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2021-12-31-accounts

Company number: 06959165 Charity number: 1133218

Producers Direct

Report and financial statements For the year ended 31 December 2021

Producers Direct

Contents

For theyear ended 31 December 2021
Reference and administrative information 1
Trustees’ annual report 3
Independent auditor’s report 26
Statement of financial activities (incorporating an income and expenditure account) 30
Balance sheet 31
Statement of cash flows 32
Notes to the financial statements 33

Producers Direct

Reference and administrative information

For the year ended 31 December 2021

Company number 06959165 Charity number 1133218

Registered office and operational address International House, 45-55 Commercial Street E1 6BD, UK

Country of registration England & Wales Country of incorporation United Kingdom

Previous Names Producers Direct legally changed its name from Cafédirect Producers’ Foundation in December 2017. Trustees Trustees, who are also directors under company law, who served during the year and up to the date of this report were as follows: Lebi Gabriel Hudson Chair Christele Delbe Vice Chair Pauline Boit Lenin Tocto Minga Penny Newman Resigned: 18[th] February 2022 Anthony Wainaina Key management Claire Rhodes Chief Executive Officer personnel Bankers Triodos Bank Deanery Road Bristol BS1 5AS Barclays Bank Leicester LE87 2BB Solicitors Bates Wells 2-6 Cannon Street London EC4M 6YH

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Producers Direct Reference and administrative information

For the year ended 31 December 2021

Weil Gotshal & Manges 110 Getter Lane London EC4M 6YH Auditor Sayer Vincent LLP Chartered Accountants and Statutory Auditor Invicta House 108-114 Golden Lane LONDON EC1Y 0TL

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Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

The Trustees present their report and the audited financial statements for the year ended 31 December 2021.

Reference and administrative information set out on pages 1 & 2 forms part of this report. The financial statements comply with current statutory requirements, the memorandum and articles of association and the Statement of Recommended Practice - Accounting and Reporting by Charities: SORP applicable to charities preparing their accounts in accordance with FRS 102.

Objectives and activities

Purposes and aims

Producers Direct is a UK-registered charity, established in 2009, that works with smallholder farmer organisations in Africa and Latin America. Producers Direct’s objects, as outlined in its Articles of Association are to:

Throughout 2021, Producers Direct has operated in accordance with its vision, mission and strategic objectives. These are stated as follows:

Producers Direct’s vision is of thriving smallholder communities, where each smallholder can realise their own vision. Producers Direct’s mission is to work with smallholders in Latin America and Africa to develop innovative solutions to the challenges they face (within the context of their farming and business practices).

Producers Direct’s Strategic Objectives are to:

  1. Pioneer innovative, effective programmes that strengthen producers' capacity, education and resilience.

  2. Ensure Producers Direct is truly producer-led in governance and in its overall model.

  3. Mobilise diverse resources to achieve sustainability for producer partners and for Producers Direct.

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Approach and Model

Producers Direct was founded in 2009 to be an organisation led by smallholder farmers, for smallholder farmers. The majority of the 600 million farms in the world are small. Farms of less than 1 hectare account for 70% of all farms but operate only 7% of all agricultural land. While smallholders play an essential role in global food security and nutrition, these same smallholder farmers typically live on under $2 a day and are themselves often affected by food insecurity and malnutrition. Changing climatic conditions continue to exacerbate these challenges for both smallholder farmers and global food systems. Current market systems do not incentivise the management of climate resilient food systems and agricultural landscapes. With food shocks related to extreme weather events becoming increasingly frequent, smallholders are facing the double burden of increasing productivity and resilience without receiving the information and tools needed for it. Typically, smallholders face and confront climate risks with minimal access to external data. While smallholders are one of the most vulnerable groups to climate change, their central role in global food systems uniquely positions them to be key leaders / actors in fighting in - and in the future management of sustainable food systems.

Within this context, there are four major, interconnected problems that Producers Direct’s model and 2021-2025 Strategy is seeking to address:

  1. FARMER-OWNED FOOD VALUE CHAINS: The world is not on track to reach Sustainable Development Goal (SDG) number 2. Food systems are broken and unsustainable. Smallholders currently have limited power in food value chains. Most smallholders work independently, capturing minimal value for their crops at market with limited support to achieve the increased onfarm productivity and reductions in post-harvest loss required to strengthen food security, resilience and incomes. To meet expected global demand for food as the world’s population grows, more effectively investing in and leveraging the knowledge, skills and resources of the world’s smallholders is becoming increasingly critical.

  2. WOMEN’S EMPOWERMENT: Globally, women comprise over 50% of the agricultural labour force and produce nearly 80% of the food consumed in the developing world. Yet, female smallholders earn far less than men and have limited access to credit. For example, in Kenya, women smallholders access less than 1% of available agricultural credit. Further challenges, including lower financial and digital literacy levels, and restricted mobility exacerbating lack of access to training and markets, drives further marginalisation of women smallholders within food value chains.

  3. YOUTH AGRIPRENEURS: Youth populations are rising rapidly. Over 50% of the world’s population is under 30. In the next decade, 1 billion youth will enter the job market. 600 million of them will not find jobs. We are on the brink of facing a massive youth unemployment crisis. While Africa’s rapidly transforming economies are driving increasing urban opportunities for off-farm employment, farming remains the single largest employer of rural youth. Yet rural youth face many hurdles earning a livelihood from farming. Unfortunately, most young people do not see farming as a viable livelihood. A key gap remains investing in a critical mass of skilled youth with access to finance and know-how to drive productivity growth in farming and related value chains. Youth typically do not perceive agriculture as a remunerative or prestigious profession. Until youth see more inspiring, profitable examples of youth-led agri-enterprise within rural areas, current trends in urban migration will continue. Key barriers not only include a lack of access to training and skills, capital and financial services, and market access (FAO, 2021) - but also a lack of awareness of the opportunities and services that do exist to support them.

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  1. DATA IN THE HANDS OF FARMERS: Farmers often do not have access to the data and information they need to make informed on-farm decisions, protect our planet and strengthen their resilience - including to changing climatic conditions. 99% of farmers in our network either keep no records at all, or paper-based records at best. Traditional smallholder data collection methods remain costly, and are often designed to primarily benefit stakeholders working with farmers - rather than the farmers themselves. The lack of access to smallholder farmer data prevents financial institutions from quantifying risk and offering them affordable financial services - particularly for female farmers and youth agri-preneurs. When farmers are not using data insights to support their on-farm decision making, this can further exacerbate barriers to on-farm improvement, including optimising costs of production, and overall on-farm productivity, diversification and performance - all of which significantly contribute to farm profitability and ultimately farmer incomes.

