Annual Report 2022 V

Photo: Transporting sacks of seed and fertiliser, Pottuwil, Sri Lanka. © FAO/Prakash Singh

As an impact investor, the CFC finances investments that can generate a greater social and economic impact in developing countries. To be a credible and effective impact investor, the CFC recognises the need for a robust and efficient system for measuring and managing impact.

To this end, the CFC's Executive Board approved a new impact strategy in October 2018. This chapter provides further information on the strategic focus, implementation, and impact highlights of the CFC's loan portfolio in 2022. Additionally, three impact stories from featured CFC investments are introduced.

CFC’s Impact Strategy Framework – Sustainable Development Goals

CFC's Impact Strategy Framework is based on the Sustainable Development Goals (SDGs) which serve as a universal call to action to put an end to poverty, protect the planet and ensure prosperity for all people. By building upon the Millennium Development Goals (MDGs), the SDGs balance the economic, social, and environmental dimensions of sustainable development, which a focus on tackling the root causes of poverty and promoting sustainable and prosperous global development.

While every country has primary responsibility for its own economic and social development, collaborative partnerships that bring together governments, civil society, and the private sector are widely believed to be the most effective way to take transformative and bold steps towards a more sustainable and resilient world. The CFC has adopted the SDGs as its impact framework in response to this call to action.

Given the crucial economic role of commodities, CFCfinanced projects have the potential to impact the advancement of all 17 SDGs. However, CFC's impact management strategy primarily focuses on identifying its direct positive impact on selected "core" SDGs where the impact is most apparent and measurable across the entire portfolio of supported projects. In doing so, the CFC seeks to have a clear and comprehensive view of its contribution towards achieving the SDGs on a portfolio-wide basis.

SDG 1 is more critical now than ever before. The global extreme poverty rate increased for the first time in over two decades in 2020¹ due to the pandemic. With double-digit inflation and the war in Ukraine, it is estimated that as many as 198 million extremely poor people were added in 2022.² Poverty perpetuates a cycle of limited access to basic services, education, and healthcare, impeding the ability of individuals to contribute to their community. Achieving SDG 1 requires investment in social protection systems, empowering marginalised communities, supporting small businesses, and creating sustainable job opportunities. The CFC contributes to SDG 1 by investing in businesses that improve people’s livelihoods throughout the supply chain, by among others, training and providing stable demand to smallholder farmers in developing countries.

The combined challenges of the pandemic, soaring food prices, and the war in Ukraine have threatened progress toward achieving zero hunger (SDG 2). This particularly applies to rural households that rely heavily on small-scale farming for their meals and income. According to the latest estimates, between 720 and 811 million people worldwide were suffering from hunger in 2020,³ and this number is likely to have increased due to the COVID-19 pandemic.⁴ In addition, over 2.4 billion people were experiencing moderate to severe food insecurity, lacking regular access to adequate food. In 2022, the number of people facing acute hunger rose from 282 million to a record 345 million people in 82 countries.⁵ Hunger and malnutrition can lead to a wide range of negative impacts, such as stunting and other health problems, reduced cognitive development, lower productivity, and decreased economic growth.

The CFC supports a world where everyone has access to safe, nutritious, and sufficient food. It invests in SMEs that aim to increase smallholder productivity and build farmers' resilience to external risks. By improving access to credit, technical assistance, and other resources, the CFC helps to ensure that people can access safe and nutritious food year-round, supporting their livelihoods and contributing to global food security.

Despite efforts to achieve gender equality by 2030, progress has been further hampered by the socioeconomic impact of the pandemic. Women and girls have been disproportionately affected by job loss, interrupted education, increased unpaid care work, and domestic violence. Moreover, despite the effective leadership of women in responding to COVID-19, they are still excluded from decision-making roles. In agriculture, where women make up 43% of the labour force in developing countries, gender disparities persist in access to productive resources, including land rights, technology, finance, and income distribution. By prioritising investments that promote gender equality, such as women-led enterprises, employment creation for women, and high representation of women in senior positions, the CFC contributes to achieving SDG 5, ensuring that women have equal access to resources, opportunities, and decision-making positions.

