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case ...........................................................................................................................2 Triodos Sustainable Trade Fund
(an extension of prior trade finance programs) was unveiled in early 2008 at bioFach, the World Organic trade Fair which brings together more than 46,000 visitors from over 120 countries.
Organic and fair trade exporters in emerging and developing countries generally lack access to adequate finance. this is a significant problem, particularly at harvest time. if farmers cannot receive timely payment for their produce they are
the triodos sustainable trade Fund is one of a number of special purpose funds at triodos bank and offers trade finance loans that assist organic and fair trade producers to access the markets of europe and the United states. the new fund
repayment of the loan and pays the remainder to the seller. this continues throughout the harvest season, so that by the end of the harvest season the loan has been fully repaid.
Koert Jansen is Fund Manager at triodos for the sustainable trade Fund. When speaking with him, one can easily surmise that he really enjoys his job and is committed to triodos and the Fund. His current portfolio is estimated at Usd 19 million. Jansen comments, “triodos saw a huge need. Local banks generally perceive these loans as too risky and only accept fixed assets for collateral.”
triodos began its trade finance programs in 1995 in cooperation with Hivos and doen Foundation. these programs were a success and paved the way for the launch of triodos sustainable trade Fund earlier this year. the focus remains on helping organic and fair trade farmer groups to scale up and avoid selling on the street to predatory buyers.
“At triodos we are dedicated to creating longterm partnerships throughout the supply chain: from the farmer to the final buyer.” Without the Fund, farmers may not be able to become truly part of the supply chain and therefore unable to plan for future years. the Fund enables the cooperatives to guarantee purchase of the crop from their farmers, in time and at premium (organic and fair trade) prices. “imagine what it would be like to have no access to finance just when demand is increasing,” remarks Jansen.
often forced to sell at a discount to local middlemen. this represents a real bottleneck in the growth of organic and fair trade projects and prevents farmers from increasing their level of income.
A central element of the loan is that the seller, the buyer and triodos sustainable trade Fund agree that all payments on the contract are made through a triodos bank account. each time a payment is received; triodos sustainable trade Fund withholds part of it for the
Triodos Sustainable Trade Fund
Jansen talks about the funding structure of the new Fund. “triodos bank is funding the Fund with a credit line. twothirds of the credit line is unsecured (for the risk of triodos bank) and one third is secured by third party guarantees. “Given our good track record in trade finance triodos bank is prepared to give the Fund this high leverage. this structure enables guarantors to multiply their financial commitment by a factor of three. targeted guarantors are social investors and foundations. the Fund is currently still open for new guarantors.”
the funding structure shows the commitment on the part of triodos bank. this has enabled the Fund to offer loans to 25 cooperatives and private companies in over 10 different countries in Latin America and Africa. Loans which have enabled farmers to bring to market certified organic and fair trade soy beans, coffee, cotton and oil seeds. Jansen is proud of triodos’s role and believes that a ‘triangular relationship’ provides for success; “We at triodos have direct relationships with the seller (the client) and the buyer.”
As this issue of Upsides is looking at various aspects of impact, we asked Jansen to talk about the impact of the oil crisis on the Fund’s clients. Jansen explained that increasing oil prices have seriously increased their clients’ transport costs, especially since they transport goods over long distances over land and water. still, part of these higher costs can be passed on to the buyers. Jansen feels that the more important change has been increased speculation in
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is that these markets have become more volatile than ever before. in such an environment, it is difficult to maintain existing trading relationships and this puts a strain on the sustainability of supply chains.”
How has triodos faired in the midst of this turbulent environment? Jansen says that “We are financing
existing, longstanding trading relationships which have so far survived the rollercoaster rides of the different commodity markets”. We know the chains that we are financing, through screening the suppliers as well as the buyers.
As part of his role as Fund Manager, Jansen travels to visit his clients. He
agricultural and other commodity markets in general. Unprecedentedly large amounts of money have been flowing into the commodity markets, mostly speculating on the buying side of the market. the resulting higher prices are benefiting farmers, although much of the benefit is skimmed off by intermediary traders. the downside however
coffee commodity market and represents a venture which is socially and environmentally responsible as well as cultu rally enhancing. indeed, coffee holds a sacred place in their country. the best ethiopian coffee can be compared with the finest coffee in the world. perhaps an ancient proverb best describes the place of coffee in ethiopian life,
remembers particularly the coffee crops produced in ethiopia as part of a union of 21 cooperatives, “this coffee is certified as organic and as fair trade; coffee which wasn’t available seven years ago due to government constraints. After all, ethiopia is coffee’s country of origin. it is quite special. the price of this specialty coffee is linked less to the
“buna dabo naw”, which when translated means “coffee is our bread!”
case 2
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Bo Weevil: Sustainable finance for sustainable textile
bo Weevil produces organic cotton in turkey and in Uganda. the cotton is produced according to the european regulation for organic agriculture. in turkey, the organic production is certified by control Union. the Ugandan organic cotton is certified by ecocert international. this cotton also complies with Us (NOp) certification. All textile products sold by bo Weevil are produced with certified organic cotton (fiber) and can be recognized by their trademark: ecotton®.
textile is made in turkey and india, and is certified by control Union. Finishing and dyeing have a negative impact on the environment. Within the sustainable textile program of control Union (stp) it is possible to treat fabrics and garments with a minimum of effect on the environment. However, after the treatment, the fabrics and
garments cannot be called organic any longer and are therefore called sustainable textile. the stp is a private law certification program. the eKOsustainable textile logo is sown into the textiles and is a statement of sustainable production is given for fabrics.
in addition to organic certification, cotton from Uganda is Fair trade certified (from the 2007 crop). ecocert combines the inspections for Fair trade and organic production.
clothing, towels, and fabrics are produced in turkey, and bags in india. in order to show bo Weevil’s commitment to humane labor conditions bo Weevil is a member of the Fair Wear Foundation (www.fairwear.nl). this membership obliges bo Weevil to improve labor conditions in cooperation with the producer to a level that is in accor
dance with the standards of the international Labor Organization (iLO). Fair Wear Foundation has the production site inspected annually by an independent third party.
Bo Weevil is a partner in the Triodos
Sustainable Trade Fund.
Boweevil organic cotton wool
. ....................................................................Triodos Sustainable Trade Fund
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