To address these challenges, Producers Direct’s four 2021-2025 Strategic Goals are:

  1. Farmer- Owned Value Chains: Increase incomes by 120% for at least 295,000 smallholder farmers by end-2025 as a result of supporting smallholder farmers to diversify their onfarm production, aggregate their surplus crops, and collectively sell these crops into local and national markets. Key metrics include percentage increase in incomes, and percentage of farmers who are successfully diversifying and managing multiple on-farm enterprises, ensuring farmers are not dependent on a single crop for food security and income. We consider this a measure of resilience.

2. Women’s Empowerment: Support 147,476 women smallholders to bundle their crops and sell them collectively into local and national markets, with the aim of enabling these 147,476 female smallholders to increase their on-farm incomes, strengthen their decisionmaking power and achieve financial independence.

3. Youth Agri-preneurs: Strengthen youth leadership in sustainable agri-food systems, including supporting 117,238 youth leaders to take leadership in food value chains by either launching their own agri-enterprises and/or playing lead roles in supply chain logistics and sales.

4. Data in the hands of farmers : Empower 1.7m smallholder farmers to access and adopt digital technologies, from basic SMS to pioneering technologies such as AI and Blockchain - in order to support farmers to apply these digital tools to enhance their on-farm profitability, resilience and incomes. Key metrics include the percentage of farmers who have access to information needed to make more informed on-farm decisions.

Producers Direct delivers support services to smallholder farmers across Africa and Latin America. Producers Direct’s peer-to-peer model places producer leadership at the centre of our programme delivery, governance and strategy. We aim to enhance farmer livelihoods by 1.) Improving farming productivity and incomes; 2.) Strengthening farm- and livelihood- resilience to changing climates; and 3.) Driving farmer ownership and leadership in food value chains. Producers Direct’s farmerled model blends in-person services with cutting edge digital tools, developed through farmercentred design. Our model comprises the following four inter-linked components:

1. Farmer-led Training and Information Services: In partnership with smallholder producer organisations, Producers Direct runs a peer-to-peer training model that offers farmers: 1) Access

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to a network of trained Farmer Promoters and 2) Relevant and affordable in-person training on demonstration sites/farms, where farmers can learn and trial innovative farming practices. Inperson training is supported by multimedia digital tools to support the digitisation of training and information services to process, including through SMS, WhatsApp and radio. Farmer-led training services focus on the following areas:

2. Farmer-led Data Services: Smallholder farmers typically have extremely limited access to data to enhance their farm’s performance or respond to the impacts of changing climatic conditions on their farm’s performance. The livelihood impacts that Producers Direct is targeting to achieve through smallholders having improved data access include: Optimised profitability across multiple on-farm enterprises to support household income improvement; Insights into optimal harvest times maximising yields; Managing a range of profitable enterprises that collectively reduce vulnerability to climatic shocks; Yield prediction data that helps to de-risk on-farm investment; and enhanced access to financial services as a result of having improved on-farm performance records.

To support smallholder farmers to more effectively access data, Producers Direct is pioneering a farmer-led data system, FarmDirect, to support farmers manage their farms as sustainable and profitable small-scale businesses. FarmDirect provides producers with holistic farm views of all on-farm enterprises, enabling farmers to analyse productivity and profit/loss across multiple enterprises and to manage climate change risks.

Through FarmDirect, we are supporting farmers to access to the following data, empowering them to make smarter, more informed decisions:

3. Access to Finance: A key barrier to farmers trialling techniques that they have learnt about during in-person and digital training is their lack of access to the finance that may be required to trial the techniques. For example, funds to trial new fertilising techniques, including to support organic farming, or to develop a new micro-enterprise that increases household incomes, such as fish farming or beekeeping. To support smallholder farmers to overcome this barrier, Producers Direct is partnering with smallholder producer organisations to offer micro-loans to farmers, supporting them with access to the funds they need to make on-farm investments. This is particularly vital for women and youth within smallholder communities, who face disproportionately high barriers accessing finance. To address this, we are increasingly targeting loans to support young people and women who typically cannot access financial services or credit.

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We also support farmers accessing loans to track their profits, loss, repayments, and product volumes, building a credit history so they can access increased credit in the future.

4. Market Access: Smallholder farmers also face the challenge of accessing markets for their products. To support market access, Producers Direct has been undertaking the following activities:

The Trustees review the aims, objectives and activities of the charity each year. This report looks at what the charity has achieved and the outcomes of its work in the reporting period. The Trustees report the success of each key activity and the benefits the charity has brought to those groups of people that it is set up to help. The review also helps the Trustees ensure the charity's aims, objectives and activities remain focused on its stated purposes.

The Trustees have referred to the guidance contained in the Charity Commission's general guidance on public benefit when reviewing the charity's aims and objectives and in planning its future activities. In particular, the Trustees consider how planned activities will contribute to the aims and objectives that have been set.

In order to enhance the public benefits realised, Producers Direct seeks to:

  1. Engage and work with a broad range of individuals and community groups within smallholder farming communities in which activities are undertaken. This includes:

  2. a. Through a farmer-led training model, smallholder farmers are trained as trainers, who then share and replicate their knowledge with a broad range of smallholder farmers within their community and neighbouring communities.

Producers Direct Trustees’ annual report

For the year ended 31 December 2021

Activities and services delivered during 2021

All Producers Direct’s charitable activities focus on improving the livelihoods and resilience of smallholder producers, and are undertaken to further Producers Direct’s charitable purposes for the public benefit. Overall, Producers Direct’s activities directly reached 811,590 smallholders and young people during 2021. East Africa programme activities were delivered by Producers Direct’s East Africa Programme team, based in Nairobi, in partnership with East Africa-based producer organisations in Kenya, Tanzania and Uganda. 2021 East Africa programme expenditure totalled £481,203, with donors including MercyCorps AgriFin and Innovate UK. In Latin America, programme expenditure totalled £187,085 - funded by Pret a Manger, the World Food Programme Innovation Accelerator and the German Development Agency, GIZ. Funding from Bayer AG supported programme activities across both Peru and East Africa.

2021 activities and services delivered included:

1. Farmer-led Training and Information Services:

Following a pause on in-person farmer training during 2020 due to COVID-19, in-person training activities were maintained at a low-frequency during the majority of 2021 - with a continued prioritisation and emphasis on digitised training and information services. Priority training and information programmes designed and delivered during 2021 included:

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AgriFin and the Starbucks Foundation. Information was disseminated through a variety of channels, including SMS; Radio, with local language scripts developed, WhatsApp, Social Media and the display of posters in areas where farmers regularly visit. Content topics included: Keeping families and communities safe; Reducing Covid-19 transmission and Covid-19 myth busting - particularly vaccination myths and misconceptions. In addition to smallholder producer organisations partnering to support information dissemination, programme delivery was supported by iShamba, AFarmers Media and Standard Group Media in Kenya. An independent evaluation of campaign impact conducted by Busara Centre for Behavioural Economics indicated a 6.6 percentage point increase in smallholders’ knowledge, attitudes, and behaviours towards Covid-19, as a result of knowing more about social distancing and Covid-19 transmission.