Before the pandemic, informal employment already represented a staggering 60% of global employment. However, the pandemic and resulting containment measures had a devastating impact on informal workers. Unlike in previous crises, when laid-off employees and self-employed workers shifted to informal jobs or became unemployed, COVID-19 prevention measures prevented labour reallocation to informal employment. Many workers were forced to leave the labour force altogether, exacerbating the already precarious position of informal workers and their families. This was reflected in a decline in the informal employment rate in some countries, leaving many workers exposed to sudden income losses and at heightened risk of falling into poverty. While the global unemployment rate declined slightly to 6.2% in 2021,⁶ it remains well above the pre-pandemic rate of 5.4%. The International Labour Organization (ILO) estimates that unemployment will remain above its 2019 level until at least 2023. Additionally, almost 1.4 billion workers are in vulnerable forms of employment, lacking job security, regular incomes, access to social protection, and opportunities for social dialogue. In this context, the importance of creating decent jobs cannot be overstated. The CFC recognises this and supports investments that generate employment with decent working conditions, particularly in SMEs. By investing in these projects, the CFC helps to create quality jobs, promote inclusive and sustainable growth, and uplift vulnerable communities around the world.

Before the pandemic, certain progress was made in decreasing income inequality in some countries and lowering transaction costs of remittances, among other areas. Nonetheless, inequality remains pervasive in various forms, such as wealth, opportunity, and beyond. Unfortunately, the pandemic has amplified existing inequalities within and between nations, with the most vulnerable individuals and poorest countries bearing the brunt of the impact. To combat inequality, the CFC supports investments in the most vulnerable regions globally. By aiding individuals to earn a fair share of the global value generated from commodities, the organisation is working to decrease inequality and foster more equitable opportunities for all.

The profound impacts of climate change on commodities have significant implications for SMEs in developing countries. SMEs operating in this domain face a multitude of challenges arising from climate-related factors, necessitating a comprehensive understanding of the importance of climate change in financing strategies. Extreme weather events, including droughts, floods, and heatwaves, disrupt agricultural production, damage crops, and disrupt value chains. To access international markets and attract discerning customers, SMEs must also demonstrate their commitment to environmentally responsible production and sustainable value chains. As such, CFC-supported SMEs are well-positioned to capture new opportunities that combine both climate action and business sense.

SDG 13 is the most recent addition to the list of core SDGs for the CFC. Climate change has far-reaching implications for commodity production, trade, and livelihoods of smallholder farmers. By including SDG 13, the CFC seeks to bolster the economic prospects of smallholder farmers through climate finance to SMEs.

Measuring CFC impact across its portfolio

Measuring impact using the SDG framework can be challenging despite its wide-ranging scope. This is because monitoring targets is done nationally and globally, making it difficult to attribute the contribution of a specific organisation to specific goals. To address this challenge, it is necessary to convert the SDG framework into specific indicators. The CFC has adopted the Impact Reporting and Investment Standards (IRIS+) as its main reporting tool, which is a catalogue of the most useful metrics from the impact investing industry. This makes it easier to measure performance. The CFC has mapped the most relevant IRIS+ metrics related to respective SDGs and selected the main indicators to be monitored by its projects. As a result, the CFC can overcome reporting difficulties and ensure that its projects have a positive impact on the SDGs.

Implementing the impact strategy

The selection of proposals that receive support from the CFC is largely based on their potential development impact. For this reason, each investment proposal submitted through the Open Call for Proposals is expected to provide indicators of the intended impact. Since the 13th Call for Proposals in 2018, the CFC has required prospective investees to present the estimated impact of their projects using the SDG framework. Specifically, proponents must explain how their project will contribute to the advancement of the core SDGs and provide target impact indicators for each year of the project, as well as baseline values using the IRIS+ metrics. Projects that fail to provide this information are typically not recommended for further consideration during the screening stage.

At the due diligence stage, the CFC reviews the impact indicators and incorporates them into the project agreement between the CFC and the project proponent. The agreement ensures that the project strives to accomplish its intended outcomes and reports specific impact indicators, as agreed upon with the CFC. This data is submitted to the CFC annually along with financial reporting. The CFC’s Impact Strategy is characterised by regular and consistent impact reporting in addition to financial indicators.

