Incofin’s Fairtrade Access Fund (FAF) decided to start a partnership with Olivado, an international avocado oil producer based in Kenya. Incofin is committed to sustainable agricultural practices and this partnership fits well with that commitment: Olivado is a unique carbon-neutral avocado producer. That is hopeful news today, on Earth Overshoot Day, the day we should reflect on how we deal with our natural resources.
Today, 22nd August, is Earth Overshoot Day, the day that we used all the biological resources that the earth can renew during the entire year. So, it is fair to say that from now we are living the rest of the year from our reserves. Reflecting a reduction of almost 10% of our ecological footprint, this day is three weeks later than last year, but only because it is a direct consequence of the coronavirus-induced lockdowns around the world.
Since our resources are limited, the importance of a sustainable and smart way of using them cannot be underestimated. According to the Foot Print Network food demands make up 29% of the global ecological footprint due to inefficiency. About 1/3 of the food produced in the world for human consumption, 1.3 billion tons every year, gets lost or wasted.
MINING THE GREEN GOLD CAN BE DONE IN A SUSTAINABLE WAY
An industry that has seen an exponential growth over the past decade is the industry of the “green gold”: avocados. The delicious and nutritious fruit has gained immense popularity over the last years, linked to a healthy lifestyle. Also in Kenya the more lucrative business of avocado farming has increasingly been adopted replacing coffee and tea plantations. But the production of avocados comes often with a high foot print. Kenya has 7,500 ha under avocado production with a potential yield of 81.000 tons, but around 40% of the crops are lost in Kenya due to poor pre- and post-harvest handling practices
This is where Incofin’s investee avocado and avocado oil producer Olivado comes in. Where most avocado exporters only take up to 30% of the farmers production, Olivado agrees with the avocado farmer to buy at least 95% of his yearly harvest. Olivado buys their avocados directly from smallholder farmers, paying a premium set price, thus bypassing brokers and guaranteeing the farmers a regular income.
Where fresh fruits need to be impeccable, Olivado uses most of them to produce avocado oil. The avocado skins and stones go to the green waste and are turned into compost. The pulp goes to the dairy farm across the road, and the water which is extracted from the oil is spread over the pasture with a muck spreader. Olivado sells 90% as avocado oil and 10% as fresh avocado fruits. A sustainable avocado agriculture is the core of their mission. They help their farmers in obtaining organic and Fairtrade certifications and offer free trainings for better farm management and send a team in the producing regions to offer free pruning services.
They have even their own biogas plant, which allows them to use the avocado waste as feedstock to produce methane gas to power it. The 1.5 million kWh of energy plant provides fuel for vehicles, and produces 3,000 tons of fertilizer. With the clean natural gas, Olivado can power the two generators which run the factory, cold stores and packhouse where they pack the fresh avocados for export to Europe and produce the avocado oil. All of the vehicles they use at the site, including the trucks used by the team of avocado pickers, the field officers’ cars, and the staff buses are all fueled by natural gas.
The Fairtrade Access Fund (FAF), founded in 2012, is an open ended debt fund advised by Incofin Investment Management. The Fund focuses on delivering strong social and environmental impact and is the first fully self-sustaining agri-focused fund. FAF addresses the financial needs of smallholder farmers by bridging the gap in pre-harvest financing needs and by providing long term financing with the aim to contribute to financing investments. Via Fairtrade, farmers’ organizations have greater access to the international markets, a network with guaranteed minimum prices and other economic advantages.
About Incofin Investment Management
Incofin Investment Management (Incofin IM) is a global independent impact investment company, focused on rural and agricultural finance. Driven by a desire to promote inclusive progress, Incofin strives to provide the support entrepreneurs’ needs in order to improve to lives of the less privileged people. Incofin IM is an AIFM licensed fund manager and has over EUR 1 billion in assets under management. Incofin has a team of more than 60 professionals spread over the headquarters in Belgium and local investment offices in Cambodia, Colombia, India and Kenya.
Olivado is among the world’s leading producers of organic avocado oil, directly sourcing the avocados from 2,200 smallholder farmers. The company manufactures a range of cold pressed extra virgin oils and natural cooking oils for the international edible and cosmetic oil markets. Olivado operates as a social enterprise integrating small scale farmers into international value chains for fresh avocado, edible and cosmetic oil.