CASE STUDY: PRODUCERS DIRECT

CAF team collaboration helped us shape a new social investment to support farmers in East Africa

25 August 2020

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Regional area:            International
Sector:                         Communities
Social investment:     £75,000 unsecured loan
Purpose:                      Development capital to develop trading income 
SDGs:                            We believe the organisation contributes to the
                                      UN’s Sustainable Development Goals (SDGs) to improve food security, climate                                                          resilience and decrease poverty.
                           
                                            

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Improving the livelihoods of international farmers

CAF Venturesome has recently made a social investment in Producers Direct, a farmer-led organisation set up in 2009 to improve the livelihoods of smallholder farmers in East Africa and Latin America.  The social investment, when fully drawn down, will be a £75,000 unsecured loan.

Producers Direct creates opportunities for smallholders to share, build upon and strengthen their knowledge and expertise.  Farmer ownership and leadership is central to all its activities. 

Producers Direct was created by the Fairtrade coffee company, Cafédirect, to be an organisation led by farmers with the experience, knowledge and expertise of rural farming communities.  Cafédirect continues to make an annual donation to Producers Direct of £100,000 and the majority of its funding has, until recently, come from grants and donations.

New income from farmers’ product sales into national markets

The organisation is now looking to develop its trading income while enhancing farmers’ incomes through the sale of Producers Direct branded products into national markets in East Africa – starting with honey. To do this it decided to apply for social investment finance to supplement secured funding from donations and producer partners. It has now raised £123,000 development finance to allow it to offer affordable micro loans to farmers to purchase equipment such as bee hives and other apiary essentials to build capacity.  Typically, smallholder farmers – especially women and young people, experience challenges having a loan application approved by traditional lenders and/or face high interest rates on loans they can secure (up to 20%)

CAF teams supporting each other

CAF Venturesome provides social investment to build the capacity of high-impact social organisations operating all over the world, as long as they are based in the UK.  We conduct thorough due diligence on every organisation we work with and we often ask for the support of our CAF colleagues with sector and geographical expertise.

Our investment officers met with Michael Mapstone, Director - Programmes and External Affairs, UK and International so that he could explain the international context for organisations working with smallholder producers and farmers like Producers Direct.  His experience of leading CAF’s international partners to support social organisations all over the world helped us shape the application.  With Michael’s support we were able to present the Producers Direct application to our independent investment committee confident that we understood the financial risks involved in supporting the project, whilst also being able to demonstrate Producers Direct’s high social impact. 

Delivering impact now more than ever

As a result of Covid-19, the support from organisations such as Producers Direct to smallholder farmers and producers and their livelihoods is now more necessary. In response to the pandemic Producers Direct are putting increased emphasis on delivering services to smallholders through digital challenges, including training and access to markets – recognising that in-person movements remain restricted.

Producers Direct’s impact makes farming a more financially viable option for people, and ensures they can meet increase demand for food production. Since inception Producers Direct work has improved the livelihoods for 1 million farmers and their families; 90% of which have increased their productivity and 50% increased their income.  In 2018, Producers Direct reached 424,000 farmers across East Africa and Latin America.

This social investment is for 5 years and we look forward to seeing the impact that their support has on even more farmers and their families.