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bananas and avocados, in a variety of formats including training manuals for farmer promoters, visual guides for farmers, WhatsApp for Business content and tips to be shared by SMS. This included working with 350 female farmers in Peru to design and test training materials, and channels for information dissemination.

2. Farmer-led Data Services (Latin America and East Africa)

2021 provided an opportunity to do more on-the-ground, in-person testing of FarmDirect, with focus areas including on: 1.) Re-designing and further testing of paper-based log books to support smallholders managing on-farm records across a number of enterprises, including beekeeping, and working with youth leaders within farming communities to test the digitisation and sharing back of insights to farmers; and 2.) Expanding focus to test how farmers can benefit from predictive data insights, as well as real-time snapshots of how their farm is performing. Throughout 2021, Producers Direct partnered with the International Centre for Tropical Agriculture (CIAT) to test how AI-generated yield prediction models can be paired with farm-level data - with the aim of generating a pre-season prediction of the crop yield that a farmer might expect to receive. We are testing this through the farmer-led design and prototyping of a second digital tool - Croppie, working initially with smallholder coffee farmers to test the concept with coffee yield predictions. Our goal is to understand how these yield predictions, combined with sharing digitised agronomic and financial planning tips with smallholders, ahead of and during the season, can firstly support the farmer to optimise on-farm and financial / cost management during the season, and secondly look ahead to planning for future seasons - recognising that farmers will increasingly need forward-looking insights to plan for anticipated impacts of changing climatic conditions on crop yields and farm performance. With initial funding from CGIAR as a 2020 Inspire Challenge winner, and from October 2021 from GIZ, we have begun to work with 700 smallholder farmers in Peru and 300 smallholder farmers in Colombia to 1.) Explore how they value these yield predictions, including when paired with agronomic and financial tips and 2.) Test how farmers can access predictions on their future farm performance under varying climate scenarios, in order to support forward planning and the proactive management and mitigation of potential climaterelated risks to their annual farm performance.

3. Access to Finance:

During 2021, Producers Direct launched Phase 2 of its Rotating Credit Facility, ROTA. Phase 2 focussed on Producers Direct providing loans to support beekeepers invest in their honey enterprises. Instead of the financing being provided in cash, Producers Direct pre-purchased 1,000 hives, which were then distributed as loans to 100 beekeepers across Kenya, Tanzania and Uganda. Farmers will each repay the value of the hives they received through a blend of honey and cash over the next four years, at an interest rate of 8%. Producer partner organisations supporting the administration and management of the loans to individual farmers will receive a 1% Management Fee of the collective value of loans distributed to the farmers they are supporting.

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4. Market Access:

2021 saw significant progress on market access programme activities across East Africa and Peru, through branded and unbranded product sales into local and national markets - with a focus on horticultural crop and honey value chains. We launched our branded Producers Direct honey into the Kenya market in April 2021, with end-2021 results including listings in over 40 Kenyan retail outlets; 7,152 kg of honey sold; and revenue from branded Kenyan honey sales of £26,624. Furthermore, an initial trial of branded honey sales in Peru commenced in December 2021. This investment in driving market access opportunity for beekeepers directly connects with 2021 Training, Data and Finance programme activities outlined above to support the structuring of honey value chains, by training and building the capacity of smallholder farmers to supply their honey to the Producers Direct brand, through in-person and digital trainings in hive management; distribution of rotating credit loans to support beekeepers start or expand their beekeeping enterprise, and data services to support farmers to manage their hive performance and their ROTA loan management, on-paper and digitally.

For horticultural crops, we expanded the testing of FarmDirect’s market access functionalities during 2021, with a focus on supporting smallholder farmers to bundle surplus food security crops they are growing, including fruits and vegetables, and selling them in local markets. Logistics associated with identifying buyers and sourcing products from farmers is being supported by a network of youth agents. FarmDirect functionalities tested during 2021, included registering farmers and buyers on FarmDirect and digitally aggregating / bundling volumes available from individual farmers to sell in bulk to buyers. During 2021, 80 farmers in East Africa and 350 female farmers in Peru were engaged in FarmDirect testing activities, with Peru programme activities undertaken in partnership with World Food Programme (WFP) Innovation Accelerator and WFP Peru.

Achievements and performance during 2021

During 2021, Producers Direct’s activities reached 811,590 smallholder farmers and their families. Since 2009, cumulatively, 1.3 million smallholder farmers and their families have benefited from Producers Direct’s activities. Looking ahead to 2025, we are committed to reaching 1.7 million smallholders and improving incomes and livelihoods for smallholders, strengthening resilience to rapidly changing climates and driving ownership in food value chains.

Data collected from farmer surveys during 2021, including from 507 smallholder farmers across Kenya and Uganda, and 350 smallholder farmers in Peru, indicated:

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an additional $288 per year, while farmers managing beehives and selling honey can earn an additional $348 per year.

Impact metrics are tracked internally through data collections, surveys, evaluations, and focus groups. Producers Direct has also had our work externally evaluated four times - by Picture Impact in 2017 and 2018, and by Busara Centre for Behavioural Economics in 2020 and 2021, to verify our impact on smallholder farmer livelihoods. Busara’s evaluation on the impact of our Covid-19 campaign concluded that 87% of farmers changed behaviour because of our digital Covid-19 campaign. Busara also evaluated the effectiveness of Producers Direct’s 2021 YouthDirect Na AgriBiz campaign on changes in Knowledge, Attitudes and Behaviours (KAB). Results showed that youth participating in this 6-month campaign on average improved their knowledge and attitudes to youth-led agribusiness by 10% when compared to a control group. Although this did not necessarily translate to behaviour change during this 6 month engagement, Busara's KAB score - which averages out the knowledge, attitude, and behaviour components - showed that youth are on the right trajectory to changing their behaviour. For example, 96% of youth responded that they would join a physical or digital agricultural focussed cooperative group and 100% said they would like to attend other similar agribusiness competitions and events. Additionally, 93% of youth who participated in campaign events said they had learned something new; and 98% said they would recommend campaign information and activities to other youth in the agribusiness sector.

Other non-programmatic achievements during 2021 included:

External factors affecting achievement

Producers Direct works principally with smallholder producer organisations located in East Africa and Latin America. Working with these vulnerable producer organisations can affect capacity to deliver on partnership agreements according to defined timelines and targets. Throughout 2021, Covid-19 remained a dominant external factor affecting achievement - with the detrimental impacts of Covid-19 spanning both on the livelihoods of smallholder communities where Producers Direct works, as well as the socio-economic consequences of Covid-19 in the UK and internationally where Producers Direct’s team members, donors and other strategic partners are located.

