to the start-up of the project, Venezuela, the intended third country in the project, decided to withdraw. The project started in 2010 and was completed in 2014. Counterpart organization in Colombia was CENIPALMA. In Ecuador, ANCUPA was the party responsible for project implementation. Lead farmers achieved 40-100% yield increase on demonstration plots as a result of improved measures focusing on water

management, mulching and balanced fertilization, resulting in net increased revenues of USD 9,000 – 19,000/farmer. The new technology transfer system, with training of lead farmers and farmer-to-farmer extension, yielded good results. In Colombia, 37 lead farmers applied the improved crop management practices on 5,460 ha and convinced 579 other farmers to adopt these practices on 31,500 ha. In Ecuador, 45 lead farmers with an area of 1,725 ha convinced 2,163 other farmers to adopt these practices on 54,000 ha. In Ecuador the number of participating extractors increased from initially 2 to 22. These extractors started to employ new technical staff for training of farmers to increase raw material supply. Similar

achievements were noted in Colombia. While progressively phasing out, the project strengthened strategic alliances with national oil palm organizations and with processors, who were increasingly assuming responsibility for this new system of technology transfer. The project successfully used various local media to promote the programme and its results. The Final Technical report presents in more detail the technologies promoted by the project and the results obtained. The Project Completion Report describes the set-up of the project and the lessons learned. The report of the external evaluation by MDF Latin America confirms the achievements of this project. These reports are accessible at the CFC website.

VII Regular Projects Completed in 2014 | 79

Olive Oil CFC/IOOC/06: Programme for the Development and Dissemination of Sustainable Irrigation Management in Olive Growing

Submitting ICB International Olive Council (IOC) Project Executing Agency International Centre for Agricultural Research in the Dry Areas, (ICARDA), Aleppo, Syria Countries Directly Benefitting Morocco and Syria Project Cost USD 1,431 300.00 Common Fund for Commodities USD 799,460.00 (Grant) (of which USD 399,730 from the OPEC Fund for International Development â&#x20AC;&#x201C; OFID) Counterpart Contribution USD 631,840.00 in kind

The main objective of this project is to enhance crop yields of the smallholder olive farmers in Morocco and Syria, through the optimisation of water management practices applied to olive cultivation. Improved and more stable olive yields will then turn in to improved earnings and livelihood for the small holder olive farmers targeted by the project. The project demonstrates sustainable irrigation technologies and water management practices adding value to the commodity in terms of the productivity of olives and the quality of olive oil. Four pilot demonstration fields have been set up in both countries in significant olivegrowing areas of differing soil and climatic conditions, where rainfed or traditional irrigation methods now prevail. The project aims at transfering best practices and know how to a minimum of 400 farmers in the four olive growing areas via systematic training sessions, field days and distribution of technical manuals. Project operations have started in May 2010. The project conducted a

final review meeting in Marrakesh, Morocco, in October 2014: In both Countries project activities successfully compared rainfed or traditional (flood) irrigation practices to â&#x20AC;&#x153;regulated deficit - drip irrigationâ&#x20AC;?, on both mature and young olive orchards, collecting meaningful statistical data from field analysis and transferring best practices and know how to olive farmers via training sessions, field days and distribution of technical manuals. On field results clearly demonstrate the effectiveness of the new irrigation technologies introduced by the project: in comparison to traditional food irrigation, the alternative water regimes tested at the pilot plots have successfully raised yields, improved the quality of olive oil and reduced production costs. Project results also emphasized the economic implications of optimal water management in terms of reduction of water consumption in dry areas and the potential income increase for the farmers in terms of higher and more stable crop yields. Overall, the project completed all the tasks

assigned to the teams: both national teams conducted farmer field days, trainings and field experiments and produced material for dissemination. 100 extension agents have been trained in rational irrigation management practices. Seven training courses for national team members were organized in which 106 scientists were trained. The target number of farmers to be engaged in farmer field days was almost doubled with 730 farmers being engaged by project completion date instead of the foreseen 400. Eighteen conference papers, several posters and brochures, a website, a promotional video (http://www.icarda.org/olive-lrrigationproject) and various newspaper and TV interviews were arranged to disseminate project findings. Project teams from both countries were able to capture the 2014 harvest data that will be part of the statistical analysis comparing water productivity, tree growth, crop yield, olive oil yield and oil chemical parameters under the different irrigation regimes to be included in the Project Completion Report, which will be released in 2015.

Tea CFC/FIGT/04: Development, Production and Trade of Organic Tea

Submitting ICB Project Executing Agency Countries Directly Benefiting Project Cost Common Fund for Commodities Common Fund Loan Counterpart Contribution

The three main objectives of the project are: (a) to develop pilot farms for organic tea production including the conversion of existing tea gardens into organic tea gardens; (b) develop appropriate certification mechanism that would be internationally accepted and; (c) undertake an assessment of the global market for organic tea and develop appropriate marketing strategies. The Project was implemented in China from May 2007 to May 2010 and in India from September 2008 to March 2014. The project was granted a two year extension because

FAO Intergovernmental Group on Tea The International Federation of Organic Agriculture Movements (IFOAM) China and India USD 7,128,284 USD 1,778,387 (Grant) USD 1,739,714 USD 3,610,183 there were some long-term activities to be completed, and the establishment of capacity building centres faced some delay, particularly the one in South India. The extra costs were borne by the Tea Board India. The project outcomes for the three components are as follows:

2 Support to establish a certification system: In China an agreement was signed for a cooperation with a foreign certification body, and subsequently inspections were initiated. In India the certification component was dropped since India did not have a certification body specialized in organic tea.

1 Research and development: The outcomes of this component resulted in a better understanding of organic tea production by the tea research institutes and in development of recommendations of practices for the organic tea producers.

