Rabobank: Food, Agri & Africa. Bouwe Taverne Head Sustainable Development

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1 Rabobank: Food, Agri & Africa Bouwe Taverne Head Sustainable Development

2 Resource efficiency is key How to feed 9 bn and fuel the economy sustainably? 2

3 Contents Rabobank & CSR Development banking (Foundation & Development) Food & Agri Principles and Policies Examples in Africa Questions/discussion 3

4 Rabobank & CSR Rabobank & CSR Introduction through film

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6 Development Banking: Rabo Development & Foundation 6

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8 Non-commercial: Rabobank Foundation 8

9 Rabobank Foundation in Africa 9

10 Rabobank Foundation Expanded from a small relief organisation into a professional development organisation 200 projects per year 75 in The Netherlands and 125 abroad Focus on fighting poverty and neglect Loans ranging from 100 dollars to s and 1 million Increasingly internal relation with rural banking 10

11 What is Microfinancing? Buying chickens to sell eggs Starting a bicycle repair shop Purchasing fishing nets and other fishing gear to catch fish 11

12 Working method New businesses first receive a donation to build up capacity, then loans can be granted in local currency Loans are granted in local currency Group loans based on solidarity, mutual suretyship, group pressure Individual loans: with suretyship or liability and/or limited collateral 12

13 Support trade chains Emphasis on improving the structure of the trade chains and cutting out middlemen Setting up co-operatives of small farmers and agricultural workers so that they form a significant party in the sector. This usually results in a higher price for the products (coffee, cacao, citrus fruits, cotton and sugar) 13

14 Sustainable Agriculture Guarantee Fund Access for selected small- and medium-sized producers of sustainable agricultural products in developing countries to working capital credit on the basis of commercial and sustainable terms The fund issues partial credit guarantees to mitigate risks An instrument for financial intermediaries e.g. banks and financial institutions Eligible co-operatives are those that have outgrown The assistance / financing possibilities provided by the Rabobank The participants Rabobank, the Dutch Ministry for Development Co-operation, Cordaid, Solidaridad 14

15 Semi-commercial: Rabobank Development 15

16 BTlogo Partner Banks Rabo Development in Africa Rwanda BPR Tanzania NMB Zambia Zanaco Mozambique Banco Terra Rabobank Group 16

17 Agri Key to Development Sub Sahara Africa Agri contributes 17 % to GDP; 40% to exports and employs 60 % of people But, African agricultural production per capita decreased since 1970 Agricultural GDP same as in Thailand and a quarter of Brazil Participation in international agri trade only 4 % 7 out of 10 African countries are net food importers Whereas, Only quarter of arable land is under cultivation, land titles often unclear 1% increase in agricultural yields lifts 2 million people out of extreme poverty Rabobank 17 Group

18 Requirements for Agri to eradicate Poverty Better quality and higher productivity, those require agri technology, technical assistance and finance to farmers Better infrastructure (physical, markets, institutions), this requires investments and capacity building Organization of fragmented supply of primary production and access to affordable finance are conditions to achieve these requirements. Rabobank 18 Group

19 Essence of a co-operative Create a balance in economic power between oligopsonistic demand side (e.g. few off-takers agri commodities) and many suppliers (farmers); By creating countervailing power through organizing farmers. Most co-operatives are active in agriculture (predominantly primary agri) and in (rural) banking, both in industrialized and in developing countries. Rabobank 19 Group

20 Significance of Co-operatives In industrialized countries In the European Union farmers co-operatives account for 60 % of processing and marketing and for 50 % of input supply (including banking) In the Netherlands a farmer is a member of 4 co-operatives on an average And in developing countries The International Co-operative Alliance consists of 221 co-operatives from 88 countries, representing 800 million members. But there are many more. Co-operatives provide 100 million jobs around the world (more than multinational enterprises) Rabobank 20 Group

21 Shortcomings Co-ops Many co-operatives depend financially or regulatory on government support and restricting regulation. Consequently, often co-operatives are used as an instrument for government policy which undermines (business) objectives and (financial) solidity. Governance and management not appropriate and not of good quality. Capacity building is required to solve this problem. Ideological approach of co-operatives by donors and governments. Co-operatives are businesses in order to serve the interests of its members. Rabobank 21 Group

22 Credit Co-ops mostly grassroot organizations Credit co-operatives in developing countries serve groups of small farmers that have no direct access to banks. They are community based and use social control as an instrument for repayment, and therefore can serve the informal economy well. However, when the financial industry is consolidating, they will not survive: hardly economics of scale and therefore relatively high interest rates concentration of credit risk (same crops, weather, disease) their best (most profitable) customers will go to (better equipped) banks lack of professional management (too expensive) Rabobank 22 Group

23 F&A Principles & Policies 23

24 Foodchains Upstream Downstream 24

25 CSR policy framework 25

26 Food & Agribusiness Principles Rabobank Group Vision: Sustainable business will gain an edge on competition and contributes to common wealth Food & Agribusiness regards the entire value chain Our five Food & Agribusiness Principles: 1. Aiming for food safety and food security 2. Using natural resources responsibly 3. Promoting social welfare 4. Treating animals responsibly 5. Enabling citizens and consumers to make wellconsidered choices 26 Rabobank Group

27 F&A Principles enable strategic Corporate Social Responsibility (CSR) Integrated approach in two ways: risk management and strategic choices to attune CSR to commercial options Risk management by applying CSR criteria within customer due diligence and loan assessment Strategic CSR by engaging in: - Round tables such as RTRS, RSPO, BSI and BCI - Programmes to organize small holders - Programmes to develop sustainable financial services - Programmes to improve the access to affordable financial services in developing countries - Programmes of Solidaridad to support soy, sugarcane and palm oil smallholders 27 Rabobank Group

28 Sector policies 1. Palm oil 2. Soy 3. Cotton 4. Sugar Cane 5. Cocoa 6. Coffee 7. Forestry 8. Fishery Wildcatch 9. Aquaculture 10. Biofuels 11. Mining 12. Oil & Gas Roundtable on Sustainable Biofuels Aquaculture stewardship council 28

29 Sustaining value chains NGO s Inputs Producers Trading Processing Feed Food industry Animal Proteins Distribution & Consumer Financial Institutions 29 Rabobank Group

30 Active throughout the supply chain Often not the core business of our client! Core expertise Rabo Foundation 30

31 Example: Progresso Coffee Fund The chain (from crop to cup) Every program has a number of components: Capacity building for the producer organisation Technical assistance) Providing access to finance markets Diversifying sources of income Dedicated organisations in Asia, Latin America and Africa Assisting about 20 co-operatives of coffee producers, 8 countries 160,000 small coffee farmers involved The coffee is sold under Fairtrade label, thus providing higher proceeds 31

32 Check SME local bank clients From risk analysis to better management practices Check RI clients 32

33 Building sustainable supply chains Stakeholder and consumer pressure Transparency - sustainability - traceability responsibility Responsible sourcing Sustainability labels & supplier audits and certification Strengthening of supply chain relationship engagement From direct footprint to indirect footprint How/where can we help you 33

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