Smallholder farmers represent one of the most vulnerable groups to climate change, with changing climatic conditions continuing to exacerbate the challenges faced by smallholder farmers. Climate-related challenges include vulnerability to natural disasters, prolonged droughts and associated detrimental impacts of these changing climatic conditions on crop production. Current market systems typically do not incentivise the management of climate resilient food systems and agricultural landscapes. With food shocks related to extreme weather events becoming increasingly frequent, smallholders are facing the double burden of increasing productivity and resilience without receiving the information and tools needed for it. Typically, smallholders face and confront climate risks with minimal access to external data.

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Beneficiaries of our services

Primary beneficiaries of Producers Direct’s work are smallholder farmers located across East Africa and Latin America. To deliver our activities and impact, we work with a network of 38 smallholderowned producer organisations across Latin America and East Africa. Smallholder farmers across Producers Direct network are diverse in geography, crops and resources. On average, the smallholder farmers we work with earn less than $2 per day and sustain their families on 1.2 hectares (3 acres). Farmers are managing diverse farming systems, including cash, non-cash and subsistence crops. Principal crops include grains, fruits, vegetables, honey, tea, coffee, and cocoa. The average age of our farmers is 60, on average they have 5 dependents and 94% are affected by climate change. On average, 16% of the farmers we work with own a smartphone, and 17% have internet access. Only 48% have a bank account. From our recent survey data, 89% of farmers who responded reported access to finance being a key challenge, and 59% reported market access as an additional challenge - showcasing the importance of our investment in linking farmers to markets. We particularly focus our resources on reaching women and youth. For over a decade, we have made significant investments in promoting female farmer leadership across our network and empowering female smallholders to play central roles in the design and delivery of our programme activities, both in-person and digitally. Furthermore, we continue to invest in supporting youth to take up leadership roles within smallholder communities, as well as to launch and scale their own agri-enterprises, as exemplified by our 2021 YouthDirect Na AgriBiz campaign.

Organisations we work with

In addition to our work with smallholder-owned producer organisations, Producers Direct also continues to work with a number of other organisations at international, regional and national levels to support programme implementation. During 2021, strategic partners supporting programme delivery included the World Food Programme Innovation Accelerator, MercyCorps AgriFin, International Centre for Tropical Agriculture (CIAT), Busara Centre for Behavioural Economics, Ideo.org, Champion Agency, Climate Edge, Cranfield University, iShamba and AFarmers Media.

Financial review

As shown in Producers Direct’s Financial Statements, 2021 income totalled £988,359 with funds brought forward from 2020 totalling £1,314,734. 2021 expenditure totalled £1,089,278. During 2021, Producers Direct’s principal funding sources included grants and donations from private foundations, inter-governmental organisations and public limited companies.

Detailed below and in our 2021 Financial Statements as a 2021 Post Balance Sheet Event, Wefarm Limited went into administration in August 2022. Consequently, the end-2020 value of Producers Direct’s shareholding in Wefarm (£367,000) was reduced to £0 at end-2021, representing a net loss on investment of £367,000 at the end of 2021.

Producers Direct ended the year with a total fund balance of £846,815, of which £393,806 was restricted funds and £453,009 was unrestricted funds.

Policies for making social or programme-related investments

Overall, Producers Direct does not make social or programme related investments and therefore does not have a policy on this. To-date, Producers Direct’s establishment of Wefarm in 2015 has represented a one-off investment that was undertaken because Producers Direct’s Trustees felt

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this was the best option for enabling Wefarm to continue delivering the mission of Producers Direct and where the greatest social impact could be achieved by Wefarm.

Investment policy and performance

Beyond interest received on current accounts and fixed term deposit savings accounts, Producers Direct’s shareholding in Wefarm represented Producers Direct’s only current investment through until end-2021.

From 2015 through until the end of 2018, Producers Direct maintained the fixed asset value of its shareholding in Wefarm at £800. This valuation of £800 was maintained because there had been no market mechanism or liquidity in Producer Direct’s Wefarm shares. At the end of 2019, Producers Direct’s Wefarm shares were re-valued in anticipation of Producers Direct being able to share a percentage of its shareholding during a 2020 Wefarm investment round, with the share value changing from £0.10 per share at the end of 2018, to £1.994 per share at the end of 2019. During 2020, Producers Direct sold 610,825 of its 800,000 shares, at a price of £1.908 per share on 29th October 2020, realising £1,165,465 of unrestricted income. The share price for this 2020 investment round was £1.94 per share, with a 1.65% deduction applied to this share price for transaction costs.

As a 2021 Post Balance Sheet Event, Wefarm Limited went into administration in August 2022. Consequently, Producers Direct’s shareholding in Wefarm was devalued from £367,000 at the end of 2020, to £0 at the end of 2021, representing a net loss of £367,000.

Grant making policies

Producers Direct does not openly invite applications for grants and therefore does not have a grant making policy.

Loans

In 2020, Producers Direct secured two loans to support cash flow management and to invest in testing branded honey sales in East Africa. These were:

Voluntary help and gifts in kind

Throughout 2021, Producers Direct benefited from pro bono support from legal firm, Weil, Gotshal & Manges, who have acted on behalf of Producers Direct during Wefarm investment rounds. The value of these pro bono legal services included within the 2021 Accounts is £55,192.

Producers Direct was also grateful for the in-kind contributions of smallholder farmers and key staff at the smallholder producer organisations who work with Producers Direct, who invested significant time without financial compensation in order to support the delivery of Producers Direct programme activities during 2021.

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Principal risks and uncertainties

Producers Direct manages a risk register, which identifies major risks and ranks them in terms of their potential impact and likelihood. Trustees review major risks and their rankings quarterly, in order to satisfy themselves that adequate systems and procedures are in place to manage the risks identified. Where appropriate, risks are covered by insurance. From Producers Direct’s perspective, major risks are those which may have a significant impact on its:

Key risk management procedures in place include:

Additionally, the management of Covid-19 specific risks continued during 2021, with attention to key programme- and financing-related risks that included:

Reserves policy and going concern

Producers Direct’s Reserve Policy focuses on holding sufficient unrestricted reserves to cover at least six months of essential operational costs during a period of unforeseen difficulty. In this context, Trustees consider essential operational costs to include: Core team members across the UK, East Africa and Latin America; IT costs to support effective remote working; and any outstanding contractual commitments to donors and/or service providers.

Under current 3-year cash flow projections, 6 months of essential operational costs are budgeted to range between £260,000 - £413,000. At the end of 2021, the balance of Producers Direct’s unrestricted cash and assets totalled £453,009. During 2022, Producers Direct will continue work to enhance its unrestricted cash reserves through the following strategies:

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At the end of 2021, Trustees assessed Producers Direct as a Going Concern on the following basis:

Fundraising

During 2021, Producer Direct’s fundraising activities principally consisted of applications to national and international donors for grants to support programme and organisational development. Fundraising activities are principally undertaken internally by grant writers who are employed by Producers Direct.

