Check the latest projects of NewForesight™ and ForeFinance™ in the second edition of our Newsletter!

For the past months we have been working in close cooperation with the Better Sugarcane Initiative and been involved in several innovative sustainability initiatives for the herbs and spices sector and RTRS.We are happy to announce that the ForeFinance™ project has been launched and pilots are starting in Kenya.
We thank all our clients, partners and friends for your business, trust and inspiration. Enjoy!

Our partner Finance Alliance for Sustainable Trade (FAST) is hosting the “FAST Financial Fair” (FFF) from the 2 – 3 September, 2010 alongside the XXII Latin American Coffee Symposium in San Pedro Sula, Honduras. The FFF will facilitate one-on-one meetings between FAST lending members and producers and give qualified producer organizations the opportunity to present their sustainable business plans and potentially achieve financial success with lenders. Make use of this great opportunity: Please visit the FAST website to download and complete the necessary forms and submit them to fff@fastinternational.org. Please note that meetings will be scheduled on a first come first serve basis so it is recommended to submit your information by 16 August 2010. For further information, please contact Daniel Ascencio: daniel.ascencio@fastinternational.org or call +1 514 759 6626.

ForeFinance officially started it's pilot projects with a workshop on July 22 in Nairobi. In the pilot projects, five producer groups will be profiled according to the ForeFinance Credit Risk Assessment Methodology. The workshop was attended by over fifty people from producer groups, financial institutions, NGO’s, governmental organizations and audit companies.

The participants in the workshop, with the theme “Enhancing Access to Finance for Agricultural Producers”, entered into interesting discussions which showed the need of bridging the information gap between financial institutions and producers. The morning session was mainly about the need for agrifinance and the problems producers and financial institutions encountered in the marketplace. Farmers and bankers engaged into discussions with each other, which made clear that the need for more transparency about producer groups and more support for financial institutions is necessary to increase agricultural finance in Kenya. Besides the presentations by ForeFinance about the concept and the Credit Risk Assessment Methodology, presentations were made by the Co-operative Bank of Kenya, UAP and AgriFinance PM&C, amongst others. 

The afternoon session was focused on the producer groups to prepare them for a pilot. Control Union, an audit firm, explained what producer groups could expect in an audit. At the end of the afternoon, five producer groups committed to participate in a pilot, which will be conducted in August. 

PRESENTATIONS - Click on one of the links to download the presentation

• Lucas Simons (ForeFinance) - ForeFinance Introduction
• Lucas Simons (ForeFinance) - Credit Risk Assessment Methodology
• Pithon Mwangi (Co-operative Bank of Kenya) - The ten commands of agrifinance
• Guus Rozendaal (ForeFinance) - AgriFinance De-risking
• Isaac Magina (UAP) - Agric Insurance Derisking
• Kalkidan Wubie (Control Union) - What is involved in a ForeFinance audit
• Jaime ter Linden (ForeFinance) - A profile & credit rating
• Alphonce Muriu (AgriProFocus) - AgriProfocus Kenya

ILEIA has published an 3-page article about the ForeFinace concept in their June issue of 'Farming Matters'.

Many farmers in developing countries are too big to get support from microfinance institutions, yet too small for commercial lenders. The result is a group known as

the “missing middle”. In this article ForeFinance explains how its innovative model of 'credit-scoring' aims to bridge this cap and serve this missing middle.

ForeFinance presented its concept to the World Cocoa Foundation. This conference was hosted by the Rabobank. In total 200+ companies and organisations were present to discuss the sustainable future of the global cocoa industry,

ForeFinance recevied many positive reactions and invitations for pilots and partnerships.

NewForesight™ together with LizMuller, llc have been asked to support and facilitate the development of the UNDP Green Commodities Facility (GCF). The main objective of the GCF is to create market driven, national strategies that involve local governments and institutionalize the market shift towards the production and sales of sustainably produced commodities.

NewForesight™ and LizMuller co-produce with the UNDP the GCF strategies and materials and will identify and assess market opportunities that are likely to be the strategic partners and funders of the GCF.

Companies, NGO's and sustainable commodity initiatives that are interested in working with the UNDP GCF can contact NewForesight.

For more information on the Green Commodities Facility visit the UNDP website.

Over the past three months NewForesight™ has chaired and facilitated the RTRS (Round table for Responsible Soy) ‘Traceability and Market Claim Working Group’ to identify credible and cost-efficient traceability and labeling options for linking certified soy production in origin to responsible end markets. The outcome of this working group was a unanimous strategic recommendation to the RTRS board for the development of a traceability and market claim strategy. The RTRS Board has acknowledged and accepted the strategic recommendation and will start its operationalisation in the months to come.