3 Market development: the main outcomes of the market development analysis showed that the domestic markets in both countries are more receptive and ready to pay a premium for organic tea as opposed to export markets. >>

80 | Common Fund for Commodities Annual Report 2014

development and marketing while the loan was used for farm establishment. The loan to China was completely repaid (early repayment) in August 2010. The loan to India has an outstanding balance as of 31 December 2014 of USD 387, 854 with installment payments on schedule. The project completion report in currently under revision by the PEA in order to incorporate CFC’s comments, it will be available on the CFC’s web site shortly.

Photo: ©FAO/John Isaac / FAO

The main challenges highlighted by the project outcomes were the difficulties of smallholders to access new technology dissemination channels and certification schemes. In addition, the ability for institutions responsible for the production sector to deal with smallholders in an appropriate and effective way remain a challenge. On the financing side, the combination of grant and loan proved successful. The grant component was mainly utilized for research,

VII Regular Projects Completed in 2014 | 81

Photo: ÂŠFAO/Ami Vitale / FAO

Photo: CFC

Dr. Dirk Jan Koch, Special Envoy Natural Resources,

Viii 26th Meeting of the Governing Council

Ministry of Foreign Affairs of the Netherlands

Ambassador H.E. Mr. Buddhi K. Athauda (Sri Lanka) opened the

in the development cooperation of projects are likely to meet

26th Annual Meeting of the Governing Council of the Common

the expectations of its Members and development partners.

Fund for Commodities on 10th December 2014 in The Hague. The Chairperson welcomed all the delegates and other partici-

Dr. Dirk Jan Koch, Special Envoy Natural Resources, Ministry of

pants and referred to the major steps taken in the process of

Foreign Affairs delivered the opening statement on behalf of Ms.

completing the reform of the Common Fund for Commodities

Liliane Ploumen, Minister for Foreign Trade and Development

(CFC). The proposed amendments in the Agreement Establish-

Cooperation of the Netherlands. In his statement, Dr. Koch

ing the Common Fund for Commodities would expand the

specifically referred to the importance of bringing public and

scope of the work of the CFC. This would result in deepening

private sector initiatives together, developing sound mecha-

and widening of the range of applicable instruments, including

nisms of joint financing of sustainable commodity development

adoption of innovations in the commodity development meas-

activities. The CFCâ&#x20AC;&#x2122;s experience over the past years has shown

ures and actions of the CFC. The consolidation and expan-

that such novel approaches can lead to public-private win-win

sion of actions taken needs to be reinforced by learning from

situations, demonstrating that the road that the CFC is taking

previous experience. This includes maximizing the development

has clear perspectives of success. The CFC has now embarked

impact of economically, financially and environmentally sound

on an era of transition which will help in formatting the niche

projects. The development of effective rules and procedures for

and future basis for the CFC as an efficient and effective work-

screening, approving and implementing the identified projects

ing organisation.

will contribute towards the enlargement and achievement of the overall goals of the CFC. With the transformation of the CFC

Mr. Sietse van der Werff, the Officer-in-Charge of the CFC,

planned to be concluded by the end of 2015, the new changes

delivered a statement on the activities of the Common Fund

VIII 26th Meeting of the Governing Council | 83

Photo: CFC

H.E. Mr. Moazzam Ahmed Khan, Alternate Governor of Pakistan & Mr. Zahid Ali Abbasi, Commercial Counsellor, Embassy of Pakistan

The Governing Council, after deliberations, adopted the proposed amendments to the Agreement Establishing the Common Fund for Commodities. The Governing Council took note of the report on the First Account Net Earnings Programme and the Activities under the Second Account for the year 2014. The Governing Council approved the Administrative Budget for 2015 and the 2013 Audited Financial Statements.

during 2014. He welcomed the delegates and thanked Dr. Dirk

Chairperson and Vice-Chairpersons of the Governing Council for the Year 2015

Jan Koch, Special Envoy Natural Resources, Ministry of Foreign

The Governing Council, by consensus, elected Ms. Elisabeth-

Affairs for delivering the welcome remarks on behalf of the host

Sophie Mazella di Bosco Balsa (Brazil) as Chairperson for the

Government. He referred to the work of the Open Transition

period up to and including the Twenty-Seventh Annual Meeting

Committee established by the Governing Council in its 25th

of the Governing Council to be held on 8th and 9th December

meeting held in December 2013 which, after detailed review

2015 in The Hague, The Netherlands.

and discussions in the 57th and 58th meeting of the Executive Board, has recommended unanimous approval of the proposed

The Chairperson and Vice-Chairpersons of the Governing

amendments to the Agreement Establishing the Common Fund

Council for the year 2015 are as follows:

by the Governing Council. The adoption of the new amendments will be a major step forward for the CFC. During the year,

Chairperson

the CFC had already taken steps to modify and strengthen its

Ms. Elisabeth-Sophie Mazella di Bosco Balsa (Brazil)

project proposals, streamline its administrative expenditures and explore avenues to expand commodity development efforts.

Vice-Chairpersons

The steps taken will build and strengthen the scope of work

African Group: H.E. Ms. Odette Melono (Cameroon)

done by the CFC for benefit of its members and partners.

Asia and Pacific Group: Mr. Pit Laquian (Philippines) Latin America and Caribbean region Group: Mr. Nicolas Vidal (Argentina)

The Governing Council

OECD Group: Ms. Anna Tofftén (Sweden) China: Mr. Li Fei (China) Russian federation: Mr. Vladimir Tkachenko (Russian Federation)

The Agenda of the meeting was adopted. Twelve national delof the OECD group, made the national statements. The deliberations of the Council were focused on the proposed amendments to the Agreement Establishing the Common

Photo: CFC

egations, including Sweden which made a statement on behalf

Fund for Commodities. Following the extensive work done by the Open Transition Committee and the Executive Board, a full package of recommendations was considered by the Governing Council. Adoption of the amendments to the Agreement and the related “lower level” documents provides a formal basis for the establishment of new operational modalities for the CFC. These would focus on providing loans to the public and private sector and on seeking project proposals through Open Calls for Proposals, while maintaining the established project assessment

Chairman, Ambassador H.E. Mr. Buddhi K. Athauda (Sri Lanka) &

and approval procedures.

