Finance for and support for disadvantaged producers

Annual Review for the year ended 30 September 2006 Moderator’s statement is a part of a worldwide movement to promote fairer world trade. As we approach the 200th anniversary of the UK Parliament’s abolition of the slave trade it is sobering to reflect that slavery was for a long time regarded as an essential element of the economic process by which Britain prospered. We may have made slavery illegal, but tens of millions of people are still bound by the shackles of economic injustice. Shared Interest’s pioneering role in finance for fair trade is significant. The past year, our sixteenth trading year, has seen us pass some important milestones: members’ share capital topped £20 million for the first time; direct loans to producers doubled to £1.9 million (showing faster growth than our traditional lending to fair trade importers); we established a regional presence in and in Costa Rica; and the Shared Interest Foundation hosted its first producer training event. Growth in members’ capital is vital to support our aims to increase longer term loans to fair trade producers. Our regional presence helps us to identify potential borrowers, process loan applications more quickly and identify producers’ training requirements. Two years ago we began to invest in changes to make the Society more effective in supporting our investors and borrower customers. These new business developments are not yet complete and the trading results this year, a profit of £45,000 after share interest, fell slightly short of our plan. We are in the business of sharing lending risk so that producers can gain access to the credit they need. We assess the risk of each loan carefully but we need to ensure that Shared Interest makes an overall financial return sufficient to absorb the occasional bad debts which inevitably follow. In 2004/5 we commissioned our first social accounts and repeated the process in 2005/6. We are encouraged by the social impact which Shared Interest is already achieving and are challenged to become even more effective in reaching those whose lives can be transformed by fair trade. Our new Managing Director, Patricia Alexander, and her team have worked hard over the past year. On behalf of all members and customers I thank them for their energy and commitment, and also the Board and Council who serve the Society. Most of all I thank Shared Interest’s members for investing in a fairer world.

Philip Angier, Board Moderator

Shared Interest is the world’s leading fair trade finance organisation. Through Shared Interest, investors give some of the poorest communities in the world the financial backing to join the fair trade marketplace and trade their way out of poverty. Shared Interest Society is a co-operative lending society, owned and controlled by its members from across the UK and was established in 1990. The combined investments of members are used to provide much needed, accessible financial services to fair trade producer groups in developing countries. Shared Interest Foundation is the sister charity to the Society. Shared Interest Society and Shared Interest Foundation share a common vision. Our vision ... is to achieve real and lasting improvements to the lives of disadvantaged producers, particularly in poorer parts of the world, by providing fair and just financial services and sharing risk. Shared Interest Society’s mission ... is to finance fair trade. We do this by: • Lending to and working with producer and buyer organisations which are committed to using fair trade principles • Promoting a North-South partnership: enabling members in the UK to share risk and take positive action to direct funds to borrowers working in poorer parts of the world listening to and promoting southern voices and views • Strengthening the fair trade movement so that it continues to present a more just model of trade. Shared Interest Foundation’s mission ... is to support disadvantaged producer groups in using fair trade as a sustainable solution to poverty. We do this by: • Providing education and training, particularly in business and financial management • Developing capacity within producer organisations and assisting them in improving their business performance • Widening access to fair finance • Supporting the development of the fair trade movement • Improving and developing the social impact of Shared Interest. Fair financing across the world We are celebrating a successful year of working with customers in some of the world’s poorest countries. Our plan to bring our business closer to the people who can benefit most has worked very well, with the offices we opened in and Central America contributing effectively to a large increase in lending. We extended our list of customers by 13 during 2006 and made a substantial impact on the work of a total of 56 producer organisations and 39 of their buyers. As a result our lending rose by £1.9 million, enabling the advantages of fair trade to be delivered to a growing number of communities. It was especially significant for our strategy to deliver more to impoverished communities that more than £900,000 of our increased lending was made directly to producer groups.

Speciality Foods of Africa, Zimbabwe, a new customer in 2006. Photo ©PhyoTrade Africa.

