Agriculture and Finance...

Transcription

1 Agriculture and Finance... Agenda 1. Overview of Global Agriculture 2. Agricultural Lending 3. Managing Risk in Agriculture 4. Fair trade F r a n k f u r t S c h o o l. d e F r a n k f u r t S c h o o l. d e

2 Overlook of Global Agriculture F r a n k f u r t S c h o o l. d e 2

3 Future of global agriculture.??? How to feed an expected population of some nine billion by the middle of the 21th century? Growing impacts of climate change Millenium Development Goals (halving world poverty and hunger by 2015) Concerns over energy security Changing dietary patterns (food = health) F r a n k f u r t S c h o o l. d e 3

4 Long-term Perspectives of Agriculture Demand for agricultural products will continue to grow, but more slowly. The world as a whole has the production potential to cope with demand. The rate of growth in agricultural production has slowed, fairly high levels of food consumption being reached in many countries. The world as a whole has the production potential to cope with demand. F r a n k f u r t S c h o o l. d e 4

5 Long-term Perspectives of Agriculture Progress in improving nutrition has been significant. Yet hundreds of millions from developing countries remain undernourished (food consumption of less than kcal / day) In order to reduce undernourishment (reduce poverty): - income growth: growth in agriculture + rural non-farm employment / development. Agriculture must grow first, to generate the increased demand for non-farm products. - better public services (infrastructure) - female and nutrition education - safe drinking water - improved health services and sanitation. F r a n k f u r t S c h o o l. d e 5

6 Long-term Perspectives of Agriculture Changes in dietary are due to: - preferences (intensive media ) - increased international trade in foods - global spread of fast food chains - exposure to North American and European dietary habits - convenience (the portability and ease of preparation of ready-made bread or pizza, versus root vegetables) These changes in diet have an impact on the global demand for agricultural products (ex. increase in meat consumption, milk and diary). F r a n k f u r t S c h o o l. d e 6

7 Agriculture and the Environment Over the next 30 years, many agriculture-related environmental problems will remain serious. World Bank.: Agriculture accounts for the major share of human use of land (more than 40% of world land). The puts pressure on biodiversity of land and see (species richness is closely related to the area of a wild habitat). Estimates of losses of biodiversity to extinction over the coming decades vary widely, from 2 to 25% of all species. Agriculture also affects the basis for its own future through land degradation, salinization, the over-extraction of water. Crop and livestock production are the main source of water pollution by nitrates and phosphates from fertilizers, manure, pesticides, insecticides, herbicides and fungicides. Agriculture is also a source of air pollution and greenhouse gases. Livestock account for about 40% of global ammonia emissions, mineral fertilizers for 16% and biomass burning and crop residues for about 18%. Ammonia is one of the major causes of acid rain, which damages trees, acidifies soils, lakes and rivers, and harms biodiversity. F r a n k f u r t S c h o o l. d e 7

8 Agriculture and the Environment Crop land vs. grazing land F r a n k f u r t S c h o o l. d e 8

9 Agriculture and Climate Change - Agriculture is an increasingly significant source of greenhouse gases. + Agriculture can help mitigate climate change through carbon storage in soils and vegetation. Agriculture Climate Change Climate change will have very diverse impacts on agriculture (effects of carbon dioxide, higher global temperature, increases in the frequency and severity of extreme events, increase of see level) In the next three decades, climate change is not expected to depress global food availability, but it may increase the dependence of developing countries on food imports and accentuate food insecurity for vulnerable groups (small-scale farmers, low-income people in area prone to drought, flooding, salt water intrusion and fishers) and countries. F r a n k f u r t S c h o o l. d e 9

10 Technology and Policy Choices Measures to reduce greenhouse gas emissions: Removal of subsidies and introduction of environmental taxes on chemical fertilizers and energy inputs Improvement of fertilizer use efficiency Development of rice varieties emitting less methane Improved management of livestock waste Restoration of degraded lands Improvement of crop residue management (instead of burning) Expansion of agro-forestry and re-forestation F r a n k f u r t S c h o o l. d e 10

11 Technology and Policy Choices Measures to promote adaptation to climate change: Development and distribution of crop varieties and livestock breeds resistant to drought, storms and floods, higher temperatures and saline conditions Improvement of water use efficiency Promotion of agro-forestry to increase ecosystem resilience and maintain biodiversity Maintenance of livestock mobility in pastoral areas subject to drought F r a n k f u r t S c h o o l. d e 11