Ms. Elizabeth-Sophie Mazzella di Bosco Balsa (Brazil)

84 | Common Fund for Commodities Annual Report 2014

IX Financial Reports Balance Sheet - First Account, as of 31 December 2014 (expressed in USD & SDR) 2014 2013 2014 2013 USD USD SDR SDR ASSETS Cash and Cash equivalents Cash in Bank

12,759,900

11,103,800

8,807,200

7,210,300

Time Deposits

5,592,600

1,152,800

3,860,100

748,600

18,352,500 12,256,600 12,667,300 7,958,900 Investments Debt Securities

73,151,000

85,550,000

50,490,400

Participations in Investment Funds

1,278,500

882,400

55,551,900 0

74,429,500

85,550,000

51,372,800

55,551,900

Promissory Notes 37,869,700

42,710,800

26,138,500

27,734,300

Amounts Receivable From Members Amounts Receivable From Members

12,608,700

14,152,200

8,702,800

9,189,700

Provision For Overdue Members Capital Subscription

-11,670,100

-13,442,500

-8,055,000

-8,728,900

938,600

709,700

647,800

460,800

Prepayments

140,900

112,500

97,300

73,100

Loan Receivable

485,600

551,300

335,200

358,000

638,600

Other Receivables Accrued Income on Investments

863,400

983,400

595,900

Recoverable Taxes on Goods & Services

93,800

51,300

64,700

33,300

Receivable from EC Trust Fund

384,200

249,500

Other receivables

28,500

162,900

19,900

105,800

985,700

1,581,800

680,300

1,027,200

133,202,500

143,472,700

91,939,200

93,164,200

Accrued Liabilities

830,900

905,200

573,500

587,800

Payable to EU/EC

1,800

2,000

1,200

1,300

Turkey settlement

156,600

108,100

101,700

Luxembourg settlement

647,400

446,800

1,636,700

1,063,800

1,129,600

690,800

Total Assets LIABILITIES AND EQUITY Liabilities

Capital Subscriptions & Accumulated Surplus Paid-in-Shares of Directly Contributed Capital

119,685,400

126,717,500

82,609,500

82,284,100

Provision For Overdue Members Capital Subscription

-11,670,100

-13,442,500

-8,055,000

-8,728,900

Net Earnings Programme

18,271,100

18,384,400

12,611,100

11,937,900

Accumulated Surplus

5,279,400

8,095,800

3,644,000

5,257,100

Translation Reserve

2,653,700

1,723,300

131,565,800

142,408,900

90,809,600

92,473,400

Total Equity and Liabilities

143,472,700

91,939,200

93,164,200

133,202,500

iX Financial Reports | 85

Balance Sheet - Second Account, as of 31 December 2014 (expressed in USD & SDR) 2014 2013 2014 2013 USD USD SDR SDR ASSETS Cash and Cash equivalents Cash in bank

13,816,600

9,271,300

9,536,500

Time Deposits

4,000,000

3,400,000

2,760,900

6,020,300 2,207,800

17,816,600

12,671,300

12,297,400

8,228,100

Investments Debt Securities

58,243,700

65,657,700

40,201,100

42,634,900

58,243,700

65,657,700

40,201,100

42,634,900

6,668,000

4,054,200

4,329,900

Promissory Notes

5,873,700

Amounts Receivable From Members Amounts Receivable From Members

375,800

426,600

259,400

277,000

Provision For Overdue Members Capital Subscription

-375,800

-426,600

-259,400

-277,000

Loans Loan Receivable

5,640,100

6,222,400

3,892,900

4,040,500

5,640,100

6,222,400

3,892,900

4,040,500

720,800

Other Receivables Accrued Income on Investments

1,106,200

1,110,100

763,500

Receivable from Dutch Trust Fund

500,000

345,000

Receivable from EC Trust Fund

2,022,500

1,313,300

Other Receivables

5,900

4,100

1,612,100

3,132,600

1,112,700

2,034,100

94,352,000

61,558,300

61,267,500

Total Assets

89,186,200

LIABILITIES AND EQUITY Liabilities Turkey Settlement

234,900

162,100

152,500

Belgium Settlement

382,600

1,456,700

264,100

945,900

Luxembourg Settlement

78,000

53,800

Payable to Dutch Ministry

4,500,100

2,791,800

3,106,100

1,812,900

Payable to EU/EC

158,100

2,583,500

109,100

1,677,600

Other Payables

28,500

166,000

19,700

107,800

5,382,200

7,232,900

3,714,900

4,696,700

17,250,500

Capital Subscriptions and Accumulated Surplus Paid-in-Shares of Directly Contributed Capital

25,642,600

26,565,800

17,699,100

Provision For Overdue Members Capital Subscription

-375,800

-426,600

-259,400

-277,000

Accumulated Surplus

58,537,200

57,534,200

40,403,700

37,359,900

Translation Reserve

3,445,700

2,237,400

83,804,000

87,119,100

57,843,400

56,570,800

Total Equity and Liabilities 89,186,200

94,352,000

61,558,300

61,267,500

86 | Common Fund for Commodities Annual Report 2014

Income Statement for the period 1 January to 31 December 2014 â&#x20AC;&#x201C; First Account (expressed in USD & SDR) 2014 2013 2014 2013 USD USD SDR SDR Income Net Income from Investments