The CFC collects diverse information regarding the impact of its projects over their life cycle while seeking to minimise the overhead burden on the operational, organisational, and human resources. The CFC follows a robust approach covering impact indicators and impact measurements requiring project proposals to include the following:

Target Indicators: The indicators should clearly demonstrate the intended level of achievements for each year of the project. The CFC expects that these will be systemically assessed and reported by the proponent, demonstrating that the implementation plans are feasible and not based in unrealistic assumptions;
Baselines: Baseline levels for impact indicators should be included in the proposals. The CFC reviews and compares baseline data with other sources, e.g. similar projects;
Data on achievements: The CFC systematically follows up the achievements of its supported projects to ensure timely and accurate reporting of the progress and impact. The follow up procedures are introduced, and project proponents are informed of the consequences of incomplete or late reporting on the implementation and eventual success of the project;
Monitoring and Evaluation: Selective monitoring and evaluation for individual projects may be included but is generally constrained by the financial and human resources made available by the project proponents. The current focus of the CFC is on developing a practical approach for monitoring and evaluation across the entire CFC project portfolio;
Financing of Project: Projects receiving CFC support frequently include larger financial institutions as co-financiers. Combining resources and technical facilities of the CFC with co-financiers enables more intense and detailed impact monitoring.

Social and Environmental Management System

In addition to measuring the positive impact of its projects, the CFC recognises the significance of evaluating the potential social and environmental risks associated with its activities. As a result, the CFC has collaborated with the International Labour Organization’s Social Finance Programme to establish its Social and Environmental Management System (SEMS).

Systems of this nature are intended to empower financial service providers to identify social and environmental hazards linked to a specific transaction. These systems also allow them to take these risks into account when determining whether to provide funding. Furthermore, these systems assist in identifying prospects to enhance social and environmental performance.

When evaluating a project, the CFC has always considered the environmental, social, and governance (ESG) risks associated with it. This assessment is part of the entire process of evaluating a new proposal, starting with the initial screening of applications, and continuing with the ongoing monitoring of active projects. Despite this, given the significance and intricacy of the matter, the CFC has decided to go beyond its existing practices by aligning its procedures with the industry's current best practices in impact investment. To accomplish this, the CFC developed its own SEMS.

The CFC has partnered with the ILO to create various tools and procedures that methodically evaluate the social and environmental risks associated with potential projects. These bespoke tools consider the CFC’s specific configuration and the sectors in which it operates, encompassing all phases of the CFC’s investment process. The main result of this initiative was the endorsement of the CFC’s Sustainability Policy by the Executive Board. This policy sets the criteria for evaluating the social and environmental risks of CFC’s operations.

Impact measurement: an on-going work

The CFC acknowledges that the impact investing sector lacks a well-established and robust system that enables all investors to manage and track their impact effectively. While the sector has risen to the task of assessing social and environmental impact, substantial advancements in new tools, frameworks, and standards have emerged in recent years. Despite this progress, the development of comprehensive and dependable parameters that match those utilised for risk and return in the traditional financial market is still a long way off.

The CFC recognises these challenges and endeavours to support the advancement of a robust impact management framework within the sector. To this end, the CFC collaborates with numerous relevant stakeholders in the field and strives to stay abreast of the sector's most effective practices.

The CFC recognises that a comprehensive understanding of impact metrics requires an analysis of the projects’ operating context to provide a more holistic view of its social and environmental performance. Raw figures alone cannot accurately indicate positive or negative social value, nor can they be easily compared across companies or products. As a result, the CFC fosters close working relationships with its projects and intends to conduct more extensive qualitative and quantitative research on a subset of its investments in the future. This integrated approach serves as the foundation for the CFC to convey a credible narrative of its SDG impact. Additionally, as the CFC gains insights from these experiences, it can make more effective investments by identifying and evaluating sectors, regions, and financial instruments that are crucial to generating practical impact.