12 Technology and Policy Choices Measures to reduce food insecurity: Reduction of rural and urban poverty Improvement of transport and communications in areas vulnerable to disasters Development of early-warning and storm-forecasting systems Introduction of flood- and storm-resistant and salt-tolerant crops Introduction of land use systems to stabilize slopes and reduce the risk of soil erosion and mudslides Building of homes, livestock shelters and food stores above likely flood levels. F r a n k f u r t S c h o o l. d e 12

13 Agricultural Lending F r a n k f u r t S c h o o l. d e 13

14 Agricultural Population Implications for Lending Activity World Population (2005) Economical Pyramid of World Population, 2002 Source: FAO, % of the world s poor population live in the rural areas (USAID) 51% of world population lives in rural area. (FAO) 70% of world poor population lives in rural area. (USAID) 41% of world population is depending on agriculture. (FAO) Agricultural population: -Huge market -Risky market (high dependency on agriculture, poverty) F r a n k f u r t S c h o o l. d e 14

15 Agri-finance Demanders & Suppliers Informal Financial Systems Destitute Extreme poor Microfinance Institutions (NGOs, MLOs, NBFIs, Cooperatives) Moderate Poor Agricultural clients / Farmers financial needs + wishes P O V E R T Y L I N E MFIs & Banks Vulnerable Non-Poor Formal Financial Systems (Banks) Non-Poor Wealthy F r a n k f u r t S c h o o l. d e 15

16 Banks and agri-finance??? Why are banks not entering agricultural market? Why should banks enter agricultural market? Specialization (Not working with small clients) Commercial goals, NOT social goals (Agri-clients are poorer) High costs (Agri-lending is expensive) Safety for depositors (Agricultural market is risky) Staff attitude ( We are bankers ) Ethics (Agri-lending is for MFIs ).. Huge market (41% of world population is involved in agriculture) Reputation and image ( We care about our society ) Existing successful models ( If somebody did it why shouldn t we try? ) Cross-selling of financial products Diversifying the loan portfolio (Risk management) Loyal clientele Reduced risk related to the character of the borrower Increased competition in urban markets.. F r a n k f u r t S c h o o l. d e 16

17 How Can Banks Enter Agricultural Market? Business Decision Provide Agri-finance Directly Specialized Agri-financial Institution Internal Agri-Unit Mandated by Government Considering Agri-finance FINANCIAL LINKAGES Provide Agri-finance Indirectly Outsourcing Retail Operations Commercial Loans (Bulk Loans) F r a n k f u r t S c h o o l. d e 17

18 Direct Agricultural Lending 1. Specialized Agri-financial Institution Agricultural Development Banks usually offer a diversified range of products, agri- and non-agri. Case study: Agricultural Bank of Peru F r a n k f u r t S c h o o l. d e 18

19 Direct Agricultural Lending 2. Setting-up an Internal Agri-Unit a) Commercial banks develop an Internal Agri-Unit based on their previous experience on agricultural market (privatized state-owned bank / international experience in other countries ) F r a n k f u r t S c h o o l. d e 19

20 Direct Agricultural Lending 2. Setting-up an Internal Agri-Unit b) Downscaling Programs Local banks with COUNTRY Financing Institution Coop. Agreement - Credit Line - Technical Assist. COUNTRY Ministry of Finance no experience on rural market receive a credit Consulting services Management Contract line + technical assistance from international donors to set-up an Internal Unit Project Management Unit Management Company Co-operation Contract (technical assistance services) Credit Contract PARTNER FINANCIAL INSTITUTIONS CLIENT 1 CLIENT 2 CLIENT 3 Credit Contracts CLIENT n CLIENT n-1 CLIENT n-2 German-Romanian Fund F r a n k f u r t S c h o o l. d e 20

21 Direct Agricultural Lending Individual Lending Methodology BANK Branch Loan Repayments Cancellation Monitoring Disbursement Loan Decision Marketing Active loan portfolio management based on risk analysis Loan File Filter Mechanism Credit Assessment Loan Application Client Onsite Visit Purpose of the client visit - collecting and cross-checking application data on-site in order to determine the repayment capacity and the willingness of a client to repay the loan Agricultural Loan Cycle CLIENT F r a n k f u r t S c h o o l. d e 21