3,560,700

3,773,200

2,343,000

2,482,800

Other Income

353,800

52,300

232,800

34,400

Unrealized loss on participations in investment funds

-195,900

-128,900

Realized Exchange (loss)/gain on Operations

10,800

1,180,900

7,100

777,000

Unrealized Exchange (loss)/gain on translation of Balance Sheet items

-6,182,500

-729,600

-4,517,000

-598,200

Total Income

-2,453,100

4,276,800

-2,063,000

2,696,000

Expenses Staff Salaries & Benefits

2,239,100

2,768,900

1,473,400

1,821,900

Operational Expenses

408,000

353,700

268,500

232,700

Meeting Costs

280,400

266,700

184,500

175,500

Premises Costs

332,700

239,700

218,900

157,700

Project Preparation Facility

-47,400

30,500

-31,200

20,100

Information Dissemination

7,100

4,700

Contingency/Extra ordinary items

1,103,900

726,400

Total Expenses

3,212,800

4,770,500

2,114,100

3,139,000

NETT (LOSS)/PROFIT

-5,665,900

-493,700

-4,177,100

-443,000

Accumulated Surplus as at 1 January

8,095,900

7,852,900

5,257,100

5,109,500

Nett (Loss)/Profit

-5,665,900

-493,700

-4,177,100

-443,000

Transfer Unrealized Exchange (loss)/gain to Translation Reserve

2,653,500

729,600

Transfer to Net Earnings Program (unrealized loss on participations)

195,900

128,900

Transfer to Net Earnings Program (Advocacy & Information Dissemination)

7,100

4,700

Exchange adjustment

689,000

-12,300

ACCUMULATED SURPLUS AT 31 DECEMBER

5,279,400

8,095,900

3,644,000

5,257,100

1,746,100

598,200

iX Financial Reports | 87

Income Statement for the period 1 January to 31 December 2014 - Second Account (expressed in USD & SDR) 2014 2013 2014 2013 USD USD SDR SDR Income Net Income from Investments

2,781,800

2,835,000

1,830,500

Income from Loans

30,600

34,200

20,100

1,865,400 22,500

Voluntary Contribution in cash

403,000

265,200

Contribution DTF I

500,000

329,000

Realized Exchange (loss)/gain on Operations

-25,300

-32,000

-16,600

-21,100

Unrealized Exchange (loss)/gain on translation of Balance Sheet items

-809,000

-197,200

-532,300

-133,000

Total Income 2,478,100

3,043,000

1,630,700

1,999,000

Expenses Project Payments Total Expenses

4,920,800

10,790,600

3,207,900

7,051,400

4,920,800

10,790,600

3,207,900

7,051,400

-2,442,700

-7,747,600

-1,577,200

-5,052,400

57,534,200

65,084,600

37,359,900

42,347,400

NETT (LOSS)/PROFIT Accumulated Surplus as at 1 January

Nett (loss)/profit

-2,442,700

-7,747,600

-1,577,200

-5,052,400

Transfer Unrealized Exchange (loss)/gain to Translation Reserve

809,000

197,200

532,300

133,000

Transfer Translation Reserve to Accumulated Surplus

2,636,700

1,705,100

Exchange adjustment

2,383,600

-68,100

ACCUMULATED SURPLUS AT 31 DECEMBER

58,537,200

57,534,200

40,403,700

37,359,900

88 | Common Fund for Commodities Annual Report 2014

Directly Contributed Capital, as at 31 December 2014 (USD) First Account Second Account Outstanding Payments Constibutions*

Outstanding

Cash Promissory Constributions*

Payments Cash Promissory

Notes

Afghanistan

399,412

398,524

Algeria

862,744

Angola

61,786

339,823

444,069

Argentina

409,880

635,460

47,892

Austria

900,429

933,684

Bangladesh

154,096

95,062

308,154

379,547

Benin

5,314

344,491

379,546

Bhutan

3,424

3,795

338,969

375,751

Botswana

5,314

344,491

379,546

Brazil

1,692,815

701,208

Bulgaria

807,697

284,202

Burkina Faso

5,314

344,491

379,547

Burundi

34,239

37,955

308,154

341,592

Cameroon

990,853

Cape Verde

342,393

379,546

Central African Republic

10,627

346,588

379,546

Chad

15,941

364,254

379,546

China

3,807,113

4,216,762

Colombia

1,060,568

Comoros

342,393

379,546

Congo

1,129,125

Dem.Republic of Congo(zaire)

1,213,098

Costa Rica

833,938

Cote d’Ivoire

1,273,830

Cuba

291,399

322,660

393,960

320,771

Denmark

599,933

434,201

718,430

Djibouti

388,206

379,547

Ecuador

126,968

699,028

Egypt

616,445

557,933

Equatorial Guinea

734,443

Ethiopia

42,509

187,975

189,773

171,197

189,773

Finland

586,004

649,025

154,611

28,060

Gabon

331,375

455,118

Gambia

10,627

346,588

379,546

Germany

5,954,753

6,528,200

657,485

105,833

Ghana

1,085,935

Greece

347,901

379,547

Guatemala

423,346

408,621

Guinea

26,568

13,911

3,796

338,969

375,751

Guinea-Bissau

342,393

379,547

Haiti

15,941

348,685

379,547

Honduras

41,750

37,758

375,751

339,823

India

370,828

406,115

560,088

98,518

Indonesia

449,328

125,250

579,573

146,040

Iraq

878,501

Ireland

3,455

3,795

615,094

113,117

Italy

2,558,455

2,831,417

612,520

124,660

Jamaica

48,056

53,137

612,816

136,416

Kenya

906,469

789,457

Republic of Korea

517,919

573,115

Kuwait

941,579

Lao People’s Dem. Republic

387,130

383,342

Lesotho

342,393

379,547

Dem. People’s Republic of Korea

iX Financial Reports | 89

Directly Contributed Capital, as at 31 December 2014 (USD) First Account Second Account Outstanding Payments Constibutions*

