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COMMON FUND FOR COMMODITIES
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Organisational Profile

Establishment and Membership

The Common Fund for Commodities (CFC) is an autonomous intergovernmental financial institution established within the framework of the United Nations. The Agreement Establishing the Common Fund for Commodities was negotiated in the United Nations Conference on Trade and Development (UNCTAD) from 1976 to 1980 and became effective in 1989. The first commodity development project was approved in 1991.

The Common Fund for Commodities forms a partnership of 101 Member States plus 9 institutional members. Membership of the Fund is open to all States Members of the United Nations or any of its specialised agencies, or of the International Atomic Energy Agency, and intergovernmental organisations of regional economic integration which exercise competence in the fields of activity of the Fund.

 

Objectives, Main Activities and Structure

The Common Fund’s mandate is to enhance the socio-economic development of commodity producers and contribute to the development of society as a whole. In line with its market-oriented approach, the Fund concentrates on commodity development projects financed from its resources. These resources consist of voluntary contributions, capital subscriptions by Member Countries transferred to the Second Account and interest earned. Whereas voluntary contributions can be used for either grants or loans, the capital subscription transferred to the Second Account can only be applied for loan-financing of projects. Through co-operation with other development institutions, the private sector and civil society, the Fund endeavours to achieve overall efficiency in and impact on commodity development.

The Common Fund operates under the novel approach of commodity focus instead of the traditional country focus. Commodity focus entails concentrating on the general problems of commodities The CFC’s aim is to realize the potential of commodity production, processing, manufacturing, and trade for the benefit of the poor. The CFC supports implementation of interventions that:

  1. are new and innovative that will lead to commodity based growth, generate employment, increase household incomes, reduce poverty, enhance food security, provide new opportunities for systemic change in the markets and create resilience to shocks,
  2. pilot new approaches to risk-sharing with other institutions in areas that will achieve significant development benefits,
  3. are scalable and financially sustainable,
  4. have a measurable positive socio-economic impact on the stakeholders in commodity value chains,
  5. develop stronger connections with existing markets or create new markets along the value chain,
  6. increase financial services to commodity producers and commodity based businesses; and
  7. enhance knowledge generation and information dissemination.

CFC interventions use value chain approach to identify chain participants to identify opportunities and obstacles in specific commodity value chains thereby developing viable solutions. Value chain analysis leads to identification of opportunities for value chain development.

The CFC supported interventions cover all aspects of the value chain from production to consumption i.e. from “field to the fork”. Specifically targeted areas are:

  • Production, productivity and quality improvements
  • Processing and value addition
  • Product differentiation
  • Diversification
  • Marketing
  • Technology transfer and up gradation
  • Introduction of measures to minimise the physical marketing and trading risks
  • Facilitation of trade finance
  • Risk Management

The main criterion for selection of intervention for support are quality, potential impact, beneficiary focus, replicability, sustainability, cost effectiveness, manageability and dissemination.

Governing Bodies

The governing bodies of the Fund are its Governing Council and the Executive Board. The Managing Director is the Chief Executive Officer of the Fund. The Executive Board is advised by a Consultative Committee, composed of nine independent experts, on technical and economic aspects of projects submitted to the Fund. The Governing Council meets once a year, and the Executive Board and Consultative Committee biannually.

Headquarters

The Headquarters of the Common Fund are located in Amsterdam, The Netherlands

Special Mentions

The Common Fund's partnership with OPEC Fund for International Development (OFID) is historic and dates back to the very inception of the Fund. The OPEC Fund not only facilitated and paid capital subscription for as many as 37 Least Developed Countries (LDCs) but continues to make contributions under ''Framework of Financial Support'' towards CFC's commodity development projects for the least developed countries and poorer strata in other developing countries.

The Kingdom of Norway and the European Commission have been supportive of the Fund and have sponsored capital contribution of 9 and 3 countries respectively.

The Kingdom of the Netherlands: A Trust Fund arrangement set up by the Netherlands Ministry for Development Cooperation to support CFC projects with co-financing contributions for the Five Year Action Plan. 

THE CFC PARTNERSHIP NETWORK