The Story of CAIC and Camino: Financing Fair Trade (Part 1)

Camino Display, Ottawa is launching another series with this post, using case studies to illustrate how different models of social finance are being implemented in the social enterprise and nonprofit sectors. The aim is to highlight and provide evidence of successful applications of social finance.

Since 2001, the Canadian Alternative Investment Cooperative (CAIC) has made two loans to La Siembra Cooperative, a pioneer of Fair Trade Certified organic cocoa and sugar products in North America. The first loan, used for expanding the business, was fully repaid in 2008, and since then, CAIC has invested in La Siembra’s growth and expansion once again. This is the first post of a two-part exploration of the successful relationship between CAIC and La Siembra.

La Siembra Cooperative is an Ottawa-based worker cooperative that markets fair trade organic sugar and cocoa based products (brand name Camino) in North America. Certified Fair Trade products guarantee consumers that third world farmers receive higher than world market prices including the payment of organic and social premiums that are used for development programs that are decided by the co-op members themselves. La Siembra’s fair trade products support an alternative trading model that ensures that fair prices are paid to cocoa and sugar farmers in Latin America and the Caribbean.

CAIC, as featured previously on, invests in groups working for positive social change that promote alternative economic structures and act as a catalyst for structural change. CAIC is interested in supporting the concept of fair trade (an alternative trading model) to live out its mandate while protecting its members’ capital. CAIC has been able to do both in the case of not one, but two loans to La Siembra Cooperative.

La Siembra first approached CAIC for a $50,000 loan (used as part of leverage capital for eventually raising $280,000 in funding from a Caisse Populaire) in September 2001 to help expand operations. At the time, fair trade was still a nascent industry in Canada and this provided La Siembra with a niche that they could capitalize on. CAIC, on the other hand, was attracted by the fact that La Siembra was a cooperative and promoted an alternative economic structure, thereby fitting perfectly into CAIC’s mandate. Despite the fact that CAIC did not have a long history of investing in fair trade enterprise, it conducted its standard due diligence and decided to grant La Siembra with a loan.

CAIC took the following factors into account when making the loan decision:

  1. Commitments from retailers
  2. The strength of the business plan, specifically:
    • Realistic sales projections
    • A clearly demonstrated understanding of the market
    • Solid marketing and promotional plans
    • Well-articulated sources and uses of financing

Two other factors were also significant in this development: the senior principals at both organizations developed a good working relationship, and the loan amount was also relatively low. The funds were eventually extended at a 9% rate of return, with an embedded performance bonus as well. As collateral, CAIC used a General Security Agreement on La Siembra’s assets, along with personal guarantees from two of the Worker Cooperative’s members. According to Valerie Lemieux, who has been working with CAIC for many years, “It was scary on paper, but the La Siembra management really impressed us.”

CAIC’s judgement was to prove correct as the loan was fully repaid in 2008, by which time the cooperative had grown dramatically. According to Beth Coates, Financial Manager of CAIC, “By 2008 the original business plan was quite “out of date”.  Sales were much higher than original projections as La Siembra was very successful in marketing its product – however the cost structure became more expensive over time thereby eroding profitability.  To some extent this is to be expected in a fair trade organization as ensuring that producers are properly compensated is one of the key organizational missions.  So in short, the top line objectives were met…the organization was always financially viable.”

CAIC and La Siembra’s partnership did not end there; to find out what has taken place since 2008, read Part II of this post!

Many thanks for Valerie Lemieux and Beth Coates for their support in helping put together this story.

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