Stories
Fair Trade Agriculture Company

Highlights:

The fair trade agriculture company (the “Company”) supports 43 oil cooperatives and 1,700 farmers, and offers internship, scholarship, training, and other community empowerment programs in the villages in which it operates. MEII served as a catalyst in helping the Company obtain needed equipment, which allowed it to expand its network and increase its community empowerment programs.

The Story:

Approximately 80 percent of farmed land in the local country consists of olive orchards. On average the country’s olive harvest produces 25,000 tons of olive oil annually, whereas the domestic market only consumes 15,000 tons. This leaves 10,000 tons of olive oil as surplus; however, the quality of local olive oil does not typically meet international standards (organic and extra virgin).

The Company runs an association that has for years trained local farmers how to grow and harvest olives that meet international standards. It works with approximately 43 olive oil cooperatives and 1,700 farmers. The Company processes, bottles, and sells the olive oil to international markets such as Europe, North America, and the Middle Easton on behalf of the farmers in its association. It applies the fair trade concept in all of its operations whereby it pays sustainable prices for its farmers’ products to ensure fair wages for labor (the company pays a 10% Fair Trade premium and 10% Organic premium above the market price). It also requires that farmers observe health and safe working conditions as set by PFTA guidelines.

In addition, the Company aims to empower the communities in which it operates through a variety of initiatives.  It runs a microlending program that provides start-up funds for female-led agriculture projects, an educational scholarship program for farmer's children and it offers annual  internship opportunities.  The Company also oversees a tree planting program, a green energy project to convert diesel tractors to run on used vegetable oil, an annual olive harvest festival, and other community empowerment initiatives.

The Company needed a loan to purchase a modern, Italian-made olive oil press and stainless steel storage tanks in order to increase production capacity and allow more olive farmers to be part of its association. Once operational the olive oil press would provide employment opportunities for nine individuals and increase seasonal employment at the 1,700 farms in the Company’s association. The storage tanks would allow the Company to store and export quality olive oil year round instead of being dependent on seasonal production capacity.

Even with the Company providing nearly 50 percent of the financing needs in the form of land and building for the olive press and a down payment to the press supplier, local banks were unwilling to provide the company with a loan. At that point, MEII stepped in. It worked “behind the scenes” with the bank’s staff to assess the viability of the Company’s loan application, business plan, and its ability to repay the loan. MEII focused on building up local bank capacity to approve the loan instead of drawing the borrower away with outside grants or other direct loans. As a result of MEII efforts’, coupled with partial financial guarantees from MEII partners, the local bank agreed to extend the loan to the Company.

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