22 Direct Agricultural Lending Grameen Bangladesh Methodology BANK Branch Individual savings and loan accounts Group 5 CLIENT 5.1 CLIENT 5.2 CLIENT 5.3 CLIENT 5.4 CLIENT 5.5 Center Group 1 CLIENT 1.1 CLIENT 1.2 CLIENT 1.3 CLIENT 1.4 CLIENT 1.5 Holds regular weekly meetings, supervised by a Bank worker Guarantees loans to their individual members. Appraises fellow-members loan applications, ensuring that their fellow-members maintain their regular savings contributions and loan repayments. F r a n k f u r t S c h o o l. d e 22

23 Direct Agricultural Lending Joint Liability Group Methodology Bank gives individual loans to farmers, but recipients must be members of a Joint Liability Group. The process is as follows: BANK Branch Individual loans Individual loans Individual loans CLIENT 2 CLIENT 1 CLIENT 3 Joint Liability Group The Bank asks prospective borrowers to form themselves into groups of 3-5. They usually have similar borrowing requirements. The group members agree formally with themselves and with the Bank to guarantee each other s loans. (They informally appraise each others loans). All the members borrow individually from the Bank, which accepts their joint agreement as security for repayment. F r a n k f u r t S c h o o l. d e 23

24 Direct Agricultural Lending Self Help Group Methodology BANK Branch Loan to SHG SHG Savings Self Help Group Individual Loan / Regular Savings CLIENT 1 CLIENT 20 CLIENT 2 People form groups of around twenty members (on their own or helped by the Bank). The groups are then linked to the Bank: The SHG members decide to make regular savings contributions. These may be kept by their elected head, in cash or in kind, or they may be banked. The members start to borrow individually from their Groups funds, on terms and at interest rates decided by the group themselves. The SHG opens a savings account, in the group s name, with whatever bank and branch they choose, for such funds as may not be needed by members or in order to qualify for a loan from the bank. The Bank makes a loan to the SHG, in the name of the Group, which is then used by the Group to supplement its own funds for onlending to it members. F r a n k f u r t S c h o o l. d e 24

25 Indirect Agricultural Lending 3. Outsourcing Retail Operations (Financial Partnerships) What is it? Organization (financial, commercial, social ) WIN-WIN approach PARTNERSHIP MODEL Share the risks / reward / costs Bank The organization understands the socio-comemrcial aspects of the agri-finance project and BANKs understand finance; this can make a perfect partnership. F r a n k f u r t S c h o o l. d e 25

26 Indirect Agricultural Lending Partnership Model 1: Commercial service company Donor Initial donation (US 1.2 mil) Cooperative agreement Increase access to credit for farmers To enhance the institutional capacity of local, private banks to provide retail financial services to farmers To establish the PARTNERSHIP PROJECT as a sustainable finance company by the end of cooperative agreement MFI Originates the loan Sometimes participates with funds (depending on Partner Bank) PARTNERSHIP PROJECT Share the risks / reward (interest & fees), funds %, % Partner Bank Books the loan Participates with funds (US$ 1.3 mil) Selected according to market orientation (vision in line with the Project): serving the agri / rural population F r a n k f u r t S c h o o l. d e 26

27 Indirect Agricultural Lending Partnership Model 1: Commercial service company How does it work? Partnership Project (PP): operates from a base located within the branches of the Partner Bank MFI s LOs market the program in rural areas; bank provides the printing promotional materials (costs shared) Screening process / Credit Assessment: MFI s LO visits the business and home of potential client and does the credit appraisal Credit decision process: stage1: MFI s LO completes a loan analysis and makes the positive recommendation to the branch manager of the bank stage 2: the branch manager ensures that the client and guarantor are reputable and provides his/her recommendation stage 3: formal decision is made at a weekly credit committee meeting of members of MFI s senior management team and members of the bank s retail division in the Head Office (unanimous decision of both MFI & Bank) Contracts: signed in the branch; Disbursement: in the branch; the bank disburses the loan from bank funds, or, in case where a capital share arrangements exists with the MFI, from corresponding MFI s account; Repayment: bank is responsible for crediting the corresponding MFI s account with MFI s share of capital, interest and applicable fees; Tracking process: the bank provides MFI with duplicates of all copies of transactions documents and the credit file; credit file and all original documents of the loan are stored in the head office of the bank F r a n k f u r t S c h o o l. d e 27

