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Supporting Smallholders

Supporting Smallholders. Smallholder Task Force meeting Kuala Lumpur, RSPO, RT7 November 1, 2009. Objective and Agenda. Objective: Explain what IFC is—and isn’t—and how we work with smallholders Order of Presentation IFC Overview IFC projects with smallholders globally

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Supporting Smallholders

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  1. Supporting Smallholders Smallholder Task Force meeting Kuala Lumpur, RSPO, RT7 November 1, 2009

  2. Objective and Agenda • Objective: Explain what IFC is—and isn’t—and how we work with smallholders • Order of Presentation • IFC Overview • IFC projects with smallholders globally • IFC Advisory Services projects related to palm oil

  3. IFC Overview

  4. Who We Are, What We Do • The only global multilateral institution focused exclusively on the private sector — the global leader in private sector development finance • Owned by 182 member countries • Collaboratewith other members of the World Bank Group including, IBRD and IDA, MIGA, and the International Centre for Settlement of Investment Disputes • Make a unique contribution to development • Promote environmental, social, and corporate governance standards • Create opportunities for people — improving lives in poorer countries

  5. Our Vision That people should have the opportunity to escape poverty and improve their lives.

  6. IFC is a Member of the World Bank Group MIGA Multilateral Investment and Guarantee Agency IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation Est. 1945 Est. 1960 Est. 1956 Est. 1988 To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6,055. - Technical assistance - Loans - Policy Advice To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice To promote private sector development Private companies in member countries - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services To reduce political investment risk Foreign investors in member countries - Political Risk Insurance Role: Clients: Products: Shared Mission: To Promote Economic Development and Reduce Poverty

  7. Investments by Industry, FY09 Commitments for IFC’s Account: $10.5 Billion SubnationalFinance 3% Private Equity and Investment Funds 3% Oil, Gas, Miningand Chemicals 7% Agribusiness 7% Global FinancialMarkets 45% Infrastructure 14% Health and Education 2% Global Information and Communication Technologies 5% Global Manufacturing and Services 14%

  8. Working with Smallholders

  9. Smallholder Development Focus Areas Client Level Offerings • Productivity • Standards • Finance • Sustainability Sector Level Offerings • Sector-specific regulatory • Eco-Standards

  10. Project/CorporateFinance Inputs Production Agri. Marketing Processing Marketing Distribution Market Infrastructure Market Institutions Pre-HarvestFinance TradeFinance Risk Sharing Facilities IFC Global Agribusiness: Supporting the Entire Value Chain

  11. Supporting small farmers through IFC’s Investment • Investing in agribusiness companies and food retailers with an extensive small farmer supplier base • Channeling financing through intermediaries • Processing companies • Traders • Financial institutions • Providing advisory services and technical assistance directly to small farms

  12. Employment Creation Farmers Reached SMEs Reached Technical Assistance 1,450 Total Direct Jobs 2,300 Farmers Reached 60 Ind. Distributors Over 250 jobs Efforts to improve small farmer productivity and income 50-80% 250 Seasonal Workers 3,300 additional indirect jobs 15,000 Points of Sale Dairy sector: Conaprole (Uruguay) Two expansions of dairy product facilities to efficiently utilize global competitive advantages of Uruguay’s largest dairy cooperative, and one of its largest employers. • IFC Role • Provide long-term loans not available in local market • Improve farmer productivity • Institute environmental and social best practices and guidelines

  13. Employment Creation Farmers Reached SMEs Reached Technical Assistance 500 Direct Jobs Created 24,000 Farmers Reached 600 Wholesale Distributors Avian Influenza Management 3,600 Total Employees $300 avg monthly income / farmer 12,000 Suguna-branded live bird kiosks Biosecurity - Supply Chain Mgmt Poultry sector: Suguna (India) Project to more than double sales for India’s pioneer and market leader in integrated poultry production. The company’s direct purchasing provides farmer incomes and its backbone kiosk structure provides employment for retailers. • IFC Role • Long-term partner for mid-tier growth company preparing for IPO • Sharing of poultry sector expertise • Corporate governance best practices in preparation for IPO