As part of our commitment to best practice, Producers Direct adheres to the standards set by the Fundraising Regulator (England, Wales and Northern Ireland), and the UK Chartered Institute of Fundraising. During 2021, there were no instances of non-compliance with the requirements of the fundraising code of practice and no complaints have been received by the charity regarding fundraising activities.

The aim of Producers Direct’s fundraising expenditure on grant writers is to enhance Producers Direct’s annual restricted and unrestricted income for 2021/2022 and future periods in order to sustain and grow programme activities in East Africa and Latin America and support organisational growth. As a result of this annual expenditure on fundraising, Producers Direct received and benefited from funding from the following key donors and social lenders during 2021:

East Africa

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Latin America

International:

Unrestricted Income

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Plans for the future

Future Programme Focus Areas

The focus of Producers Direct’s 2021 - 2025 Strategy is to deliver public benefits to smallholder farming communities across Africa and Latin America, with the overarching impacts of:

Key aspects of Producers Direct’s 2021-2025 Strategy and model include:

Producers Direct’s 5-year strategy aims to transform food systems while enhancing resilience for 1.7m farming households, increasing incomes by up to 120% and promoting leadership and inclusion of all farmers, including reaching 50% women and 40% youth. We will continue to blend in-person and digital services, designed and delivered by farmers for farmers. The key focus areas of our 2021-2025 strategy are as follows:

Training and Digital Information Services: We are aiming to provide access to farmer-led training and digital services for 1.7 million smallholder farmers by 2025. All training is farmer-friendly, ensuring farmers can access, utilise and readily adopt what they’ve learned. In-person training will be led by a network of Farmer Promoters who will lead training on demonstration sites. Training will focus on the crops we will be selling into local and national markets, ensuring a cohort of 295,000 farmers has access to knowledge needed to improve productivity and quality, catalysing improved incomes, strengthened climate resilience and increased food and nutrition security. In parallel, we will accelerate our move to digital, ensuring 1.7M farmers have access to cutting-edge, farmer friendly training materials online and offline. FarmDirect will provide farmer-friendly digital training so farmers can learn new skills remotely. Digital training will provide information on micro-enterprise diversification, food security, Covid-19 health and safety, and climate resilience.

Farmer-led Data Services: We will increasingly expand the data services that FarmDirect offers to smallholder farmers, enabling farmers to analyse productivity and profit/loss across multiple enterprises and to manage climate change risks. Through FarmDirect, we will aim for farmers to have access to the following data, empowering them to make smarter, more informed decisions:

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For the year ended 31 December 2021

Access to Finance: We will provide smallholders who qualify with access to loans, incentivising coinvestment from farmers and partner farming cooperatives. We will focus our loans on farmers who plan to sell value-added products into national markets, ensuring farmers have access to initial start-up costs needed to invest in their farms and sell their crops and products. The majority of our loans will be earmarked for young people and women who typically cannot access financial services or credit. We will support farmers accessing loans to track their profits, loss, repayments, and product volumes, building a credit history so they can access increased credit in the future.

Access to Markets: We will drive market access for smallholders. Aggregated volumes of crops and value-added products will empower smallholders to increase their bargaining power in, and ownership of, food systems. 295,000 smallholders will sell their products into local and national markets, increasing incomes by up to 120%. Smallholders will bundle crops using our pioneering digital tool, FarmDirect. In parallel, we will test and scale the sale of Producers Direct branded products into domestic markets across East Africa and Latin America, supporting farmers to capture a higher value for their crops. Transport logistics will be managed by networks of youth. We aim for smallholder farmers to play stronger leadership roles within food systems in order to drive sustainable, resilient food value chains.

Future funding

Funds secured to support 2022 programme activities and operations to-date include:

Restricted Income: International

Restricted Income: East Africa

Restricted Income: Latin America

19

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

Unrestricted Income

Additional 2022 priorities and 2021 post-balance sheet events include:

Structure, governance and management

Constitution

Producers Direct is an international non-governmental, non-political, non-religious organisation. It was established as a UK private limited company limited by guarantee on 10th July 2009 (Company Number: 06959165) and was registered as a UK charity in December 2009 (Registered charity number: 1133218). The company was established under a Memorandum of Association (10th July 2009) that established its objectives and powers and is governed under its Articles of Association (10th July 2009). Producers Direct also holds local branch registrations in Kenya and Peru and

20

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

during 2021 registered a non-stock company in the US, Producers Direct Inc – with the aim of securing non-profit 501c3 status in the US.

Trustees

Producer Direct’s Trustees are responsible for setting Producers Direct's strategy and are responsible in law for the running of Producers Direct. The Charity's sole Member, Cafédirect Producers Limited (CPL), is responsible for officially appointing Producers Direct Trustees. Prior to appointment by CPL, existing members of the Producers Direct Board of Trustees are responsible for confirming that new Trustees have the necessary skills and capacity to contribute to Producers Direct's governance, and organisational development.

Producers Direct's Articles of Association allows for a minimum of three Trustees to be appointed. As the charity's sole Member, CPL (as outlined in Producers Direct's Articles of Association) reviews the appointment of Producers Direct Trustees each year. A minimum of two Trustees will offer to retire by rotation each year. A retiring Trustee may be re- appointed by the Member. Trustees typically serve a maximum of two three-year terms.

All Trustees give their time voluntarily and receive no benefits from the charity. Any expenses reclaimed from the charity are set out in note 6 to the accounts. Producers Direct's Trustees are not paid and are not remunerated for their role. Typically, international travel expenses associated with Producers Direct Trustees attending Board meetings are reimbursed, including the international flights of Producers Direct Trustees travelling from Kenya, Uganda, Tanzania and Peru. However, Producers Direct’s Board meetings were convened virtually rather than in-person throughout 2021. Subsequently, no travel expenses associated with Board meetings were incurred during 2021.

The Producers Direct Board of Trustees is responsible for approving Producers Direct's annual work plan, budget and long-term strategy development. The day-to-day management of Producers Direct is delegated to Producers Direct's CEO – Claire Rhodes, based on a strategy, annual work plan and budget approved by the Trustees. Claire Rhodes has served in this role since the establishment of Producers Direct (previously Cafédirect Producers’ Foundation) in 2009.

Typically, Producers Direct’s Board of Trustees meet at least quarterly, with the CEO reporting to the Trustees on activities undertaken in managing Producers Direct and providing updated financial reports that explain Producers Direct's financial position. During 2021, while meetings continued to be convened virtually, the Board met monthly by teleconference. A total of 12 Board teleconferences were convened and update reports provided.