28 Indirect Agricultural Lending Partnership Model 1: Commercial service company What are Bank s & MFI s benefits and contribution? MFI s benefits from the partnership: - Using the existing bank infrastructure: sizable, nationwide branch network - Access to bank s solid management information system - Lower-cost funds / access to capital - Ability to lend without legal or regulatory hurdles MFI s contribution to the partnership: - Market knowledge (operates locally) - Client knowledge and analysis experience - Hands-on human resources Bank s benefits: Better utilize its liquidity and earn higher rates of return; A new source of revenue while requiring a limited investment in staff and infrastructure; It opens the door to new market segments in which banking competition is limited or nonexistent; It allows the banks to fulfill their social responsibility to the broader community by providing services to farmers / low-income groups. Role of the donor is crucial in the start-up and success of the program. The start-up funding provided by the donor allow MFI to cover its operational expenses for the start-up phase and also allows MFI to create the risk-/capital-sharing model that determines banks to enter the market. F r a n k f u r t S c h o o l. d e 28

29 Indirect Agricultural Lending Partnership Model 2: Partnership with actors along the agricultural value chain Why is it important to know how a specific value chain works? The bank can properly evaluate the risk of each actor The bank can develop proper tools to break the internal financial systems (financial systems along the value chain): Trader Credit Contract Farming Warehouse Receipt F r a n k f u r t S c h o o l. d e 29

30 Risk Analysis Inside the Value Chain: M I L K Contract Which farmer is riskier for the bank? M I L K M I L K M I L K M I L K M I L K No written contract M I L K Farmer 1 Farmer 2 F r a n k f u r t S c h o o l. d e 30

31 Indirect Agricultural Lending Partnership Model 2: Partnership with actors along the agricultural value chain Financial Systems Inside the Value Chain: Trader Credit Agro-inputs on credit Agro-inputs on credit Agro-chemical producer Contract Farming Cash, on term Credit in cash or in kind Products - milk Local dealer (shop in the village) Cash, after the harvest Farmer Warehouse Receipt Milk Processing Company Milk Producer - Farmer F r a n k f u r t S c h o o l. d e 31

32 Indirect Agricultural Lending Partnership Model 2: Partnership with actors along the agricultural value chain Have high transaction costs and face high risks on agricultural market BANK Monthly loan repayments (30% out of the monthly milk quantity bought from the farmer) Loan Three-party Agreement - share the risks / share the costs - PROCESSOR (MILK DIARY) Very interested in producers development Are unbankable but have financial needs Have a strong relationship with one processor Milk selling (100%) Milk payment (70% out of the monthly milk quantity bought from the farmer) PRODUCER (MILKING COW FARMER) Have a good knowledge or rural clients can make recommendation for good eligible clients can carry part of the loan-risk (co-signer) Have relationships with the banking sector can reduce the transaction costs (repayments) F r a n k f u r t S c h o o l. d e 32

33 Indirect Agricultural Lending Partnership Model 3: Partnership with agricultural equipment sellers 1. provides the farmer a loan (10.000, 2 years, collateral: equipment + buy back clause from the seller) 2. Takes the loan, buys an equipment (10.000) with a life duration of 10 years 3. Repays the loan for 1 year; after that he can not pay any more (balance 6.000) 4. Sells the equipment back to the supplier, selling price (balance of the loan) BANK 3. Repayments 5. Pays the remaining of the loan (6.000) 1. Loan for buying an equipment Three-party Agreement - share the risks / share the costs - EQUIPMENT SELLER 4. Buys back the equipment after 1 year (6.000) 2. Sells the equipment (10.000) FARMER 6. Sells the equipment to another client (second-hand) with F r a n k f u r t S c h o o l. d e 33

34 Indirect Agricultural Lending Partnership Model 4: Partnership with development organizations / farmers associations Agricultural, livestock development services (improve the yield, quality of crops ) Institutional development services (financial education, entrepreneurship development, formation of association of producers, building collaboration to deliver a wide range of services, marketing chanels ) F r a n k f u r t S c h o o l. d e 34

35 Indirect Agricultural Lending 4. Commercial Loan Bank Commercial loan Agri-lending Financial Institution (Credit Cooperative, NGO, NBFI ) Farmer Farmer Farmer Viability of an Agri-FI: Financial Sustainability Quality of the Loan Portfolio Other Quantitative and Qualitative aspects Farmer Example: Moldovan SCAs system The collateral is the pledge on the Agri-FIs loan portfolio F r a n k f u r t S c h o o l. d e 35