The Traceability and Market Claim Working Group (TMC WG) has been funded by the IDH and consisted of 18 members from different stakeholder interest groups within the soy industry. Through an intensive three-month period of giving training on the various traceability models and their relation to the dynamics of a sustainability program, conducting market research into the communication and claims needs of the market, identifying the lessons learned from the RSPO in their development and implementation of a traceability and market claim strategy, and organizing workshops and facilitating discussions, NewForesight™ has supported and facilitated the TMC WG to come to a unanimous strategic recommendation for the development of a traceability and market claim strategy that is supported by all working group members and accepted by the RTRS Executive Board.

The Outcome:

The RTRS will take a pragmatic approach to traceability. The RTRS traceability system will operate four traceability models that will work in conjunction with each other to transform the mainstream soy market to become fully responsible over time, where eventually soy products contain responsible soy. These 4 traceability models include: 1) Segregation, 2) Mass Balance EU RED (compliant with EU RED requirements), 3) Mass Balance Group Company (on a national level), and 4) Certificate Trading. The physical trade of certified responsible soy through the Mass Balance and/or Segregation models will be supported through a de-centralized system of supply chain certification, based as much as possible on already existing structures. The trade in Certificates will be supported through a centralized web-based system.

For more information on RTRS’s supply chain traceability and labeling strategy or the workings of its traceability system, read the full strategic recommendation report.

* Strategic Recommendation Report: Strategic Traceability and Market Claim report (PDF)

To speed up the implementation of the Better Cotton Initiative’s (BCI) sustainability criteria, NewForesight™ has facilitated and supported the creation of a “Better Cotton Fast Track Program”.  The Program currently consists of Ikea, Levi’s H&M, ECOM, WWF International and is funded by ICCO, IDH, and Rabobank Foundation and has the objective of reaching a production of 1 million metric tons of sustainable cotton lint by 2015 based upon the commitment of frontrunner brands and retailers to implement Better Cotton into their supply chains. Moreover it focuses on making the cotton value chains more transparent so a meaningful link is possible between buyer and seller.

NewForesight™ believes the Better Cotton Fast Track Program provides a real drive for transforming the mainstream cotton sector to become more sustainable.

By creating a global market for Better Cotton, the Better Cotton Fast Track Program aspires to generate triple-value in the cotton commodity chain, reducing the environmental impact of cotton production, improving the livelihoods of cotton producers and workers and creating business value in the market. The main objectives of the Program are to:

1. Support and strengthen the BCI.
2. Facilitate collaborative learning and reflection on the effectiveness of BCI implementation in good coordination with the BCI.
3. Create demand for Better Cotton through brand and retailer involvement.
4. Create supply of Better Cotton through producer support programs and enabling access to finance for Better Cotton producers
5. Connect supply and demand through transparent supply chains.

Members of the Better Cotton Fast Track Program can apply to the Better Cotton Fast Track Fund for match funding to implement the Better Cotton sustainability criteria into their supply chains.

For more information on the Better Cotton Fast Track Program and its fund contact BCI or IDH.

This decade represents a crossroads for seafood. For the first time in history, almost half of the fish and shellfish consumed globally comes from a farm, rather than being caught in the wild. This rapid growth of the aquaculture industry has negative impacts on society and the environment. As a result, there is a need to build informed consensus about these key impacts and develop a comprehensive approach to improve the performance of the commercial aquaculture industry on a global scale.

On behalf of IDH, NewForesight™ is supporting the development and set up of the Aquaculture Stewardship Council (ASC). The ASC builds on the WWF multi stakeholder Aqua cultural Dialogues standards for responsible aquaculture. NewForesight has given strategic input the architecture of the ASC structure and helps to design and set up the global improvement programs to help fish farmers to be able to comply with the ASC standards.  

This month, ForeFinance™ reached a major milestone by signing an agreement with ICCO, the Dutch based inter church organization for development cooperation. ICCO will support ForeFinance™ financially for the coming years and will support ForeFinance™ in the development and implementation of the concept.

“The ForeFinance™ credit scoring model aligns perfectly with ICCO’s motto: the partner to enterprising people”, according to Lisette van Benthum, Specialist Financial Services at ICCO. “ForeFinance™ supports farmers in developing countries by improving their access to finance, so that they can improve and expand their business. ForeFinance™ itself is doing this in an innovative way which we are keen to support”.

Lucas Simons, founder of ForeFinance™, developed the business model and the credit rating standard over the last months. “With the support of ICCO, we are now ready to start pilot projects in Africa to fine-tune our methodology and expand our network. After this phase we want to launch the ForeFinance concept in at least four countries over two continents. Eventually we want to become the leader and global market maker in credit scoring of farmers to increase their access to finance”.

With the funding, ForeFinance™ enters the next stage of development. After careful preparation the company can start pilot projects in Africa to fine-tune the credit rating standard and the business model and expand the network of partners.

ICCO is closely involved in all the strategic steps of ForeFinance™ and will act as a partner in the field.