Photo: Farmers harvesting rice. © FAO/Hoang Dinh Nam

While preparing this Annual Report, it is important to mention that not all projects have provided updated impact reports for 2022. Many projects still face disruptions in their value chains, including fluctuations in input and commodity prices.

Consequently, some companies have needed to restructure their financing. Nevertheless, at the portfolio level, the overall operations of the CFC show an increased impact in 2022 compared to previous years, thereby setting a record in reaching farmers.

Below we present a brief analysis of the main indicators corresponding to the SDGs framework:

CFC-financed projects have substantial prospective benefits, with approximately 440,000 people reached. The primary target group encompass small-scale farmers who contend with the challenging circumstances of living below the World Bank's established poverty threshold of USD 2.15 per day and/or the living income. These individuals are likely to witness a significant augmentation in their income; potentially elevating them from their existing impoverished state. Although not all initiatives have submitted their impact figures, the estimated annual net income increment for the beneficiaries ranges between USD 248 and USD 5,500. In the year 2022, CFCfinanced projects directly profited 92,000 farmers. The endeavours of the CFC illustrate the potential for substantial socioeconomic progression through precise interventions and inclusive financial approaches.

The additional income received by the people we reach through CFC-financed projects has the potential to contribute to food security, thereby also contributing to SDG 2. Moreover, several projects supported by the CFC play a crucial role in expanding cultivated land areas and enhancing crop productivity for smallholder farmers, which can have a positive impact on SDG 2. In total additional land cultivation amounted to over 60,000 hectares.

The CFC places significant emphasis on empowering vulnerable groups, particularly women, in its projects. Many of the projects supported by the CFC actively contribute to women's empowerment by offering training, employment opportunities, and access to new markets, among other initiatives. Projects are expected to report gender-related metrics such as the percentage of female beneficiaries, total jobs created for women, representation of women in senior positions, and female ownership. In the current portfolio, approximately 31% of estimated beneficiaries are expected to be women.

The projects backed by the CFC are estimated to have supported 11,000 jobs, thereby providing employment opportunities for individuals in vulnerable circumstances. The annual income per job created ranges from USD 3,795 to USD 29,525. In 2022, CFC projects supported employment opportunities for 3,000 permanent and 7,900 temporary employees, offering favourable conditions for decent work and contributing to economic growth.

The CFC focuses on supporting interventions in developing countries, with particular attention given to projects targeting vulnerable regions and countries, including Least Developed Countries (LDCs) and Landlocked Developing Countries (LLDC). Within the current portfolio, nearly 33% of approved investments are allocated to LDCs across 10 projects and 15% to LLDCs across five projects.

CFC’s investment in Natural Extracts Industries (NEI) came at a particularly opportune time for the Tanzania-based agribusiness. We began working with NEI in 2019, just as the price of vanilla began to fall from its peak and only a few months before the Covid pandemic brought the world to a standstill.

As an impact investor we aim to finance viable agribusinesses that drive positive change in the communities around them. That takes long-term commitment and a willingness to stick with them through challenging times. This was a moment to practise what we preach.

‘The double whammy of declining prices and Covid created a lot of uncertainty,’ says NEI Co-founder and Managing Director Juan Guardado. ‘But the Common Fund kept going with us so we could weather that storm, which was really fantastic because nobody knew what was going to happen to the market.

CFC financing helped NEI to continue paying its smallholder farmers for their vanilla, giving them much needed financial security. It also put NEI into a strong position to take advantage of the opportunities that would emerge during the pandemic. ‘2020 was actually a really good year,’ adds Juan. ‘Covid forced everybody to eat and cook at home and we had retail-focused customers who increased volumes significantly. So even though prices were coming down volumes kept up.’

For farmers that meant they could continue planting vanilla crops in the knowledge NEI would provide a secure market for them. This has helped keep the average increase in income per NEI farmer on trend, with that figure hitting USD 291 in 2022, equivalent to more than 25% of GDP per capita in Tanzania.