Outstanding

Cash Promissory Constributions*

Payments Cash Promissory

Notes

Madagascar

48,209

703,374

Malawi

15,941

348,685

379,546

Malaysia

832,788

941,275

Maldives

34,239

308,154

379,547 341,592

Mali

15,941

40,531

37,955

308,154

Mauritania

42,509

395,774

379,547

Mexico

170,697

770,650

163,707

Morocco

471,279

3,795

375,021

140,124

Mozambique

439,549

357,951

Myanmar

21,255

342,665

382,583

Nepal

5,314

310,251

341,592

34,239

37,955

Netherlands

752,209

1,632,050

730,118

Nicaragua

98,166

653,459

Niger

5,314

344,491

379,547

Nigeria

124,171

132,841

624,220

102,438

Norway

347,901

390,933

608,489

107,505

Pakistan

871,363

Papua New Guinea

120,151

699,703

Peru

1,074,903

Philippines

614,978

785,857

Portugal

171,346

447,097

111,834

Russian Federation

7,078,543

6,368,048

Rwanda

15,941

348,685

379,547

Samoa

342,393

379,547

Sao Tome and Principe

734,443

Saudi Arabia

360,373

398,524

Senegal

959,157

Sierra Leone

15,941

348,685

379,547

Singapore

227,143

254,296

411,896

67,193

Somalia

384,860

344,491

Spain

2,547,890

619,883

Sri Lanka

422,309

470,638

Sudan

127,528

290,011

265,683

102,718

113,864

Swaziland

94,101

394,727

262,885

Sweden

874,180

1,002,003

640,618

108,462

Syrian Arab Republic

916,910

United Republic of Tanzania

69,077

198,462

189,773

171,197

189,773

Thailand

485,578

519,979

Togo

763,530

Trinidad & Tobago

680,870

Tunisia

959,840

Uganda

95,646

380,145

379,547

United Arab Emirates

1,107,200

United Kingdom

3,166,031

3,499,744

664,193

Venezuela

878,775

Yemen

10,627

688,981

759,093

Zambia

205,365

912,100

Zimbabwe

725,106

TOTAL

12,608,707

69,207,071

37,869,631

375,751

19,415,908

5,850,877

* As stated in Schedule B of the Agreement Establishing the Common Fund for Commodities, Members in the category of least developed countries as defined by the United Nations shall pay only 30% of the number of shares exceeding 100, over a period of three years. The remaining 70% (of shares exceeding 100) shall be paid as and when decided by the Executive Board. This remaining 70% is also included in the Outstanding Contributions.

90 | Common Fund for Commodities Annual Report 2014

Voluntary Contributions, as at 31 December 2014 (USD) Payments Cash up Payments Cash

to 31 Dec. 2013

2014

Country

Currency

Pledge (3rd 5YAP) USD (1)

USD

Payments Total USD

SDR

Austria

USD

2,000,000

1,380,443

Belgium

EUR

3,000,000

3,235,542

2,233,241

Cameroon

USD

7,994

5,518

China

USD

2,000,000

1,380,443

Denmark

DKR

2,417,748

794,987

548,718

Ecuador

USD

45,311

31,275

Finland

USD

2,000,000

2,011,089

1,388,097

France (3)

USD

15,000,000

2,385,648

1,646,626

Germany

USD

22,549,790

15,564,353

India

USD

5,000,000

4,987,696

3,442,616

Indonesia

USD

1,000,000

1,000,201

690,360

Ireland

USD

250,000

172,555

Italy

USD

15,000,000

14,999,999

10,353,324

Japan

USD

27,000,000

32,231,940

22,247,182

Luxembourg

USD

150,000

149,989

103,526

Madagascar

USD

8,643

8,616

5,947

Malaysia

USD

1,000,000

999,922

690,168

Netherlands

USD

17,000,000

19,560,207

13,500,878

Nigeria

USD

150,000

103,533

Norway

USD

22,490,000

22,446,462

15,493,034 18,221,851

OPEC Fund

USD

45,400,000

26,400,000

Papua New Guinea

USD

70,055

48,353

Republic of Korea

USD

300,000

207,066

Singapore

USD

250,000

172,555

Sweden

USD

2,345,996

1,619,257

Switzerland (3)

USD

6,000,000

3,000,000

2,070,665

Thailand

USD

1,000,000

690,222

United Kingdom (2)

STG

6,664,626

7,399,909

5,107,578

199,976,803

172,581,354

119,119,384

(1) Amounts pledges have been converted to USD equivalent using the IMF rates of 31/12/14 (2) Payment of MOU of GBP 4,270,000 received considered as contribution under Article 18.1.(e) (3) Not a member of CFC

2014 Administrative Budget, Summary Item

Approved Administrative Budget 2014

USD Staff Costs

2,689,600

EUR 2,068,900

Operational Costs

834,400

641,800

Meeting Costs

288,900

222,200

Contingency

13,000

10,000

TOTAL

3,825,900

2,942,900

iX Financial Reports | 91

92 | Common Fund for Commodities Annual Report 2014

Annex I Governors and Alternate Governors as of 31 December 2014 Chairperson of the Governing Council during 2014: Ms. Elisabeth-Sophie Mazella di Bosco Balsa (Brazil)

Vice-Chairpersons: Africa: H.E. Ms. Odette Melono (Cameroon) Asia and Pacific: Mr. Pit Laquian (Philippines) China: Mr. Li Fei Latin America and the Caribbean: Mr. Nicolas Vidal (Argentina) OECD: Ms. Anna Tofftén (Sweden) Russian Federation: Mr. Vladimir Tkachenko