Typically, Producers Direct also has a Board sub-committee established to oversee Producers Direct Procurement processes, composed of two staff and one trustee representative. However, during 2020 and 2021, Trustees recognised the need for extremely careful cash management, with all procurement matters being reviewed by the Board overall as part of monthly cash flow and expenditure reporting presented by the Management team. In previous years, a Board subcommittee has also been in-place for oversight of matters concerning Producers Direct’s shareholding in Wefarm. However, during 2020 and 2021, all matters pertaining to Wefarm investment were managed during the main Board meetings. During 2021, Lebi Hudson served as the Producers Direct Chair - with the exception of the period March -October 2021, where Lebi Hudson requested personal time away from the Board, and Christele Delbe (Vice Chair) stepped in to serve as interim Acting Chair. Lebi Hudson resumed his role as Chair from October 2021, with Christele Delbe resuming responsibilities as Vice Chair. No further specific responsibilities have

21

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

been appointed to each trustee. Penny Newman submitted her resignation from the Producers Direct Board at the end of 2021, having completed two 3-year terms as a Trustee. During 2021, a process to identify and recruit new Producers Direct Trustees was undertaken, with the goal of new Trustees joining the Board in 2022. New Producer Trustee candidates from Latin America were identified through a series of consultations with Producers Direct’s producer partners across the region. Other Trustees not representing producers were identified on the basis of Producers Direct’s current Board first identifying the skills and capacities required from new Trustees, and subsequently undertaking a selection process involving candidate interviews with Producers Direct’s current Chair, Vice Chair and CEO.

Financial controls are determined by Producers Direct's financial procedures and procurement policies, which outline the level of authority of Producers Direct Trustees and the Producers Direct CEO over Producers Direct's financial procedures. Conflicts of Interest are managed in accordance with the Producers Direct's Articles of Association and Producers Direct's Conflict of Interest Policy. A Register of Trustees’ and Senior Team member’s Interests has been established and is updated annually.

Employees

For the majority of 2021, Producers Direct employed 2 full-time and 3 part-time UK-based staff members as follows:

Throughout 2021, Producers Direct maintained its local branch status in Kenya. For the majority of 2021, Producers Direct maintained 11 full-time employees based in Nairobi, with Kenya-based senior team members including:

22

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

From September 2021, Producers Direct’s local branch registration in Peru enabled 4 Peru-based employees to be hired, with Peru-based senior team members including:

During 2021, Producers Direct contracted a range of support services, including user-centred design and financial management services, and support for the coordination of programme activities with smallholder producer organisations in Latin America. This included the services of five project coordinators for the majority of 2021, one in Haiti and four in Peru, to support the delivery of Producers Direct programmes in Latin America, and additional fundraising and administrative services to support the growth of Producers Direct’s operations and programme activities in Peru.

Employee Remuneration

Producers Direct staff salaries are reviewed annually for all employees. Salary reviews take into account the following aspects: Employee’s annual performance; level of responsibility, skill and knowledge required to carry out the role; comparable salary ranges in the geography and market in which the team member is working. For the CEO, the Chair of Producers Direct is responsible for proposing the salary adjustment to the Producers Direct Board for consideration and approval, based on their review of the CEO’s performance and salary benchmarking with non-profit organisations of similar size, scope and resources to Producers Direct. For all other Producers Direct staff, the CEO is responsible for proposing the salary adjustments to the Producers Direct Board for consideration and approval, based on an employee’s annual performance and benchmarking of salaries against comparable roles in organisations operating in similar geographies and markets to Producers Direct.

Appointment of Trustees

To recruit and appoint new Trustees, the Producers Direct management team reviews and shortlists potential candidates based on the key skills sought from the new Trustees and each candidate’s potential suitability for the role. Existing Producers Direct Trustees are responsible for reviewing the short-list of candidates and identifying top candidates to be interviewed by current Trustees. Trustees then recommend selected candidates to the sole member of Producers Direct, Cafédirect Producers Limited (CPL). As the sole member of Producers Direct, Cafédirect Producers Limited is responsible for the final appointment of new Trustees to the Producers Direct Board.

23

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

Trustee induction and training

When new Trustees are appointed to Producers Direct, they will be given an induction to Producers Direct and are given the information they need to fulfil their role, including information about their role as a Producers Direct Trustee and on charity law. Trustees are also encouraged and supported to attend external training available for new and existing Trustees on key responsibilities associated with serving as a Trustee of a UK Charity.

Related parties and relationships with other organisations

Related parties include:

Producers Direct Inc. Producers Direct Inc is a US-registered non-stock company that was established by Producers Direct to support the growth of Producers Direct’s operations and expansion of US-based fundraising opportunities for Producers Direct. An application for US 501c3 non-profit status has been submitted and is currently under consideration. From September 2021, Producers Direct’s COO has been US-based and is employed by Producers Direct Inc.

Cafédirect Producers Limited (CPL): CPL is the sole Member of Producers Direct. CPL is a limited company (Company Number 4804115) owned by the smallholder producer organisations who hold shares in Cafédirect plc. CPL activities focus on enhancing the role of producer organisations as shareholders in Cafédirect plc and advancing the role of producers in the governance of Cafédirect plc.

Cafédirect Producers Trust: The Cafédirect Producers Trust was established by a Trustee Deed dated 10th December 2003 to permit producer organisations who sell products to Cafédirect plc to hold shares in Cafédirect plc. CPL is one of the Trustees.

Cafédirect plc: Producers Direct is legally independent from Cafédirect plc. Cafédirect plc and Producers Direct have been linked through a Donation Agreement, dating from 28th September 2009, which outlines the terms under which Cafédirect plc makes an annual donation to Producers Direct to support producer programmes, and to strengthen Producers Direct's operational capacity. This donation agreement was extended for an additional 3-years from January 2020.

Wefarm Ltd (Closed August 2022): Wefarm originated as a project of Producers Direct and operated as a Producers Direct project from 2010-2015. In January 2015, Wefarm was incorporated as a Private Company Limited by Shares. Until October 2020, Producers Direct was represented on the Wefarm Board and held the right to a Wefarm Board seat. In October 2020 Producers Direct sold 610,825 of its 800,000 shares in Wefarm at a price of £1.908 per share, enabling Producers Direct to realise £1,165,465 unrestricted funding from its investment in Wefarm. As part of this 2020 investment round, Producers Direct relinquished its rights to a Wefarm Board seat. At the end of 2021, Producers Direct’s shareholding in Wefarm is less than 1%. Wefarm Ltd went into administration in August 2022.

Statement of responsibilities of the Trustees

The Trustees (who are also directors of Producers Direct for the purposes of company law) are responsible for preparing the Trustees’ annual report and the financial statements in accordance

24

Producers Direct

Trustees’ annual report

For the year ended 31 December 2021

with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these financial statements, the trustees are required to:

The Trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the Trustees are aware:

The Trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Members of the charity guarantee to contribute an amount not exceeding £1 to the assets of the charity in the event of winding up. The total number of such guarantees at 31 December 2021 was 1, Cafédirect Producers Limited being the sole member of the charity (2020: 1). The trustees are members of the charity but this entitles them only to voting rights. The trustees have no beneficial interest in the charity.