36 Indirect Agricultural Lending 4. Commercial Loan Example: Moldovan SCAs system Frankfurt School.de 36

37 Risk Management in Agriculture F r a n k f u r t S c h o o l. d e 37

38 Weather related Risks Natural Disasters Biological and Environmental risks Political Risks Major risks facing agricultural value chain actors Market related risks Policy and institutional risks Management and operational Risks Logistical and infrastructural Risks F r a n k f u r t S c h o o l. d e 38

39 Farmers strategies to manage risk in agriculture Savings Buffer stocks Enterprise diversification Low risk, low return cropping systems Production techniques (irrigation systems, use of pesticides, medicine ) Food crop sharing Associations of producers (common property resource management) Sales of assets Borrowing from relatives / informal systems Traditional agriculture insurance Credits along the agricultural value chain Financial hedging tools F r a n k f u r t S c h o o l. d e 39

40 Bankers strategies to manage risk of agricultural clients A permanent assessment of the specific risks that are associated with different agricultural activities Agri-lending should start in production zones that present low risks; operations can then gradually be expanded to more risky areas Loan appraisal should include a thorough assessment of the borrower loan repayment capacity and his creditworthiness; also external risk factors of farm production should be taken into account. Lending decisions should take into account the management capacity of the farmer and his ability to face the risks he is exposed to Individualized loan products and loan repayment schedules that are set in accordance with the loan repayment capacity of the borrower reduce the risk of loan default Loan portfolio diversification Managing of external risks through insurance Staff incentives systems motivate staff to permanently improve their knowledge in agricultural issues Agricultural lending institutions should be free of political interference in their daily management. Partnerships with different organizations (risk sharing agreements) F r a n k f u r t S c h o o l. d e 40

41 Role of Agricultural Insurance Agricultural and crop insurance is the branch of insurance that is geared to covering losses from adverse weather and similar events beyond the control of farmers. Agricultural insurance is not limited to crop insurance; it also applies to livestock, forestry, aquaculture, equipment etc. F r a n k f u r t S c h o o l. d e 41

42 Types of Agricultural Insurance 1. Weather - index insurance The claim is calculated on the basis of the value of an external index (rainfall, temperature, wind speed, etc.), not on losses measured in the field. For example, a wind index is based on wind speeds as measured at a named meteorological station. The index insurance starts to pay an indemnity when wind speed exceeds a specified level. Advantages: practical solution for small-scale, dispersed farmers in less developed areas of the world: Eliminates moral hazard and adverse selection No loss assessment required Objective and transparent Simplified claim process Provides timely payout Reduce administrative costs Disadvantages: Farmer: in a multi-risk environment - actual losses are not always fully correlated with the weather trigger. For example, a wind speed index insurance will normally not cover crop losses because of excess rain, flood events that are associated with storms. Insurer: it can be a costly and time-consuming task to assemble the data and construct the appropriate indexes. F r a n k f u r t S c h o o l. d e 42

43 Types of Agricultural Insurance 2. Crop revenue insurance (yield based insurance / multi-peril or all risk inclusive insurance ) It provides cover against all perils that affect revenue, unless specific ones have been explicitly excluded in the contract. It is thus geared to a level of expected revenue (yield & price) rather than to the damage that is measured after a defined loss event. It combines production and price risk - production and price being the determinants of gross revenue from a given crop. Advantages: Revenue insurance gives both the farmer certainty regarding income Increases access to loans for farmers Disadvantages: Application depends primarily on the development of local crop futures markets. A necessary precondition for this product is the existence of developed commodities and derivative markets that enable insurers to protect themselves from price decreases and to pass all or part of the price risk to other risk takers. High administrative cost per unit of value. F r a n k f u r t S c h o o l. d e 43

44 Types of Agricultural Insurance - example The Base Insurance Product (BIP) is a commercial risk product, sold and serviced by insurance companies on a voluntary basis. Herders pay a commercial premium rate for this product, on average 3% (depending on the species and the location) which pays out when the sheep mortality rates exceed the trigger of 6%. The maximum payment for the BIP occurs when mortality rates reach a specified exhaustion point of 30%. The Disaster Response Product (DRP) is a social safety net product financed and provided by government, which begins payment when mortality rates exceed the BIP exhaustion point of 30%. Herders who purchase the BIP are automatically registered for the DRP at no additional cost. Herders who do not purchase at least the minimum value of BIP must pay a small administrative fee for DRP. As an example, consider a herder who owns 100 sheep where the value of a sheep is 20,000 Mongolian tugrik (Tg). The herder decides to insure 50% of the total value of his herd that is, 1 million Tg. The premium rate for the BIP is 3%, with a strike (deductible) at 6% and a cap at 30%; so the herder pays a premium of 30,000 Tg. Suppose the mortality rate in the herder s sheep during a bad year equals 40%. The payment rate for the BIP is equal to 30% 6% = 24%. Thus the BIP payment is 24% 1,000,000 Tg = 240,000 Tg. Payment for the DRP equals (40% 30%) 1,000,000 Tg. = 100,000 Tg. F r a n k f u r t S c h o o l. d e 44