Country

Governor

Afghanistan

c/o H.E. Mr. Nanguyalai Tarzi

Alternate Governor

Algeria

H.E. Ms. Nassima Baghli

Angola

Mr. Sebastião de Sousa e Santos Júnior

Argentina

H.E. Mr. Héctor Horacio Salvador

Austria

Mr. Guenther Schoenleitner

Bangladesh

Mr. Hedayetullah Al Mamoon

c/o Mr. Istiaque Uddin Ahmed

Benin

H.E. Mr. Charles Borromée Todjinou

Mr. Stephane Beria

Bhutan

H.E. Mr. Daw Penjo

Mr. Kinley Wangchuk

Botswana

H.E. Mr. Samuel Otsile Outlule

Mr. Micus Chiwasanee Chimbombi

Brazil

Mr. Paulo Estivallet de Mesquita

Ms. Elizabeth-Sophie Mazzella di Bosco Balsa

Bulgaria

Mr. Petar Dimitrov

Burkina Faso

Ms. Salimata Some-Traoré

Mr. Amadou Sagnon

Burundi

Ms. Victoire Ndikumana

Mr. Emmanuel Niyungeko

Cabo Verde

Minister for Foreign Affairs

Cameroon

Mr. Luc Magloire Mbarga Atangana

H.E. Ms. Odette Melono

Central African Republic

Mr. David Banzoukou

Ms. Gertrude Zouta

Chad

Mr. Youssouf Abassallah

Mr. Daouda Tabanda

China

Mr. Wenliang Yao

Mr. Fei Li

Colombia

Mr. Álvaro Gutiérrez Botero

Ms. Maria Alejandra Páez Gómez

Comoros

Mr. Said Mohamed Ali Said

Democratic Republic of the Congo

c/o Mr. Sébastien Mutomb Mujing

Congo

Mr. Juste Benjamin Lekaka

Costa Rica

H.E. Mr. Sergio Ugalde Godinez

Mr. Jorge Sauma Aguilar

Côte d’Ivoire

Mr. Mamadou Sangafowa Coulibaly

Mr. Aly Toure

Cuba

Ms. María de la Luz B’Hamel Ramírez

Ms. Alina Revilla-Alcazar

Ms. Ikram Zouad Mr. Nicolás Francisco Vidal

Denmark Djibouti

Mr. Ismaël Ali Abane

Ecuador

H.E. Mr. Miguel Calahorrano

Ms. Maria Belén Barberis

Egypt

H.E. Mr. Taher Ahmed Farahat

Ms. Amany Fahmy

Equatorial Guinea

c/o H.E. Mr. Carmelo Nvonno Nca

c/o Director General de Comercio

Ethiopia

H.E. Mr. Teshome Toga Chanaka

Mr. Nahom Girma Fikresilassie

Finland

c/o Mr. Antti Piispanen

Gabon

Mr. Fidèle Mengue M’engouang

Mr. Bertrand Rubens Matteya

Gambia

H.E. Ms. Teneng Mba Jaiteh

Ms. Fatou Mbenga Jallow

Germany

Mr. Reinhard Krause

Mr. Edgar Gansen

Ghana

Mr. Joseph Samuel Annan

Mr. Gideon Quarcoo

Greece

Mr. Nikolaos Thomopoulos

Ms. Trisevgeni Lianou

Guatemala

H.E. Mr. Eduardo Sperisen Yurt

Ms. Debora Maria Cumes Mariscal

Guinea

Hadja Zénab Diallo

Mr. Mohamed Camara

Guinea-Bissau

c/o Embassy of Guinea-Bissau

Annex I Governors and Alternate Governors as of 31 December 2014 | 93

Country

Governor

Alternate Governor

Haiti

Mr. Wilson Laleau

c/o Mr. Jean Bony Alexandre

Honduras

Mr. Jacobo Paz Bodden

Mr. José Adalberto Sorto

India

Mr. Rajani Ranjan Rashmi

Ms. Vandana Yadav

Indonesia

Amb. Hasan Kleib

Mr. Irfa Ampri

Iraq

Mr. Kadhim M. Jawad Hasan

Mr. Mwafak Taha Izulddin

Ireland

H.E. Ms. Mary Whelan

Italy

Ms. Giuseppina Zarra

Ms. Laura Calligaro

Jamaica

Ministry of Agriculture and Fisheries

H.E. Mr. Wayne McCook

Kenya

H.E. Ms. Rose M. Muchiri

Mr. J. Patrick Okoth

Democratic People's Republic of Korea

c/o Mr. Kim Myong Hyok

Mr. Sok Jong Myong

the Republic of Korea

Mr. Kyunghwan Choi

Mr. Juyeol Lee

Kuwait

c/o H.E. Mr. Hafeez Mohammed Salem Al-Ajmi

Laos

Mr. Manohack Rasachack

H.E. Ms. Manorom Phonseya

Lesotho

Mr. Mohlabi Tsekoa

H.E. Ms. Mamoruti A. Tiheli

Luxembourg

H.E. Mr. Pierre-Louis Lorenz

Mr. Patrick Arend

Madagascar

H.E. Ms. Annick H. Andriamampianina

Mr. Eric Beantanana

Malawi

c/o Mr. Joseph Chiteyeye

Mr. Joseph Chiteyeye

Malaysia

Datuk Himmat Singh

Ms. Zurinah Pawanteh

Maldives

c/o Mr. Abdul Samad Abdulla

Mr. Abdulla Salih

Mali

H.E. Mr. Sekouba Cisse

Mr. Mamounou Toure

Mauritania

Mr. Mohamed Ould Hitt

Mr. Mohamed Moctar Alaoui

Mexico

Mr. Luis Videgaray Caso

Mr. José Antonio Meade Kuribreña

Morocco

H.E. Mr. Abdelouahab Bellouki

Ms. Samia Herrag

Mozambique

Ms. Cerina Banú Mussá

Mr. Joao José Macaringue

Myanmar

Mr. Tin Naing Thein

Ms. Myo New

Nepal

H.E. Mr. Ram Mani Pokharel

Mr. Lakshuman Khanal

the Netherlands

Mr. Jaap Smit

Mr. Robert-Jan Scheer

Nicaragua

Mr. Orlando Solórzano Delgadillo

H.E. Mr. Carlos J. Argüello Gómez

Niger

Ms. Florentine Pierrette Araoye

Nigeria

Amb. Abdulqadir Musafari A.