Visits to producer groups such as Thai Tribal Crafts are included in ‘Meet Membership boost for fair finance the People Tours’. Photo courtesy of The increase in our lending in the developing world has been mirrored by significant growth in members’ share capital, which rose by 7% to £20.5 million by the year end. This growth is the result both of attracting 336 new members, who invested £600,000, and of increased investments by existing members, including an inflow of £594,000 from conversion of the Loan Stock issue which matured in 2006. At 30 September 2006, the number of members stood at more than 8,400. In order to meet our ambitious plans to grow investment, we launched the Shared Interest Ambassador scheme in January. We would like to thank the 49 people who had volunteered by the end of the financial year to promote our work, fair finance and the fair trade movement in their communities. Their work has already had an important impact in widening awareness of what we offer to a larger audience through attendance at events organised by ourselves or by local fair trade partners. Shared Interest’s customers include the Coopercañera-Cooperativa Cancra Costa Rica Much in Little following organisations. We also send Craft Aid (Mauritius) Mauritius Mysha Enterprises payments to nearly 400 producer groups on Dezign Incorporated Zimbabwe NAWOU - Nat’ Ass’n of Wo behalf of fair trade buyers. ELOC Farms Ghana Organisations Uganda Fruits of the Nile Uganda North Western Bee Produc PRODUCER GROUPS Frutos de los Andes Fruandes Colombia Panay Fair Trade Center Alternative Trade Network Nigeria (ATNN) Nigeria Fundacion Solidaridad Talleres Artesonales Proagroin APICOOP Valdivia Cooperativa Gebana Afrique Burkina Faso Productores de Miel Flor d Campesina Apicola Chile Gebana Brasil Brazil Rungwe Smallholders Tea APRAINORES El Salvador Getrade Ghana Association Arum Dali Mekar Grupo Agricola Prieto Ecuador Salay Handmade Paper Ind Asociacion De Artesanos Qantati Bolivia Gumutindo Coffee Cooperative Enterprises Uganda Smolart Self Help Group CACVRA Peru Holyland Handicrafts Palestine Speciality Foods of Africa Camari Fepp Ecuador Honey Care Africa Kenya Thai Tribal Crafts Candela Peru Intercrafts Peru Peru Trinity Jewellery CECOCAFEN Nicaragua Jirmit Papyrus Group Egypt UCRAPROBEX COCLA Peru Kisii Soapstone Carvers Cooperative Society Kenya Undugu Society Centro de Exportaciones Kisii Soapstone Art & Craft Kenya Volta River Estates Gruppo Salinas Ecuador La Alianza Costa Rica Wupperthal Rooibostee Ko Cercle des Secheurs Burkina Faso Lombok Pottery Centre Indonesia Xochipilli A. C.y Xochiquetz Comparte Chile Machakos District Cooperative Union Kenya Yatta South Women Group Coocafe Costa Rica MCCH – Fundacion Maquita Cushunchic Ecuador Yayasan Mitra Bali BUYER ORGANISATIONS Magasins du Monde Belgium Ghana Cafédirect UK One World Shop UK men’s Citizen Dream Belgium Oxfam Australia Trading Australia Uganda Commercio Alternativo Italy Oxfam Wereldwinkels Verdeelcentrum Belgium ts Zambia Contigo Germany PointOV UK Philippines Italy Rattvis Handel Import Sweden Costa Rica Dritte Welt Partner Germany Red Tomato USA e Campanilla Mexico Ecco Bella USA Roba dell’altro Mondo Italy Growers El Puente Germany SERRV International USA Tanzania Epona UK Solidar’Monde France dustries Philippines USA Canada Canada Kenya UK Ten Thousand Villages USA USA Zimbabwe Equoland Italy Top QualiTea (UK) UK Thailand EZA Dritte Welt Austria Trade Aid Importers New Zealand Kenya F M Foods (Tropical Wholefoods) UK Traidcraft UK El Salvador Fair Trade Company (People Tree) Japan Tropical Forest Products UK Kenya Fairwind UK UK Ghana Gepa Fair Handelshaus Germany World of Good USA mitee South Africa IDEAS Spain al Kenya Just Us! Coffee Canada Kenya La Siembra Canada Indonesia Liberomondo Italy Reaching out to our customers The opening of offices in Kenya and Costa Rica was instrumental in driving forward the business’ growth as Shared Interest staff in-country developed closer working relationships with customers, potential customers and wider networks of people in the fair trade movement. In Kenya we opened an office which we now share with staff from Traidcraft and a local fair trade network, while our representative in Costa Rica has worked with an increasing number of new customers to identify and meet their borrowing requirements. Our work to bring an international dimension to Shared Interest’s operations is proving highly successful and we plan to continue expanding our presence overseas as a key means to achieve our vision. The advantages of this strategy are clear: our regional presence enables us to increase the amount of money we lend, especially directly to producer organisations, and has raised awareness of our services among businesses that can benefit from them. It has also helped us to identify producer groups which can be strengthened by the training and support provided by our charity Shared Interest Andrea Wilkinson of Shared Interest Foundation pictured at the school in Foundation. Mango, Kenya, where the development of a fair trade producer group in the village has resulted in increased school attendance, notably by girls. Successful year for Foundation Mango True Mirage, a co-operative that makes handicrafts in Kenya, became the first business Cecocafen in Nicaragua is one of the large coffee marketing co-operatives to receive training provided by Shared Interest that has benefited from Shared Interest’s presence in Latin America. Foundation in its first full year of operation. We received extremely positive feedback from the event in and lessons learned from this ground-breaking work by Foundation staff helped us refine later training programmes planned for producers in Kenya and Rwanda. We have focused on providing education in key elements of business management and all sessions are developed with the clear aim of supporting producer groups to run viable, competitive fair trade enterprises to reduce poverty for themselves and their communities. We would like to thank our members and other supporters whose generous donations made this work possible. The funds provided by Shared Interest members and people keen to see an improvement in the quality of life for people in developing countries gave the Foundation a successful start, and their continued support remains at the heart of our future fundraising plans. We also plan to secure funding from grant- making bodies in the year ahead to support our growth plans for the charity. Investing in growth In terms of expenditure, we moved into new offices in Newcastle, as our previous lease was There have been some considerable expiring, and we had an unusually high level of achievements over the past 12 months. These recruitment costs during the year. include moving offices, successfully establishing two overseas offices, inducting several new The outlook for the 2006/7 year should see our members of staff and the first real impact from regional expansion continue and our sales income the work of the Foundation which our members is forecast to grow by another 30%. The supported financially very well during the year. beginning of our new financial year has started well with sales income ahead of budget. Shared Interest Society We will also introduce a new fresher brand We continue to invest for growth with our identity to clearly signal what Shared Interest is regional expansion programme. The Society about and this will be available early in 2007. benefited from £43,025 of unsolicited donations We hope that members will continue to support during the year which took the profit to £45,074 our work as we seek to increase our producer but without these donations our profit would lending and hence our social impact. We still have been only £2,049, which was lower than need to grow our share capital to achieve our forecast. Many projects came to fruition in the plans. past 12 months, and we now have two regional offices established in Kenya and Costa Rica. Shared Interest Foundation Sales income was 25% above the previous year. The Foundation had a very successful year. However, adjusted for interest rate rises, it is Excellent support from members enabled it to around a 12% increase in comparable terms. generate funds in excess of £100,000, and it will Since we make most of our loans in US dollars, a therefore start the year with its reserves intact. weakening US dollar exchange rate both reduced the profit earned on currency loans when It absorbed the cost of our commodity project, converted into pounds and resulted in further the research and establishment costs of the exchange losses of £42,032 on translation of regional offices and the successful delivery of overseas balances. training programmes. We continue to have relatively low lending losses Our plans for the coming year are to continue the compared to the level and risk of our lending training programmes and seek grant funding to portfolio, and this year £36,474 was written off as support this, although donations from members bad debt. are always welcome. Our payment activity over the last three years (year ended 30 September) 2004 2005 2006 Number of fair trade organisations receiving payments 365 384 379 Value of payments made £19.4m £21.3m £23.1m

