The Fairtrade Access Fund provides funding to let vanilla farmers enjoy the fruits of their labor as much as consumers do.
First investment in vanilla in Madagascar
Vanilla is one of the most popular spices in the world, but vanilla farmers usually don’t benefit much from the high prices end customers are willing to pay. This concern led Fairtrade Access Fund to provide credit, for the first time, in the vanilla sector.
Chances are high that the vanilla flavor of your ice cream comes from the Sava region in northeastern Madagascar. Responsible for 80% of the global production of Bourbon vanilla, Sava is by far the main supplier. 70,000 smallholder farmers produce on around 25,000 hectares of land. This is also the region where Lafaza sources its vanilla beans. The Fairtrade Access Fund (FAF) recently approved a loan of USD 1.5 million to vanilla processor and exporter Lafaza Trading SARL (incorporated in Madagascar). Lafaza buys premium vanilla from smallholder farming communities at fair trade prices and then sells it for retail, wholesale and through export channels. But the company offers the more than 1,000 vanilla farmers they are working with more than an interesting price.
The vanilla farmers live in small, isolated villages, often requiring several days of travelling by canoe, hiking or overcoming difficult roads to reach them. Lafaza does not just buy the vanilla, but also provides capacity building on proper cultivation and curing techniques to enhance the quality of the vanilla and which enables the farmers to acquire organic certification.
The production process of vanilla is very labor-intensive and delicate. It takes up to four years for a new vanilla orchid vine to begin producing flowers. They are in bloom for less than 24 hours and pollination must occur at that moment when the flower bud opens.
Incofin’s investment in Lafaza reduces further the concentration risk in the FAF portfolio, both in terms of product (first investment in vanilla) as of country diversification (first deal in Madagascar).