H.E. Ms. Nimota Nihinlola Akanbi

Norway

Ms. Torun Dramdal

Ms. Eva Hermstad

Pakistan

Mr. Muhammad Shehzad Arbab

H.E. Mr. Moazzam Ahmed Khan

Papua New Guinea

Mr. William Dihm

c/o Mr. Kapi Maro

Peru

H.E. Mr. Carlos Andres Miguel Herrera Rodríguez Mr. Javier Pella

the Philippines

H.E. Mr. Jaime Victor B. Ledda

Mr. José I.C. Laquian

Portugal

Mr. Manuel Rodrigues

Mr. Álvaro Matias

Russian Federation

Mr. Vladimir I. Tkachenko

Mr. Cherevko Alexander Nikolaevich

Rwanda

Mr. Emmanuel Hategeka

Ms. Peace Basemera

Samoa

c/o Deputy Prime Minister

Sao Tome and Principe

Minister for Foreign Affairs

Saudi Arabia

Mr. Abdulrahman A. Aloraini

Mr. Ahmad S. Alteraifi

Senegal

H.E. Ms. Maymouna Diop Sy

Mr. Serigne Fall Seck

Sierra Leone

c/o Ms. Isatu Haja Kabba

Singapore

H.E. Ms. Yee Woan Tan

Somalia

c/o H.E. Mr. Yusuf Mohamed Ismail

Spain

Mr. Enrique Fanjul Martin

Ms. Maria Alcalá-Galiano Malo de Molina

Sri Lanka

Mr. R.D.S. Kumararatne

H.E. Mr. Buddhi K. Athauda

Sudan

H.E. Mr. Mohamed El Hassan Ibrahim Alawad

Mr. Nagi Iskander Awad Masoud

Swaziland

Mr. Andreas M. Hlophe

Sweden

Ms. Anna Tofftén

Syrian Arab Republic

Mr. Mohammad Ghassan Al-Habbash

the United Republic of Tanzania

H.E. Mr. Wilson M. Masilingi

Mr. Uledi Mussa

Thailand

Mr. Apai Suttisunk

Mr. Lersak Rewtarkulpaiboon

Togo

H.E. Mr. Hubert Kokou Nayo M’Beou

Ms. Biam Bidinabe Hodjo

Trinidad & Tobago

c/o Mr. Devant Maharaj

c/o Permanent Secretary

Tunisia

H.E. Mr. Karim Ben Becher

Ms. Chiraz Ben Abdallah

Uganda

Ms. Elizabeth Tamale

H.E. Ms. Mirjam Blaak Sow

United Arab Emirates

c/o H.E. Mr.Abdalla Hamdan Alnaqbi

94 | Common Fund for Commodities Annual Report 2014

Country

Governor

Alternate Governor

United Kingdom of Great Britain and Northern Ireland

Ms. Louise Thomas

Venezuela

Mr. Rubén Darío Molina

H.E. Ms. Haifa Aissami Madah

Yemen

Mr. Abdulla Ahmed Alshariff Alshammam

Mr. Omar G. Al-Soufi

Zambia

H.E. Ms. Grace Musonda Mutale Kabwe

Mr. Musenge Mukuma

Zimbabwe

Ms. Abigail Shonhiwa

European Union

Mr. Regis Meritan

Mr. Manfred Brandt

COMESA

Mr. Sindiso Ndema Ngwenya

Mr E.A. Mohammed

African Union

c/o Ms. Tarana Loumabeka

Director for Trade and Industry

East African Community

Amb. Richard Sezibera

Director for Trade

Caribbean Community (CARICOM)

Amb. Irwin LaRocque

Ms. Desiree Field-Ridley

Southern African Development Community (SADC)

c/o Mr. Tomaz A. Solamão

Andean Community

c/o Mr. Adalid Contreras Baspineiro

Union Economique et Monetaire Ouest Africaine (UEMOA)

c/o Mr. Rui Duarte Barros

Economic Community of West African States (ECOWAS)

c/o Mr. James Victor Gbeho

Eurasian Economic Community (EAEC)

Mr. Alexander Kasakov

Mr. Michael Shishatski

Annex I Governors and Alternate Governors as of 31 December 2014 | 95

Photo: INBAR

Annex II Member States, Institutional Members and Votes as of 31 December 2014 Country

Region

No. of votes

LDC

Afghanistan

Asia

357

Algeria

Africa

395

Angola

Africa

391

Argentina

LAC

496

Austria

Europe

652

Bangladesh

Asia

426

Benin

Africa

347

Bhutan

Asia

343

Botswana

Africa

347

Brazil

LAC

Bulgaria

Europe

417

Burkina Faso

Africa

347

Burundi

Africa

343

Cabo Verde

Africa

343

1,024

Cameroon

Africa

389

Central African Republic

Africa

349

Chad

Africa

351

China

Asia

3,000

Colombia

LAC

490

Comoros

Africa

343

Congo

Africa

351 393

Costa Rica

LAC

C么te d'Ivoire

Africa

476

Cuba

LAC

584

Democratic Rep. of the Congo

Africa

476

Denmark

Europe

643

Djibouti

Africa

343

Ecuador

LAC

391 476

X X

Egypt

Africa

Equatorial Guinea

Africa

347

Ethiopia

Africa

366

Finland

Europe

535 368

Gabon

Africa

Gambia

Africa

Germany

Europe

349

4,362

Ghana

Africa

426

Greece

Europe

309 401

Guatemala

LAC

Guinea

Africa

357

Guinea-Bissau

Africa

343

Haiti

LAC

353

Honduras

LAC

372

India

Asia

621

Indonesia

Asia

575

Iraq

Asia

376

Ireland

Europe

309 2,065

Italy

Europe

Jamaica

LAC

380

Kenya

Africa

387

Korea, Dem. People's Rep. of

Asia

355

Korea, Republic of

Asia

490

Kuwait

Asia

351

Lao People's Dem. Rep.