Since 2020 the number of farmers benefitting from working with NEI has expanded from around 6,000 to more than 10,000. On a recent trip to Tanzania CFC Impact Investment Manager Peter Nielsen visited one of those smallholdings in the Kilimanjaro region near NEI’s processing facility in Moshi, accompanied by NEI Field Officer Jacqui Shayo and the Vice President of Operations Godbless Baluhya.

On the farm, run by a smallholder called Priscilla, he met Cleopa, a smallholder champion who represents 100 farmers in the area. Cleopa described how the farm’s 100 vines have generated valuable extra revenue for Priscilla. There are costs to cover, including labour and the expense of irrigation during the dry season. But most of that money is reinvested into the farm or used to pay for school fees, creating both economic and educational opportunity.

To help kickstart this revenue stream, NEI provided vines subsidised at 20% of the cost, as well as training in how to intercrop vanilla with the smallholding’s coffee and plantain plants. Working with NEI also means Priscilla benefits from its commitment to direct farmer payments, which results in smallholders receiving around 60% of the export price and 25% more than a middleman would offer. The traceability tech that verifies this, provided by SourceTrace, also enables NEI to track field work data such as how many times they’ve trained a farmer and who may need extra support.

NEI's Godbless (left) and Jacqui (right), smallholder representative Cleopa (middle left) and Reinhart (middle right) grandson of the farm's owner.

From a CFC perspective, Peter says: ‘NEI sets smallholders up for success by providing access to inputs such as vines and a connection to international markets that gives them economic certainty in terms of pricing and demand. For many of these smallholders vanilla has become their main cash crop and we’re looking forward to helping NEI reach more farmers and expand their processing capabilities.’

The CFC has so far disbursed more than USD 1 million to NEI, and the company aims to build on this support by expanding its reach to around 30,000 smallholders in the years to come. This will help it further develop the reliable supply chains large vanilla buyers are looking for.

‘Big buyers wait for scale in a value chain before they commit, so they know the origin can guarantee the volume they need. Many of the top ten global flavour houses are now buying from us,’ explains Juan.

The potential to increase the volumes being sold to those influential customers is part of a wider east African story that Juan is eager for NEI to contribute to. He sees an opportunity for the region to provide the diversified vanilla supply chain larger international buyers are looking for, to counter the price volatility that often afflicts the sector. ‘There is huge scope for growth left,’ he says. ‘We’re developing a sustainable value chain and operate in more than seven regions in Tanzania, but vanilla’s potential goes beyond us as a company. Tanzania’s economy has come on in leaps and bounds recently and there is a large young population looking for the opportunities a thriving industry can offer. We need to be focussed on creating industries and taking a systemic view across the value chain.’

The goal is to expand Tanzania’s share of the global vanilla market from 1% to 5%. NEI hopes to play a large part in that growth and, importantly, continue to pass the rewards down to the farmers who make it possible. At the CFC, we’re excited to see our investment supporting a company that is genuinely enhancing the livelihoods of smallholders. Smallholders are keen to benefit from the programme. After conducting focus groups in just two regions of Tanzania, NEI estimates there is an opportunity to plant more than 100,000 shade trees on over 1,200 acres, benefitting more than 2,000 farmers.

One of the keys to a successful agribusiness is the strength of the relationships it has with its smallholder farmers. That's why vanilla producer Enimiro Products Uganda Limited (Enimiro) is committed to building long-term partnerships with smallholders that create economic opportunity and contribute to the growth of the vanilla sector in Uganda.

Founded in 2019, Enimiro now works with more than 4,000 smallholder farmers. We recently spoke to two of them, Manana Stephen and Naduntu Joweira, who have been working with Enimiro since 2020. Both were already growing vanilla, but Enimiro’s support has enabled them to expand and improve their production. In fact, Manana’s farm has grown from 80 to 240 vanilla vines, and he expects to yield between 100kg and 200kg this year, up from 70kg last year.

The additional income generated by these harvests can significantly boost farmers’ livelihoods. It will help Naduntu pay for her children’s school fees, renovate her home, and build an animal house: ‘I want my animals to sleep better and eat better’, she says. As her cultivation area expands, she will also hire someone to help her with the harvest.

