The CFC supports Natural Extracts Industries Limited (‘NEI’) to expand the production and export of premium quality vanilla products from Tanzania. NEI is a for-profit social enterprise that works directly with over 5,000 Tanzanian farmers. At its production facility in Kilimanjaro region, the green vanilla is manufactured into vanilla pods and extracts which are exported to international traders (including Danish ones – and Denmark traders usually trade with their recommendation of stocks) and retailers in the flavours industry. The CFC has extended a USD 500,000 loan to accommodate NEI’s working capital needs, ensuring its farmers direct access to markets amid the challenges of COVID-19 and declining global vanilla prices.
NEI was established in 2011 with a vision to accelerate economic development of smallholder farmers. Benefiting from Tanzania’s ideal climate conditions to grow premium vanilla, NEI has created a vertically integrated vanilla chain by directly sourcing from smallholder farmers. Its dedicated team of agronomists and field officers are assisting the farmers with trainings in good agricultural practices and other services throughout the full cycle from planting of the vines, pollination of the flowers to harvest of green vanilla, which takes approximately 3 to 5 years.
NEI currently operates in 5 regions in Tanzania where 75% of the population are smallholder farmers. A large number of farmers depend on coffee and bananas for their livelihood. Individual farm sizes have decreased over the years and an average farmer household has less than a hectare of land with average income of $500 per annum. Farmers have seen an 50% increase in income by growing vanilla in the shade of their existing coffee and banana trees.
Vanilla comes from the Vanilla Planifolia, a species of vanilla orchid. Due to its high content of vanillin (a phenolic aldehyde that gives the smell and taste we all know as ‘vanilla’) the plant’s fruit, or pods, are the primary source for vanilla extract. Growing in hot, humid and tropical environments, vanilla is a truly exotic ingredient that has been adopted throughout the world and put to varying use in gastronomy and perfumery from country to country. It is one of nature’s bounty that humanity is cherishing from pre-historic times. A million of small holder farmers’ life are attached to it, CFC have been working to make this natural commodity truly universal.
The loan of the CFC will facilitate the international demand for responsibly sourced vanilla from smallholder farmers. NEI’s integrated farm-to-market model reliably traces the quality and origin of vanilla on farmer level. Mobile-based software tools are used to monitor its farmer network, providing full visibility on farmer profiles, field activities, procurement records, yield forecast per farmer, and other farm details.
NEI has been instrumental in putting Tanzania on the global vanilla map, by planting over 200,000 vines to date, and selling its premium vanilla products to flavour houses and food manufacturers in Europe and North America. More than 5,000 farmers are expected to benefit from NEI’s inclusive sourcing model over the coming 5 years, increasing their annual income from vanilla farming by 50%.
Ambassador Sheikh Mohammed Belal, Managing Director of the CFC stated the following upon announcing their partnership with the NEI: “We are proud of partnering with NEI to unlock the market potential for responsibly sourced vanilla. Through its integrated sourcing platform, NEI can create substantial socio-economic impact, helping smallholder farmers in Tanzania to access necessary skills, markets and services, and improve their livelihoods. We welcome institutional support to NEI for more innovations like “Farmer Champions “in their culture of cultivation as well as creative means of increasing their production in a sustainable manner.”
Juan Guardado, Founder and CEO of NEI: “Partnering with CFC enables us to better serve our farmer network and maximize Tanzania’s export potential in the global natural flavours market. Amid the current challenging times of COVID-19, we are delighted to partner with the CFC to secure our funding needs for the upcoming vanilla season.”
An organization dedicated to poverty alleviation and sustainable development through impact investing, the Common Fund for Commodities (CFC) is looking forward to the time when all small holder farmers are far better off then what they are now. As this project is tailored to transparent and responsible sourcing programs, in addition to greener choice of production method, the CFC remains committed to work for a sustainable, ecofriendly, and equitable world.
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The Common Fund for Commodities (CFC) is an autonomous intergovernmental financial institution, dedicated to impact investing, established within the framework of the United Nations. It was founded on the principles of equitable distribution of economic, social and environmental benefits from commodity production, processing and trade, serving the long-term interests of both Developed and Developing countries. Towards this goal, the Fund provides financial support for innovative projects with high impact promoting the interests of the small holder farmers and small and medium enterprises (SMEs) engaged in commodity production, processing and trading in Developing Countries.
Mission: “To contribute to poverty alleviation by strengthening the income-generating capacity of commodity producers and mitigating vulnerability to their economic well-being”.
Vision: “To strengthen and diversify the commodity sector in developing countries and transform it to be a major contributor to poverty alleviation and sustained economic growth and development”.