The Rabobank approach to value chain finance
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Rabobank Group
Global challenges
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Global challenges
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Rabobank Group
Three units serving worldwide supply chains
$
Rabobank International
Rabobank Development
Rabobank Foundation
Development Phase
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Rabobank Group
Rabobank target countries
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Rabobank main target groups
COMMERCIAL
No financial
opportunities and not
recognized by support
providers
EMERGENT
SMALL SCALE
SUBSISTENCE
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Considerable support
both financial and
technical
Considerable
support both
financial and
technical by
NGOs and
Government
Rabobank Group
Agriculture and Agribusiness
Source: Rabo India Finance, A. Datta, 2007
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Rabobank Group
How to turn a supply chain into a value chain?
Product req'ts
Producer
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Customer
Consumer requ'ts
Rabobank Group
Review of the Value Chain
Source: Rabo India Finance, A. Datta, 2007
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Rabobank Group
Value Chain Finance Framework
Source: Terrafina/J. de la Rive Box, 2009
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Rabobank Group
Towards more inclusive value chains
Frontier areas in Value Chain Finance
Commercial
large scale
agriculture
Value Chain Volume
Number of farmers
Fully
Commercial
value chains
Interventions
Commercial finance
Bank finance barrier
Emerging
Value Chains
Emerging
VCs
Development finance
Microfinance
Family agriculture
Localized markets only
Family
agriculture
Inclusion barrier
Value chain development programs
Producer organization
Market development
Source: Terrafina/J. de la Rive Box, 2009
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Rabobank Group
Integrated Agriculture Finance Structure
Supplier
Equipment purchase contract
Insurer
Insurance contract
Buy-back agreement
Transfer of lease payments
Rabobank
Down payment
Lease contract
Farmer
Processor
Long-term raw materials supply contract
Source: Rabo India Finance, A. Datta, 2007
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Rabobank Group
Agribusiness risks are complex
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Rabobank Group
New mitigants are required
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Rabobank Group
Financial dimensions of a value chain
Chain with small farmers and small retailers
Chain with small farmers and large institutional processor or retailer
Source: Modern Value Chains, K Schwedell
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Rabobank Group
Case: Passion fruit from Ethiopia
An outgrower incubator approach based upon foreign
investment
• Five experienced Dutch entrepreneurs studied the potentials of
Ethiopia and decided to invest almost €12 million in a new
enterprise to buy, rehabilitate and expand an existing stateowned fruit farm in the Upper Awash region of Ethiopia. It is a
new venture that has set targets to become a major producer
and exporter of tropical fruit juices, purees and concentrates
from select countries in Africa to the large markets of Europe
and the Middle East.
• An integral part of the project is the active promotion of an Outgrower
Scheme, which will result in new producer cooperatives (in total approx.
1300 hectares) to become suppliers to the new processing plant, in
effect giving the local farmers efficient access to export markets and
much improved access to commercial financing
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Rabobank Group
Ethiopia: Project Location
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Rabobank Group
Ethiopia: Schematic of end objective
collateral
equity
Community “Trust”
Fruit
Juice products
dividends
$
Fair Trade premium
Social development
18
repayments
banks
coop union
loans for
growth
prod.
coop1
prod.
coop2
aJ processing
Export
market
etc
opportunity
Micro
finance
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inputs & support
aJ plantation
Rabobank Group
Case: Cooperative Banana Farmers in Peru
• Banana farmers in Northern Peru organized in a cooperative
take up pre-export processing and fair trade certification.
Whereas historically they supplied large multinationals, they
now do the quality control, washing, packaging and exports by
themselves, thus almost doubling farm incomes.
• CEPIBO is a Union of Small Producers of Organic Bananas in Northern
Peru established in 2007. It represents 1500 small producers of
bananas with an average of approximately one hectare each. It is
responsible for marketing of organic products (both locally and exports)
and it has the organizational and technological capacities that allow
them to promote fair trade throughout the commercial chain and
diversify the productive system in a sustainable manner.
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Rabobank Group
Cooperative Banana Farmers in Peru
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Rabobank Group
Case: Women milk farmers, India
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Rabobank Group
Rabobank Foundation
“ Making a difference “
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Rabobank Group