Vanuatu coffee producer Tanna Coffee has secured a AUD656,000 investment from impact investors.
Facilitated by The Difference Incubator (TDi), the private capital injection will help grow Tanna Coffee’s output five-fold, supporting more than 750 farmers and their families on the remote island.
The investment was made possible by the Pacific Investment Readiness Pilot, a partnership between TDi and the Department of Foreign Affairs and Trade (DFAT), which helps create investable opportunities for impact investors. The investment is the second capital injection into the Pacific made by the Genesis Impact Fund, set up by TDi’s partner Benefit Capital.
As part of the pilot, TDi’s team is helping businesses such as Tanna Coffee to do good and make money, ultimately contributing to sustainable economies across the Pacific and reducing aid reliance.
Tanna Coffee grows, farms, processes, roasts and distributes premium single-origin coffee on its plantation 400 metres above sea level.
Two years ago, the plantation of 750,000 coffee trees was almost totally wiped out when tropical Cyclone Pam devastated Vanuatu’s 84 islands.
Despite this setback, the company has rebuilt its operation and produced its first significant harvest since Cyclone Pam and now plans to directly re-engage all of the smallholder coffee farmers, many of whom lost everything during the cyclone.
The AUD656,000 investment will be used to develop 200 hectares of land and to increase Tanna Coffee’s production from 20 to 100 tonnes of roasted coffee annually. The land will be distributed in one-hectare plots to 200 farming families for them to grow coffee.
TDi worked with Tanna Coffee over 12 months to help build the business and secure capital from impact investors. This process included developing their business model and a framework to measure their impact, as well as negotiating the business’s valuation and terms of the investment.
Tanna Coffee’s managing director Terry Adlington says: “When I arrived in Vanuatu to work with Tanna Coffee 20 years ago, farmers were being paid 20 vatu (AUD0.25) per kilogram of coffee cherry. By changing our processes to add more value to the end product, we are now able to pay farmers 270 vatu (AUD3.20), which we see flowing directly back into the local community.
“We have worked with TDi on a plan for sustainable growth to increase coffee production to 100 tonnes over the next five years. We also anticipate farmers’ income will increase by 20 per cent as a result of the investment, increasing their living standards, improving lifestyles and providing the ability to afford consistent education for their children.”
TDi deputy CEO Anthea Smits and the TDi team met with more than 80 businesses in Samoa, Tonga and Vanuatu as part of the DFAT-sponsored programme. They then selected businesses with the greatest potential to deliver a positive social and environmental impact and a market-rate return for investors to work with more intensively, including Tanna Coffee.
“In the long term, a sustainable economy in Vanuatu will reduce the nation’s reliance on foreign aid, including the AUD62.5 million in aid the country is estimated to receive from DFAT this financial year,” Smits says.
“We have worked with Terry to develop innovative farming methods to secure the future of Tanna Coffee’s crops. For example, we noticed that after Cyclone Pam, younger crops survived whereas older crops were lost, so we are rehabilitating and developing crops at different stages to ensure a regular supply.”