Enimiro encourages farmers to grow vanilla and supports those in its network to improve their productivity and growing practices. Extension Officers such as Mercy Naigaga, work alongside smallholders to help them adopt practices that are sustainable both economically and environmentally. This is having a wider positive impact. For example, after seeing his father evolving with the company, Manana’s son also started growing vanilla for them, demonstrating the value of establishing trusted relationships with farmers.

For Manana, who has seven children, the additional income from vanilla will help him enhance his farm and improve living conditions for his family. ‘I’d like to thank the CFC for their support to Enimiro, and consequently to us farmers’, he says. ‘Before working with Enimiro, we didn’t have a secure market and we used to sell through traders, who would pay us little money. But Enimiro offers a fixed and sustainable price, and they’ve also helped us get a fence and wheelbarrow to secure and facilitate our activities.’

Both Manana and Naduntu mention that theft is a major issue. Farm security and economic security go hand in hand and Enimiro is keen to support both. Like Manana, Naduntu is receiving help to combat thieves and ensure the smooth running of her farm. She will also use the additional income from her vanilla harvest to purchase a protective fence for her field.

Farmer Naduntu Joweira (left) and Extension Officer Mercy Naigaga (right) who oversees extension activities in the Eastern region.

By increasing security, more land can be opened for crops. In the past Manana kept his field as bush to put off thieves. Fencing gives him the confidence to grow valuable vanilla plants, as does the knowledge to take care of it which he’s gained from Enimiro.

With the help of Extension Officer Philip Ssentongo he secured the area and transformed it from bush into a field ready for farming. Training in soil and water conservation techniques, such as trenches and mulching, then helped him grow a healthy crop. Philip also advised on how to create shading for vanilla, which is a crucial technique since, says Manana, ‘vanilla loves shade, but if there is too much, it won’t yield. It needs a balance’.

The benefits of Enimiro’s operations are rippling through the local community and wider value chain. The company is leading the push to develop a transparent Ugandan vanilla chain with its traceability system, and through community engagement it is ensuring farmers understand the advantages of working with them. This builds the trust smallholders need to continue investing in their farms and boosting their livelihoods, which in turn has a positive impact on their families’ educational and health outcomes.

At the other end of the value chain, the certifications achieved by Enimiro’s products show customers they are genuinely driving local impact and improving smallholder lives.

For Enimiro Managing Director, David Wright, the critical part of ensuring this impact is paying farmers on time. That comes down to the availability of working capital, which many agribusinesses in Africa struggle to access and is one challenge our investment can help to overcome. This lack of financing leads to an informal sector, which is prominent across the continent and characterised by delayed payments and increased risks for farmers.

A financial structure that enables timely payments to smallholders is the foundation stone of a business that truly supports them, says David. Enimiro has combined this with direct farmer engagement and a robust traceability system that underpins its activities.

CFC's investment has been critical in unlocking Enimiro’s potential. Before receiving USD 800,000 in CFC trade finance in 2022, Enimiro had to wait for customer payments before it could pay farmers, which threatened their income security. With timely payments now possible, Enimiro is building farmer confidence, which makes it easier to work together on quality and certification issues. As David explains: ‘It’s important to ensure that farmers trust you as a partner’.

‘Without the CFC, we wouldn’t be the company we are today. You were the first ones that took the jump, allowing us to become more investment ready with other investors. So, a huge ‘thank you’ for all that the CFC has done for the business and the vanilla sector in Uganda’, he adds.

This kind of investment showcases the power of developing trust throughout a commodity value chain. ‘When there is trust between the parties involved, they are more likely to work together towards common goals, pooling their expertise, knowledge and resources for sustainable development,’ says CFC Chief Operations Officer Nicolaus Cromme.

By continuing to work together, we hope we’ll soon have more stories like those of Manana and Naduntu to share.

Much has been written about the potential of big data and tech innovation to revolutionise agriculture and create more efficient food systems. But extending the benefits of technology to remote smallholder farmers and gathering accurate information about them that can shape effective policymaking is a challenge.

At the CFC, we're keen to support technological innovations that improve the ability of smallholders to enhance their livelihoods. We've recently taken our commitment one step further by investing EUR 300,000 in Netherlands-based firm Meridia, which is driving transparency in food chains and ensuring the equitable treatment of smallholder farmers.

