Fruits and Spices Madagascar - Working Capital

Project Description

The CFC is working in Madagascar with a local business, SCRIMAD, to fund value chain upgrading for their organic fruits and spices. SCRIMAD is a company located in Madagascar and focused on aggregating and processing organic fruit and spices from local farming cooperatives, for export to Asian, European, and North American markets. The company was created in 1993 and started operations as a family business focused on the collection and export of lychee from Madagascar. The company diversified its export portfolio to include spices (black pepper, cloves, and vanilla) and dried beans. In 2015, SCRIMAD accepted an equity investment from a strategic investor – the impact investment fund Investisseurs et Partenaires (I&P) for a 35% stake in the company to jointly develop a fruit processing unit. The main products are juice and puree from lychee, pineapple, guava, mango, tamarind, passion fruit and sour soup. SCRIMAD also partnered with the French brand ETHIQUABLE to market the processed products through its distribution network in France. Over the last 5 years SCRIMAD has grown from a small family business to a leading processor and exporter of fruit and spices from Madagascar.

As a supplier to premium customers, SCRIMAD has a number of certifications such as Fairtrade, Kosher, Global G.A.P., H.A.C.C.P (Hazard analysis and critical control points) & “Agriculture Biologique”. The certification requirements extend to SCRIMAD’s suppliers. SCRIMAD sources all of its products from smallholder farmers and cooperatives and supports the farmers to meet the requirements. SRIMAD provides a guaranteed offtake, thus ensuring financial security for smallholder farmers and cooperatives.

SCRIMAD seeks a working capital loan to support the growing demand for its products. Additional working capital will increase the operational capacity of SCRIMAD and the profitability of the model. At the level of smallholder producers, the number of suppliers located within the project area is expected to increase from 2,000 to 3,000 producers.

Current status

The CFC is extending a EUR 1,200,000 loan to accommodate SCRIMAD’s working capital needs, ensuring its farmers and cooperatives direct access to funding and markets amid the challenges of COVID-19. The loan will have a tenor of 1 year, renewable up to a maximum tenor of 5 years and will be disbursed against purchase contracts with a maximum disbursement of 70% of the contract value.

Financial terms and conditions of the loan have been finalized following the due diligence process. Disbursement is expected to start in September 2020 which is when the peak harvest season begins.