  14. Via Traders: Latin Coffee Brazil Soybeans America US$25M Loan 2002/4 US$60M Loans 2006 Via Financial Institutions: Mexico Farmers & SMEs Mexico Farmers & SMEs 2008 US$9M equiv. 2008 US$6.8M equiv. Peso Credit Line Peso Credit Line US$2M Equity Via Processors: Ukraine Fruit & Veggies Russia Dairy 2004/6 US$40M Loans 1998 US$10M Loan IFC Supports Diverse Models of Farmer Financing

  15. Advisory Services is a Significant Part of IFC’s Contribution…a few examples worldwide North Andre, China Development of a traceability system to enable small farmers to meet GLOBALGAP standard in the apple sector Mindanao Banana, Philippines Support smallholders to access premium markets through certification, development of sustainable standards and improving access to finance Agri Sector Support, Cambodia Promote standards and certification in cashews and rice. ECOM, Africa/Asia Establishing Farmer Training Centers to support small farmers to increase productivity, improve quality and meet international standards Beef Working Group, Brazil Multi-stakeholder partnership forming in Brazil to define sustainable cattle standards Indonesia Partnership w/ Ecom focusing on cocoa, GFI/PetraFoods and Armajaro focusing on cocoa, and GarudaFoods focusing on peanuts

  16. IFC Advisory Services in Oil Palm

  17. IFC Advisory Services in Palm Oil • Indonesia’s oil palm industry faces numerous social and environmental challenges • IFC is reviewing its role within the oil palm industry and determining how best to proceed • IFC is increasing engagement in and support of the RSPO and associated standard-setting process, and developing and implementing an Advisory Services program for Indonesia

  18. Oil Palm AdvisoryEnabling Environment, Indonesia • Project objectives • Identify and reduce regulatory constraints to sustainable oil palm development, including sustainable certification by smallholders • Project description • Work closely with sub-national and national level governments: Central Kalimantan, West Kalimantan, Jambi, Riau • Project Phasing • Component 1: Identify reform priority and proposed recommendations > 8 months • Component 2: Design solutions and reform implementation • Component 3: Dissemination of reform (agenda, targets, initial achievements)

  19. Oil Palm Advisory Information available at: www.bacp.net • Objective: Preserve biodiversity within agricultural landscapes through market transformation in palm oil, soy, cocoa and sugarcane • Four oil palm projects approved so far – new RFA launched • Now in year 2 of a 10-year grant-making facility (2 phases of 5 years) funded by GEF and several other donors with four components: Main Outcome Indicators 10% of global trade volumes buy certified or verified products Producers representing 25% of global trade are engaged in certification/verification systems At least 5% of the production landscapes are positively affected

  20. BACP – Oil Palm Projects to Date Fauna & Flora International • Work to identify HCVF and degraded areas fit for cultivation • Assist district governments in land planning • Facilitate the adoption of HCVF assessment and management • Zoological Society of London • Design, test, and implement guidelines and BMPs • Reduce or remove policy barriers to implementation of RSPO’s P&C PanEco Foundation • Develop palm-oil plantations on fallow or degraded land with smallholders • Close existing concessions on peat land • RSPO • Biodiversity Technical Committee • Biodiversity Coordinator

  21. Oil Palm AdvisoryOther Inputs to RSPO • Greenhouse Gas Working Group • Staff time in working group • Smallholder Task Force • Input to guidance on scheme smallholders • New Planting Working Group • Staff time in working group • Ghana National Interpretation Working Group • Staff time & support being finalized • Other • Input related to HCV Assessors Qualifications and Experience Draft Guidance

  22. Thank you for your time Ernest E. Bethe III, Program Manager, Agribusiness ebethe@ifc.org

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