Distribution of payments by product Distribution of payments by region Working together to strengthen fair trade Shared Interest’s staff, members and ambassadors continued their work with partners in the wider fair trade movement to support its growth as a mechanism to deliver higher living standards for producers throughout the developing world.

Fairtrade Foundation International Fair Trade Association (IFAT) London The Netherlands T: + 44 20 7405 5942 T: + 31 345 53 59 14 [email protected] [email protected] www.fairtrade.org.uk www.ifat.org

Fairtrade Foundation is the organisation IFAT is a global network of fair trade responsible for marketing and promoting the organisations in more than 60 countries with a FAIRTRADE Mark in the UK. Shared Interest’s high representation of producers. Shared Interest work with Fairtrade Foundation is continuous and staff attended three regional conferences – in a key component of our networking strategy. Asia, Europe and Africa – to meet with producers Shared Interest Foundation is a charity member and to update them on Shared Interest’s of Fairtrade Foundation. development as the world’s leading fair finance During 2006 we sponsored a organisation. tour organised by Fairtrade Foundation to bring We brought a special focus to a proposal worked producers from and Uganda over to the UK up between Shared Interest and IFAT members to share their experiences with supporters and to for a fund to protect producers from risks that discuss advances in the fair trade movement. could lead to heavy financial losses and bad debts.

Fairtrade Labelling Organizations British Overseas NGOs for Development International (FLO) (BOND) Germany London T: + 49 228 94 9230 T: + 44 20 7837 8344 [email protected] [email protected] www.fairtrade.net www.bond.org.uk

FLO is the organisation set up to co-ordinate In 2005/6, we increased our input to the work of work by the 17 national initiatives (like Fairtrade this network of UK-based voluntary development Foundation in the UK) and to audit all FAIRTRADE organisations and increased the number of Mark products through the supply chain from meetings we attended. producer to consumer. It also collects data about A member of Shared Interest’s staff is a Board fair trade that is used by member organisations to member of BOND and is working to strengthen support expansion of the movement. the ties between Shared Interest Foundation and FLO is a key partner of Shared Interest and our BOND organisations. staff have strengthened the relationship by increasing our attendance at meetings held by FLO around the world.

Shared Interest 2 Cathedral Square Groat Market Newcastle upon Tyne NE1 1EH Telephone: 0191 233 9100 Fax: 0191 233 9110 www.shared-interest.com

The complete Directors’ Report and Audited Accounts and the Social Accounts are available to download from our website. Shared Interest Society Ltd is registered with the Registrar of Friendly Societies, number 27093R. Shared Interest Foundation is registered with the Charity Commission, number 1102375. Front cover images Top left: Fernando Mendez Ruiz is a member of CIRSA, a coffee farmers’ co-operative in Mexico that benefits from Shared Interest’s credit facilities. Top right: Babubhai Parmar, a member of Agrocel Pure & Fair Cotton Growers’ Association, India. Photo Simon Rawles, courtesy of Fairtrade Foundation. Bottom left: A member of the dance group Adico helps to deliver the fair trade message in Arusha, Tanzania. Photo courtesy of IFAT. Bottom right: Staff from Mango True Mirage, Kenya, on the first business skills training course run by Shared Interest Foundation.