The International Forum on Strategic Studies for Agriculture and Livestock Development

and Respect for the Climate

Deborah La Franchi CEO & President, Strategic Development Solutions

FEED 2011

Financing Agricultural Solutions to Feed

9 Billion People

Financing Targeted Solutions

Maximizing Sustainable Agricultural

Food Production

Quality Infrastructure Roads, Rail, Irrigation, Storage & Processing Facilities

Water Management Collection, Storage, Conservation

Maximizing Production Effective Input Usage Crop Selection, Fertilizer, Pesticides, Irrigation, Equipment

Soil Management Erosion and Leaching Reduction, Nutrients, pH Balance, Crop Rotating

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Seek Biodiversity Intercropping, bio-diversification

Leverage Technology GPS, Satellite, Communications

Maximizing Production Access Technical Training Farming & Business Management

Invest in R&D/Crop Improvement Nutrient-Rich, Drought-Tolerant, Insect/Disease- Resistant, Short Growth Cycle, High Yield

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Risk Mitigation Credit Guarantees; Crop, Livestock & Index Weather Insurance

Conducive Policy & Regulation National & Local Laws, International Trade Policies

Maximizing Production Maximize Land Use Multiple Harvests, Mixed Crop/Livestock Systems, Pasture Conversion

High Access Capital, Inputs, Local & Intl Markets, Value-Chains

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Funding the Solutions to Feed

9 Billion People

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Large Scale Agriculture

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Huge Contributor to Global Food Supply

Mega Farms make up 20% of Land in Mato Grosso

Competitive Financing, Highly Skilled Employees, and International Financing

Brazil Ex: 2010 law limiting foreign land ownership

Global Ex: Madagascar Case Study

Risks to Large Scale Investments

Large Scale Agriculture

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Brazil Case Study: Adecoagro

• Foreign investors • Direct corporate management of

farms • Technical teams to collect farm

data & implement best practices • Environmental Plan • Result: IPO, publicly traded

Large Scale Agriculture

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Global Case Study: Sustainable Agriculture Fund (Australia)

• Domestic investors (Pension Funds), privately held company

• Direct corporate management of farms • Technical teams to employ best

practices

Large Scale Agriculture

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Small & Medium Agriculture

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Ayyagari, Beck, and Demirguc-Kunt, “Small and Medium Enterprises Across the Globe: A New Database”, 2003.

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Small & Medium Agriculture

Ayyagari, Beck, and Demirguc-Kunt, “Small and Medium Enterprises Across the Globe: A New Database”, 2003.

Brazil Case Study: Agricultural Cooperatives

Number of Cooperatives 1,615 Number of Members 942,147 Number of Employees 138,829 Participation on Agricultural GDP 37.2% Participation on Cooperative GPD 47% Exports (2009) US $3.6B

Small & Medium Agriculture

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Brazilian Cooperative Organization; www.brasilcooperativo.coop.br

Rabobank Sustainable Agriculture Guarantee Fund

Small & Medium Agriculture

M.O.U.

Rabobank International

Rabo Sustainable Guarantee Fund

Financial Intermediaries

Cooperatives/ SMEs

Smallholders

FEES

Fund Management AAA Guarantee

Security

Financing

Financial Benefit Suppliers

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Rabo Sustainable Guarantee Fund Brochure: Guarantee Structure. Rabobank International

Summary: • World-wide brand • Small contract

farmers, primarily S. America

• Medium-sized traders, processors

Challenges: • Financing • Doesn’t want

to be banker • “Missing

middle” • Payment timing

Case Study: McIlhenny’s Tabasco Sauce Suppliers

Small & Medium Agriculture

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Case Study: African Agricultural Capital

• Venture capital fund

$5M; raising $25M • Investment specialty

in ag-related SMEs • Provides financial

expertise

Small & Medium Agriculture

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Case Study: Victoria Seed Co., Uganda • Provided subordinated debt financing

• Money used to upgrade packaging, distribution

• Loan repaid in 2010 • Nationwide presence

Small & Medium Agriculture

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Global Case Study: Ag Ventures Alliance

• Iowa value-added cooperative • Tax credits & capital contributions to

invest in business development

Small & Medium Agriculture

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Case Study: ReNewable Ventures, LLC

• Develop fertilizer plants • Uses ag waste (biomass) to

generate power for fertilizer plants

• Small and medium size farms are owners of the fertilizer plant, suppliers of raw material & end-users

Small & Medium Agriculture

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Smallholder Farming Market Segment & Characteristics

• Land size 2 ha or less- shrinking • Labor dependent on family • Little Income • Little access to technology &

training • Vulnerable in supply chain

• Limited capital & market access • Little risk management tools • Limited crop diversification • In remote areas with poor

infrastructure

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Syngenta Foundation for Sustainable Agriculture. Smallholder Mapping (2008)

• 450 million farms worldwide

• 1/3 world population depends on for livelihood

• Countries range in utilization: China 98%, India 86%, Ethiopia 82%, Brazil 20%

In the Developing World:

Smallholder Farming

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Syngenta Foundation for Sustainable Agriculture. Smallholder Mapping II (2011).

Agricultural Microfinance Solutions

Smallholder Farming

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• 160 million served by microfinance

• Suited to smallholder’s needs • Offers: capital, savings,

training, networking, technology, remittances, risk mitigation

• Challenges: agriculture’s cyclical nature, remote areas, collateral, inherent risks

Brazil Case Study: ACCION International • Roots in Brazilian

microfinance • World microfinance

pioneer since 1961 • First microloan ever in

1973 in Recife, Brazil

Smallholder Farming

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Brazil Case Study: ACCION Microfincas

• Feb 2011: Opened and expanded services to remote northern region

• 14.7 million people; 1.9 million entrepreneurs

• Only 8-10% accessed capital from financial organizations

Smallholder Farming

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Brazil Case Study: Project ELO (“link”)

• Northern Brazil: 2005-current • Part of Projeto Dom Helder Camara: local

gov’t-based agriculture, social development & infrastructure support enterprise

Smallholder Farming

Project Objectives

• Give access to innovative technologies • Support development to improve living conditions in

semi-arid areas • Reduce crop losses - harvest, transport, market • Promote food safety & market access • Support education & solidarity organization

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Case Study: Judhi Kilmo Co. • Kenyan For-Profit microfinance org • 80% Kenyans are smallholder farmers • 36% rural Kenyans have no access to

financial services • Acumen Fund & Grameen Foundation

made $1.75M investment • Offers: capital, insurance, training,

technology, solidarity group loans • 7,000+ borrowers; grow to 25,000 by 2015

Smallholder Farming

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Case Study: African Sustainable Micro- finance Fund (FEFISOL)

• $15M Euro fund - July, 2011 (target $30M)

• 1st medium-term financing to rural microfinance institutions and small fair trade producer businesses, organic products & food production

• REGMIFA compliment: promotes micro, small-med, Sub-Saharan enterprises

Smallholder Farming

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This presentation is available on our website www.sdsgroup.com

Contact :

Deborah La Franchi CEO & President, Strategic Development Solutions

Los Angeles, CA dl@sdsgroup.com

+1.310.914.5333

FEED 2011