45 Risks Management and the Role of Agricultural Insurance Limitations of agricultural insurance Agricultural insurance does not: - eliminate risk - directly increase a farmer s income - solve the poverty issue - replace good on-farm risk-management techniques Agricultural insurance is not a universal solution to the risks and uncertainties that farmers face. Agricultural insurance cannot be effective if it is provided in isolation. It should be promoted only when other essential agricultural services, including training and extension, the timely availability of inputs (seeds, fertilizers, pesticides) and efficient marketing channels for agricultural outputs, are in place. F r a n k f u r t S c h o o l. d e 45

46 Climate change and agricultural insurance Agriculture is extremely vulnerable to the effects of climate change, because of: Increased variability of weather patterns Increased frequency and severity of extreme climate events The negative effects of climate change will be more pronounced in low-latitude countries than in the rest of the world. Agricultural insurance has to face both exposures. Climate change poses specific challenges for the design and rating of traditional and index-based crop insurance products. Crop insurance might be used as a mechanism to incentive farmers facing climate change to adopt risk reducing strategies, for example by insisting that drought resistant varieties must be used if the crop is to be deemed insurable. F r a n k f u r t S c h o o l. d e 46

47 Trends in global agricultural insurance About 50% of all countries (104 nations) have some form of agricultural insurance (20 years ago only about 50 countries were identified with some form of agricultural insurance). In 2009 the global agricultural insurance premium volume was estimated at about US$19.4 billion North America is the largest agricultural insurance market (55% of the total) F r a n k f u r t S c h o o l. d e 47

48 Fair Trade F r a n k f u r t S c h o o l. d e 48

49 What is Fair Trade? Fair trade is an organized social trade that aims to help producers in developing countries to make better trading conditions and promote environmentally sustainable organizations of producers. It focuses in particular on exports from developing countries to developed countries: coffee, sugar, cocoa, tea, bananas, honey, cotton, wine, fresh fruit, chocolate, flowers, gold. Why Fair Trade? Producers want to earn fair wages to have good working conditions to work in environmentally sustainable organizations Consumers 96 % of consumers would be willing pay extra for products they perceived to be ethical. 95 % of consumers feel it is important that all companies treat producers and suppliers fairly and practice Fairtrade. F r a n k f u r t S c h o o l. d e 49

50 How does fair trade work? supermarkets, independent retailers and online Coffee producers sell to a coffee cooperative Coffee cooperative (group of farmers) exports the coffee In order to be certified, producers, cooperatives, traders who deal with Fairtrade products must meet a range of standards (fair prices, crop prefinancing, banning child labour, guaranteeing a safe workplace and the right to unionize, protection and conservation of the environment...) Fairtrade Labelling Organisations International - develops and reviews international Fairtrade standards, inspects and certificates producers and traders The importer (the client of the producers cooperative) must pay: - a minimum price for coffee at times when the world price collapses and the market price otherwise - > provides fair wages to producers and good working conditions - at all times must pay 10% per pound above the world price (social premium) for any coffee it intends to sell as Fairtrade. used for social projects, health system, education, improved production techniques, distributed to the members of the cooperative F r a n k f u r t S c h o o l. d e 50

51 FAIRTRADE Mark The FAIRTRADE Mark is an independent consumer label which appears on products to signify that Fairtrade standards have been met. F r a n k f u r t S c h o o l. d e 51

52 Alternative Trading Organizations / Worldshops Some organizations, called Alternative Trading Organisations (ATOs) or Worldshops, are purely dedicated to trading fairly and have been doing so for many years before Fairtrade certification was established. They do not carry FAIRTRADE Mark because the process of agreeing international Fairtrade standards can take time, and for many of the products these organizations sell, there may not yet be standards available to certify their products. F r a n k f u r t S c h o o l. d e 52

53 Worldshop F r a n k f u r t S c h o o l. d e 53

54 Promoting Fair Trade F r a n k f u r t S c h o o l. d e 54

55 Thank you! F r a n k f u r t S c h o o l. d e 55