Agriculture / Business / Economic

Helping farmers secure sustainable finance

Recognition, acceptance and demand for Rainforest Alliance Certified products by consumers and companies is growing fast.  With this growth comes the need to help identify, introduce and link small and medium sized enterprises (SMEs) right along the supply chain to sustainable sources of investment and to funders. With our expertise in the field – in what is often termed out “muddy boots” approach – international funders recognize that Rainforest Alliance Certified™ farms and producers have built environmental, social and economic sustainability and resiliency into their practices.  This goes a long way to encourage lenders to lend. 

Helping local producers gain access to funding when they need it is one aspect of farm management the Rainforest Alliance is working on.  It can be as important as our farmer training programmes, often making a difference to whether a farm stays viable or goes under. Not only it is important to cultivate lending partners who will work with local producers, it is also important we collaborate with the stakeholders in the global financial community to identify and innovative financing approaches and tools.

The Rainforest Alliance already collaborates with NGOs, bilateral and multilateral government and private agencies, and the traditional lending community to develop innovative financing vehicles to support sustainable practices all along the supply chain.   We are finding that as the wider investment communities seeks to incorporate “sustainable” asset classes into their portfolios, a growing numbers of hedge funds, private equity funds and other asset management firms are engaging the Rainforest Alliance in a dialogue on best practice.

In 2011 the Rainforest Alliance, with a grant from Citi Foundation, created the Sustainable Finance Initiative (SFI).  The SFI enables the Rainforest Alliance to coordinate global efforts to meet demands for greater financing options and avenues for producers along the entire supply chain.

The first key output of the Sustainable Finance Initiative was a successful workshop in April, 2011.  Sponsored jointly by the Rainforest Alliance and Citi Foundation this workshop brought together stakeholders throughout the agriculture supply chain to address issues and explore questions regarding the current state of supply chain finance.  Participants included representatives from numerous NGOs, bilateral and multilateral agencies, financial institutions and multinational corporations, which source from Rainforest Alliance Certified™ producers.

Major topics tackled included; exploring current sustainable supply chain financing practices and performance, identifying areas for improvement in enabling conditions for lending, uncovering opportunities for greater stakeholder collaboration, exploring ideas for sourcing and structuring alternative financing vehicles, addressing the weak links in the supply chain such as the need for innovations in risk mitigation vehicles and enhanced methods for managing and sharing of information.   A follow-up workshop is planned for the end of January in New York.

With the creation of the Sustainable Finance Initiative, the Rainforest Alliance is mobilizing efforts to facilitate and develop more sources of sustainable supply chain finance and investment for local producers.  We look forward to keeping you in informed of our progress.  Stay tuned!

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