responsAbility opens up smallholder finance for investment
Fair trade: an exciting investment theme
Zurich, 1 July 2014 – Fairly traded products are growing in popularity. In 2013, sales of Fairtrade International-certified products in Switzerland grew by 15%, while worldwide their consumption rose by 20% to over USD 65 billion. Today, some 1.3 million smallholder farmers in 70 countries profit from fair trade. They, along with cooperatives, traders and importers, require working capital for their economic activities. The Swiss asset manager responsAbility Investments AG has been successfully mobilising private funds towards this purpose for nearly ten years.
Across the globe, a billion people are engaged in agriculture. That amounts to a third of the world’s entire working population. Their efforts are matched by a continually growing worldwide demand for food: experts1 predict that by 2050 this demand will increase by at least 60% as compared with today’s levels. If smallholder farmers organised in small- and medium-sized farming organisations are to seize the opportunities arising from this growth in demand, they will require an additional USD 13 billion in net investments from private investors.
For the last ten years, the Swiss asset manager responsAbility Investments AG has specialized in this development-related sector of emerging economies, which has enabled private investors to help satisfy some of the need for working capital. Furthermore, since 2011 it has been operating an investment fund especially geared towards sustainable agriculture that is licensed for public distribution in Switzerland. Demand on the part of investors has almost doubled since 2012 and continues to rise rapidly, in hand with the need for financing in emerging markets and developing economies. As of today, responsAbility has invested a total of USD 88 million in sustainable agriculture through various funds and has 23 employees engaged entirely to this area. They work with about 100 enterprises in 39 countries, which together produce or market 30 agricultural commodities as diverse as coffee, cocoa, quinoa and cashew nuts.
The vast majority of investees, many of them agricultural cooperatives, require pre-export financing with relatively short terms to maturity. They use this to purchase crops from smallholder farmers at or before the harvest, thereby bridging the period until payment by the importer has been received. Cooperatives usually pay better prices than other intermediaries, and use – if available – premiums from Fairtrade-certified sales for direct payments to smallholder farmers, technical support or other social projects. In addition, many smallholder farmer organisations seek to develop processing capacities so that they can add value to their products. As this requires building factories or purchasing processing equipment, long-term financing – which responsAbility also provides – is often needed.
Klaus Tischhauser, co-founder and CEO of responsAbility, explains: “Over the last few years we have seen steep growth in investments into smallholder finance. Investors appreciate the ability to obtain stable returns in the current low-interest-rate environment while simultaneously contributing to economic development in emerging markets and developing economies. All of this makes fair trade an exciting investment theme.”
responsAbility Investments AG
Ulli Janett, Media Relations
Telephone: +41 44 250 67 15
E-mail: ulli.janett [at] responsAbility.com
responsAbility Investments AG is one of the world’s leading independent asset managers specializing in development-related sectors of emerging economies. They comprise the areas of finance, agriculture, energy, healthcare and education. responsAbility provides debt and equity financing to non-listed companies with business models that target the lower-income section of the population and can thus drive economic growth and social progress. responsAbility offers professionally-managed investment solutions to both institutional and private investors.
Founded in 2003, responsAbility currently has more than USD 2.0 billion of assets under management, which are invested in over 470 companies in more than 80 countries. responsAbility is headquartered in Zurich and has local offices in Paris, Lima, Mumbai and Nairobi. Its shareholders include a broad range of reputable institutions in the Swiss financial market as well as its own employees. responsAbility is registered with the Swiss Financial Market Supervisory Authority FINMA.