Chief Executive Officer Thomas Vaassen describes Meridia as ‘a geospatial data company that puts farmers at the centre of its work to make supply chains transparent, sustainable, and inclusive of smallholders.’

From the CFC's perspective, Meridia offers benefits all along the supply chain. The firm specialises in collecting, analysing, and verifying high-quality data in smallholder supply chains. This helps food companies achieve environmental, social and governance (ESG) standards and compliance, while building supply chains that are inclusive of smallholders.

Tracing commodities back to the farms where they were grown has historically been difficult. But, explains Thomas, ‘our software provides accurate farm mapping and field data collection – farms can be mapped even in the most remote locations.’ Collecting this data has numerous advantages for smallholders. ‘They become visible and can access regulated supply chains, sustainability programmes, and investments to maintain a stable income and stop deforestation.’

In addition, farmers gain better insights into their productivity and a deeper understanding of their business. For example, exact farm size and production data enable accurate yield per farm calculations. At the same time, clear parcel boundaries lower the risk of conflict in communities. This verified data also enables smallholders to secure land rights for themselves and future generations. Having land documents embeds prosperity by giving them greater control over land use and the income it generates.

‘As increasingly larger volumes of farmer data are collected, farmers need better access, use and ownership of their data to improve their livelihoods,’ says Thomas. ‘Data needs to be governed in a farmer-centric way. As part of several large consortiums, we have taken up important data stewardship activities to secure land rights and tackle issues related to agroforestry for cocoa farmers and cooperatives in West Africa and Indonesia.’

Photo: Meridia

If this data is unavailable, smallholders risk being excluded from the supply chain. It is also a business imperative for food companies that rely on smallholders, as regulations evolve and consumers become more conscious of a brand's sustainability credentials.

Field data quality is the key to ensure compliance with the upcoming EU Regulation on Deforestation-Free Products (EUDR). However, the rigorous farm data required is hard for companies to achieve. It is particularly challenging to get this data within the tropical commodities sector, where around 75% of crops are grown by smallholder farmers.

Meridia helps companies overcome these challenges and prepare for compliance. Through assessing supply chain data and verifying its quality, compliant and none-compliant data are separated. Data verification can also unlock other benefits, like accurate farmer payments and carbon calculations.

Thomas describes the regulation as a ‘game changer’ because it turns nice-to-have internal policies into organisation-wide requirements necessary to meet mandatory regulations. ‘Companies that do not comply with the new regulation risk penalties, supply chain disruptions, and reputational harm, directly affecting their customers,’ he says.

Meridia has a track record of providing this much-needed transparency for multi-national companies such as the chocolate and cocoa business Barry Callebaut. The firm's Global Lead of Thriving Nature, Tilmann Silber, says: ‘To measure and further strengthen the impact of our agroforestry programme, we rely on high-quality data at the farm level. Our partnership with Meridia helps us to take the next step in data collection and management and will further boost our sustainability activities.’

Working with Meridia will enhance our ability to ensure the agribusinesses we invest in are truly delivering positive change on the ground, says CFC Risk and Portfolio Manager Hector Besong: ‘Technology has huge potential to enhance the lives of smallholder farmers and is becoming critical to large food brands that must prove their supply chains are living up to their ESG claims. Meridia's ability to gather and analyse robust and reliable data has a key role to play in creating global food systems in which smallholders can thrive, and net zero can be achieved.’

CFC Managing Director Amb. Sheikh Mohammed Belal added: ‘Anything that helps to bring the developing and the developed world closer together is a win-win enterprise for us. By applying innovative technology in countries such as Ghana, Côte d’Ivoire and Indonesia, Meridia is providing us with deep insights into the commodity value chain that we couldn’t access before. It is an example of how technology can be used to enhance the value chain for both the producer and the consumer.’

As the potential for tech innovation to reshape agriculture grows, we're excited to have partnered with a leading business in the sector that will support our mission to build more equitable food systems.

Search

Annual Report 2022 V

Recent Posts