One of the strategic partners of ForeFinance is AgriFinance PM&C, a consultancy firm with vast experience in trade & commodity finance, bank-to-bank business and loan re-distribution. AgriFinance’s mission is to strengthen and support access to finance initiatives for agriculture in sub-Saharan countries.

“Agri Finance Africa will create an enabling environment on the ground for ForeFinance”, according to Guus Rozendaal, Founder of AgriFinance. “We want to establish regional networks of dedicated banks which we will support with advice and third-party risk-management products and instruments. When banks have good risk mitigating strategies for agri finance in place, they are more likely to provide loans to credible farmers”.

Within the ForeFinance context, one of the main objectives of AgriFinance is to enable third-party training and advisory to local banks for their finance activities in the agriculture sector. To attract first movers, Agri Finance Africa will also set up a regional first loss guarantee structure, which will mitigate the risks for local banks to provide loans to farmers under the ForeFinance scheme. “This structure is very important, as the agri-lending business is perceived as very risky. The first loss structure will partly compensate banks for losses due to defaults, if any. We believe we can further mitigate the risks significantly under the ForeFinance scheme.”.

AgriFinance will build a network of local banks who are committed to agri-finance for the long term and who believe in the ForeFinance™ concept of credit scoring. Eventually, AgriFinance aims to set up AgriFinancePlaza.com, an internet-based platform which will facilitate re-packaging and re-distribution of ForeFinance-rated loans to institutional investors in the North as well as to the so-called internet-based crowd-funders like MyC4, Kiva and Babyloan.

Recognizing the need of access to finance for farmers in developing countries, FAST and ForeFinance™ signed a memorandum of understanding to work together in the field of credit risk scoring and to develop other financial management tools. It reflects the commitment of the two organizations to improve access to finance across the sustainable agricultural sector in developing countries.

FAST's mission is to facilitate a global collaborative effort among its more than 150 members to ensure continued growth of the sustainable trade industry. This is made possible by increasing the number of producers in developing countries who can successfully access affordable trade finance, tailored to their business needs as they enter sustainable markets and grow their businesses.

In the development stage of ForeFinance™, FAST is committed to provide where viable it’s Financial Literacy Training Toolbox, which helps to advance the management capacity of sustainable SME producers and to improve awareness and understanding of financial management. In a later phase, FAST will also apply its Impact Assessment tool, which provides the framework and methodology for socially-oriented lending institutions to monitor the positive social impact generated from their investments in the sustainable SME sector.

UTZ CERTIFIED, the certification and traceability program for agricultural commodities, and ForeFinance™ agreed to set up two pilot projects to test the ForeFinance credit scoring standard. The shared vision of both parties is to give certified farmers access to finance by stimulating better business and managerial practices through the UTZ CERTIFIED program and increase their credit-worthiness through the ForeFinance model of credit scoring. UTZ CERTIFIED will also provide feedback on the credit scoring standard and will participate in two working group sessions for this purpose.

The partnership was signed in January 2010 by Juliette Caulkins, Adjunct Director of UTZ CERTIFIED and Lucas Simons, Director of ForeFinance™.

ForeFiannce realizes that change does not happen in isolation. The credit scoring standard of ForeFinance is only a piece of the puzzle. We need to work together to create the necessary traction and momentum to make a lasting change. We are looking for partners on the following elements;

• Agricultural, financial and sustainability specialist to help develop the credit scoring standard
• Cooperatives and farms to run pilots with the credit risk scoring card. Preferably, first instance in the region East Africa.
• Standard setting organizations that want to explore the opportunities to give their farmer members access to finance.
• NGO’s that want to link their capacity building programs to create a graduation strategy for upcoming bankable farmers
• Banks, funds, social lenders that are looking to expand their exposure in agricultural commodities in the form of loans or equity.
• Donors for financial support for 2011 and beyond.

If your organization is interested in cooperation with ForeFinance, please contact Mr. Jaime ter Linden at jaime.ter.linden@forefinance.nl or +31-35-624-2573. 

As of this month, ForeFinance™ adds Jaime ter Linden as Program Manager to the team. Jaime will be responsible for the further development of the ForeFinance™ concept and the execution of the concept. One of his main tasks for the coming months is to fine-tune the ForeFinance™ Credit Risk Scoring Standard, start pilots in the field, built the database with the profiles of producer organizations and expand the network of organizations willing to participate. The first focus will be on East Africa, to expand in later phases to other African regions, Asia and South & Central America. 

August 2009: NewForesight™ and ICCO sign partnership to set up the ForeFinance™ concept.

NewForesight™ and ICCO (one of the leading Dutch NGO's) have signed a partnership to develop the busines plan of the ForeFinance™ concept. 

ICCO has many years of experience in giving farmers access to finance and they have a world wide network of valuable partners.

The partnership shows the importance of providing famrers access to finance and the potential of the ForeFinance™ concept.