Asia

345

Lesotho

Africa

343

Luxembourg

Europe

309

Chapter | 97

Country

Region

No. of votes

LDC

Madagascar

Africa

360

Malawi

Africa

351

Malaysia

Asia

768 343

Maldives

Asia

Mali

Africa

351

Mauritania

Africa

366

Mexico

LAC

469

Morocco

Africa

449

Mozambique

Africa

360

Myanmar

Asia

355

Nepal

Asia

345

Netherlands

Europe

1,086

Nicaragua

LAC

Niger

Africa

347

Nigeria

Africa

440 549

382

Norway

Europe

Pakistan

Asia

407

Papua New Guinea

Asia

389

Peru

LAC

445

Philippines

Asia

580

Portugal

Europe

309

Russian Federation

Europe

4,257

Rwanda

Africa

351

Samoa

Asia

343

Sao Tome and Principe

Africa

345

Saudi Arabia

Asia

357

Senegal

Africa

382

Sierra Leone

Africa

351

Singapore

Asia

441

Somalia

Africa

Spain

Europe

347

1,126

Sri Lanka

Asia

413

Sudan

Africa

413

Swaziland

Africa

355 929

Sweden

Europe

Syria

Asia

382

Tanzania

Africa

380

Thailand

Asia

449

Togo

Africa

358

Trinidad & Tobago

LAC

353

Tunisia

Africa

380

Uganda

Africa

395

United Arab Emirates

Asia

347

X X

United Kingdom of Great Britain & Northern Ireland

Europe

Venezuela

LAC

401

Yemen

Asia

544

Zambia

Africa

505

Zimbabwe

Africa

343

2,550

Africa

CAN

LAC

CARICOM

LAC

COMESA

Africa

EAC

Africa

EAEC

Russia

ECOWAS

Africa

Europe

SADC

Africa

WAEMU/UEMOA

Africa

Total LDC: Least Developed Country LAC: Latin America and the Caribbean Countries

98 | Common Fund for Commodities Annual Report 2014

58,325

Institutional Members of the Common Fund for Commodities Andean Community (CAN) - Lima, Peru African Union (AU) - Addis Ababa, Ethiopia Caribbean Community (CARICOM) - Greater Georgetown, Guyana Common Market for Eastern & Southern Africa (COMESA) - Lusaka, Zambia Eurasian Economic Community (EAEC) - Moscow, Russia East African Community (EAC) - Arusha, Tanzania European Union (EU) - Brussels, Belgium Economic Community of West African States (ECOWAS) - Abuja, Nigeria South African Development Community (SADC) - Gaborone, Botswana West African Economic & Monetary Union (WAEMU/UEMOA) - Ouagadougou, Burkina Faso

Designated International Commodity Bodies (ICBs) 1

International Cocoa Organization (ICCO)

2 International Coffee Organization (ICO) 3 International Copper Study Group (ICSG) 4 International Cotton Advisory Committee (ICAC) 5 International Grains Council (IGC) 6 International Lead and Zinc Study Group (ILZSG) 7 International Network for Bamboo and Rattan (INBAR) 8 International Nickel Study Group (INSG) 9 International Olive Council (IOC) 10 International Rubber Study Group (IRSG) 11 International Sugar Organization (ISO) 12 International Tropical Timber Organization (ITTO) 13 FAO - Intergovernmental Sub-Group on Bananas 14 FAO - Intergovernmental Sub-Group on Tropical Fruits 15 FAO - Intergovernmental Group on Citrus Fruit 16 FAO - Intergovernmental Sub-Committee on Fish Trade 17 FAO - Intergovernmental Group on Grains 18 FAO - Intergovernmental Group on Hard Fibres 19 FAO - Intergovernmental Group on Meat and Dairy Products 20 FAO - Intergovernmental Sub-Group on Hides and Skins 21 FAO - Intergovernmental Group on Oilseeds, Oils and Fats 22 FAO - Intergovernmental Group on Rice 23 FAO - Intergovernmental Group on Tea

Chapter | 99

Development Partners The Common Fund for Commodities has concluded Memoranda of Understanding with the following institutions: 1 African Development Bank (AfDB)/African Development Fund 2 African Export-Import Bank (AFEXIM) 3 Arab Organization for Agricultural Development (AOAD) 4 Authority for Integrated Development of the Liptako-Gourma Region (ALG)/ L’Autorité de Developpement Integré de la Region du Liptako-Gourma 5 Food and Agricultural Organization of the United Nations (FAO) 6 Grupo de Paises Latino Americanos y del Caribe Export Adores de Azucar (GEPLACEA) 7 Inter-American Institute for Cooperation on Agriculture (IICA) 8 International Atomic Energy Agency (IAEA) 9 Islamic Centre for Development of Trade (ICDT) 10 OXFAM 11 Sistema Economico Latino Americano (SELA) 12 United Nations Conference on Trade and Development (UNCTAD) 13 United Nations Convention to Combat Desertification (UNCCD) 14 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) 15 United Nations Economic and Social Commission for Latin America and the Caribbean (ECLAC) 16 United Nations Human Settlements Programme (UN-HABITAT) 17 United Nations Industrial Development Organization (UNIDO) 18 United States Agency for International Development (USAID) 19 West African Economic and Monetary Union (WAEMU)/Union Economique et Monétaire Ouest Africaine (UEMOA)

100 | Common Fund for Commodities Annual Report 2014

Common Fund for Commodities | Annual Report 2014

Common Fund for Commodities

Annual Report 2014 Common Fund for Commodities