Auditor

Sayer Vincent LLP was appointed as the charitable company's auditor during the year and has expressed its willingness to continue in that capacity.

The Trustees’ annual report has been approved by the Trustees on 15 September 2022 and signed on their behalf by

Chair, Producers Direct

Mr L G Hudson

25

Independent auditor’s report

To the members of

Producers Direct

Opinion

We have audited the financial statements of Producers Direct (the ‘charitable company’) for the year ended 31 December 2021 which comprise the statement of financial activities, balance sheet, statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on Producers Direct's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

26

Independent auditor’s report

To the members of

Producers Direct

Other Information

The other information comprises the information included in the trustees’ annual report, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ annual report . We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the statement of trustees’ responsibilities set out in the trustees’ annual report, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being

27

Independent auditor’s report

To the members of

Producers Direct

satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud are set out below.

Capability of the audit in detecting irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

28

Independent auditor’s report

To the members of

Producers Direct

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company's members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Noelia Serrano (Senior statutory auditor) 20 September 2022

for and on behalf of Sayer Vincent LLP, Statutory Auditor Invicta House, 108-114 Golden Lane, LONDON, EC1Y 0TL

29

Producers Direct

Statement of financial activities (incorporating an income and expenditure account)

For the year ended 31 December 2021

For the year ended 31 December 2021
Note
2
3
3
4a
4a
4a
5
Net losses on investments
Donations and legacies
Latin America Programme
Charitable activities
Africa Programmes
Investments
Latin America Programme
Income from:
Net expenditure before losses on
investments
Expenditure on:
Total income
Raising funds
Net expenditure after transfers
Net movement in funds
Total funds carried forward
Total funds brought forward
Transfers between funds
Reconciliation of funds:
Total expenditure
Net expenditure for the year
Charitable activities
Africa Programmes
Honey Sales		 Unrestricted
£
223,002
-
-
26,624
-		 Restricted
£
-
194,671
544,062
-
-		 2021
Total
£
223,002
194,671
544,062
26,624
-		 Unrestricted
£
130,068
-
-
-
3,034		 Restricted
£
-
13,217
168,655
-
-		 2020
Total
£
130,068
13,217
168,655
-
3,034
249,626 738,733 988,359 133,102 181,872 314,974
57,067
555,065
115,410		 15,917
176,720
169,099		 72,983
731,785
284,509		 37,876
271,674
73,483		 -
17,748
177,599		 37,876
289,422
251,082
727,542 361,736 1,089,277 383,034 195,347 578,381
(477,916)
(367,000)		 376,997
-		 (100,918)
(367,000)		 (249,932)
-		 (13,475)
-		 (263,407)
-
(844,916)
-		 376,997
-		 (467,918)
-		 (249,932)
(3,530)		 (13,475)
3,530		 (263,407)
-
(844,916) 376,997 (467,918) (253,462) (9,945) (263,407)
(844,916)
1,297,925		 376,997
16,809		 (467,919)
1,314,734		 (253,462)
1,551,387		 (9,945)
26,754		 (263,407)
1,578,141
453,009 393,806 846,815 1,297,925 16,809 1,314,734

All of the above results are derived from continuing activities. There were no other recognised gains or losses other than those stated above. Movements in funds are disclosed in Note 18a to the financial statements.

30

Producers Direct

Company no. 06959165

Balance sheet

As at 31 December 2021

Balance sheet
As at 31 December 2021		 Company no. 06959165 Company no. 06959165
Note
Fixed assets:
10
11
Current assets:
13
12
Liabilities:
14
Creditors: amounts falling due after one year
15
18a
Total unrestricted funds
Net current assets
Total net assets
The funds of the charity:
Programme related investments
Creditors: amounts falling due within one year
Cash at bank and in hand
Investments
Debtors
Tangible assets
Unrestricted income funds:
Restricted income funds
Total charity funds
General funds		 £
£
5,374
-
5,374
46,024
92,537
935,582
1,074,143
(166,950)
907,193
(65,752)
846,815
393,806
453,009
453,009
846,815
2021		 £
£
3,129
367,000
370,129
-
49,766
1,029,990
1,079,757
(50,950)
1,028,806
(84,200)
1,314,734
16,809
1,297,925
1,297,925
1,314,734
2020
5,374
907,193		 370,129
1,028,806
1,074,143
(166,950)
(65,752)
453,009		 1,079,757
(50,950)
(84,200)
1,297,925
846,815 1,314,734
393,806
453,009		 16,809
1,297,925
846,815 1,314,734

Approved by the trustees on 15 September 2022 and signed on their behalf by

Lebi Hudson Trustee, Producers Direct

31

Producers Direct

Statement of cash flows

For the year ended 31 December 2021

For theyear ended 31 December 2021 For theyear ended 31 December 2021 For theyear ended 31 December 2021
Note
£
£
Cash flows from operating activities
(467,919)
2,376
367,000
-
(42,772)
116,000
(25,315)
-
-
(46,024)
(4,621)
(50,645)
Cash flows from financing activities:
(18,448)
(18,448)
(94,408)
1,029,990
935,582
(Increase)/decrease in debtors
Net expenditure for the reporting period
(as per the statement of financial activities)
Depreciation charges
Losses on investments
Dividends, interest and rent from investments
2021
(Decrease)/increase in creditors
Net cash used in operating activities
Cash received on repayment of programme related
Cash and cash equivalents at the end of the year
Change in cash and cash equivalents in the year
Cash and cash equivalents at the beginning of the year
Net cash used in investing activities
Purchase of fixed assets
Cash flows from investing activities:
Dividends, interest and rents from investments
Proceeds from sale of investments
Net cash used in financing activities
Cash inflows from new borrowing		 £
£
(263,407)
2,477
-
3,034
81,657
(66,234)
(242,473)
(3,034)
1,185,000
3,240
(2,945)
1,182,261
84,200
84,200
1,023,987
6,003
1,029,990
2020
(25,315)
(50,645)		 (242,473)
1,182,261
(18,448) 84,200
(18,448)
(94,408)
1,029,990		 84,200
1,023,987
6,003
935,582 1,029,990

32

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

1 Accounting policies

a) Statutory information

Producers Direct is a charitable company limited by guarantee and is incorporated in England and Wales.

The registered office address and principal place of business is: International House, 45-55 Commercial Street, E1 6BD, UK

b) Basis of preparation

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) - (Charities SORP FRS 102), The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.

Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy or note.

c) Public benefit entity

The charity meets the definition of a public benefit entity under FRS 102.

d) Going concern

The trustees consider that there are no material uncertainties about the charity's ability to continue as a going concern. This is based on Trustees undertaking a review of the following Going Concern Assessment Critiera: At the end of 2021, Trustees assessed Producers Direct as a Going Concern on the following basis: 1.) A review of internal management information, including a budget and cash flow forecast through until at least December 2023 - with planned scenarios in the event that fundraising income is significantly lower than plan; 2.) An analysis of external factors and risks, as outlined and managed through Producers Direct’s Risk Register and Covid-19 response plan; 3.) Producers Direct currently holding sufficient unrestricted cash reserves to cover at least six months’ of essential operational costs to enable operations to continued during a period of unforeseen difficulty.

Key judgements that the charity has made which have a significant effect on the accounts include: Recognition of income in accordance with the terms of the grants made to the charity, where income is granted to the charity over the period greater than one year, and is linked to performance within the project, there is some degree of judgement is assessing the stage of completion and hence the income recognised.

The trustees do not consider that there are any sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

e) Income

Income is recognised when the charity has entitlement to the funds, any performance conditions attached to the income have been met, it is probable that the income will be received and that the amount can be measured reliably.

Income from government and other grants, whether ‘capital’ grants or ‘revenue’ grants, is recognised when the charity has entitlement to the funds, any performance conditions attached to the grants have been met, it is probable that the income will be received and the amount can be measured reliably and is not deferred.

For legacies, entitlement is taken as the earlier of the date on which either: the charity is aware that probate has been granted, the estate has been finalised and notification has been made by the executor(s) to the charity that a distribution will be made, or when a distribution is received from the estate. Receipt of a legacy, in whole or in part, is only considered probable when the amount can be measured reliably and the charity has been notified of the executor’s intention to make a distribution. Where legacies have been notified to the charity, or the charity is aware of the granting of probate, and the criteria for income recognition have not been met, then the legacy is a treated as a contingent asset and disclosed if material.

Income received in advance of the provision of a specified service is deferred until the criteria for income recognition are met.

f) Donations of gifts, services and facilities

Donated professional services and donated facilities are recognised as income when the charity has control over the item or received the service, any conditions associated with the donation have been met, the receipt of economic benefit from the use by the charity of the item is probable and that economic benefit can be measured reliably. In accordance with the Charities SORP (FRS 102), volunteer time is not recognised so refer to the trustees’ annual report for more information about their contribution.

g) Interest receivable

Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the charity; this is normally upon notification of the interest paid or payable by the bank.

33

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

1 Accounting policies (continued)

Unrestricted funds are donations and other incoming resources received or generated for the charitable purposes.

i) Expenditure and irrecoverable VAT Expenditure is recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably. Expenditure is classified under the following activity headings:

Irrecoverable VAT is charged as a cost against the activity for which the expenditure was incurred.

Resources expended are allocated to the particular activity where the cost relates directly to that activity. However, the cost of overall direction and administration of each activity, comprising the salary and overhead costs of the central function, is apportioned on the following basis which are an estimate, based on staff time, of the amount attributable to each activity.

Where information about the aims, objectives and projects of the charity is provided to potential beneficiaries, the costs associated with this publicity are allocated to charitable expenditure.

Support and governance costs are re-allocated to each of the activities on the following basis which is an estimate, based on staff time, of the amount attributable to each activity

Governance costs are the costs associated with the governance arrangements of the charity. These costs are associated with constitutional and statutory requirements and include any costs associated with the strategic management of the charity’s activities.

k) Operating leases

Rental charges are charged on a straight line basis over the term of the lease.

l) Tangible fixed assets

Items of equipment are capitalised where the purchase price exceeds £500. Depreciation costs are allocated to activities on the basis of the use of the related assets in those activities. Assets are reviewed for impairment if circumstances indicate their carrying value may exceed their net realisable value and value in use. Major components are treated as a separate asset where they have significantly different patterns of consumption of economic benefits and are depreciated separately over its useful life.

Depreciation is provided at rates calculated to write down the cost of each asset to its estimated residual value over its expected useful life. The depreciation rates in use are as follows:

3 years straight line

m) Debtors

Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due.

n) Cash at bank and in hand

Cash at bank and cash in hand includes cash and short term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.

o) Creditors and provisions

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount after allowing for any trade discounts due.

34

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

1 Accounting policies (continued)

o) Financial instruments

The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the effective interest method.

p) Pensions

The charity operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the charity. The annual contributions payable are charged to the statement of financial activities.

2 Income from donations and legacies

Income from donations and legacies
MercyCorps AgriFin
UKAid
Innovate UK
East Africa Programme:
World Food Programme
Total income from charitable activities
Pret a Manger
Global Resilience Partnership
Producer Partners
GIZ
CIAT
Income from charitable activities
Latin America Programme:
Bayer AG
Donations
Sub-total for Latin America Programme
Sub-total for East Africa Programme
Honey Sales: East Africa
Peru Partners		 Unrestricted
£
223,002		 Restricted
£
-		 Total
2021
£
223,002		 Unrestricted
£
130,068		 Restricted
£
-		 Total
2020
£
130,068
223,002 - 223,002 130,068 - 130,068
Unrestricted
£
-
-
-
-
-
26,624		 £
99,607
66,464
-
-
28,600
-
Restricted		 Total
2021
£
99,607
66,464
-
-
28,600
26,624		 Unrestricted
£
-
-
-
-
-
-		 £
-
-
(4,682)
-
17,899
-
Restricted		 Total
2020
£
-
-
(4,682)
-
17,899
-
26,624
-
-
-
-
-
-		 194,671
235,443
139,211
43,471
100,000
25,937
-		 221,295
235,443
139,211
43,471
100,000
25,937
-		 -
-
-
-
-
-
-		 13,217
-
-
-
102,500
61,465
4,690		 13,217
-
-
-
102,500
61,465
4,690
- 544,062 544,062 - 168,655 168,655
26,624 738,733 765,357 - 181,872 181,872

35

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

4a Analysis of expenditure (current year)

Analysis of expenditure (current year)
Staff costs (Note 6)
Direct programme expenditure
Costs of generating funds: Other expenditure
Office costs
Audit, legal and professional fees
Support and governance costs
Total expenditure 2021
Total expenditure 2020		 Raising
funds
£
72,983
-
-
-
-		 Charitable activities Governance
costs
£
-
-
-
-
7,893		 Support
costs
£
178,705
50,950
-
51,643
58,815		 2021
Total
£
490,229
452,900
-
79,440
66,708		 2020
Total
£
253,848
246,573
16,074
51,667
10,219
East Africa
Programme
£
212,395
241,011
-
27,797
-		 Latin America
Programme
£
26,146
160,939
-
-
-
72,983
-		 481,203
250,584		 187,085
97,424		 7,893
(7,893)		 340,113
(340,115)		 1,089,277
-		 578,381
-
72,983 731,785 284,509 - - 1,089,277 578,381
37,876 289,422 251,083 - -

36

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

4b Analysis of expenditure (prior year)

Analysis of expenditure (prior year)
Staff costs (Note 6)
Direct programme expenditure
Costs of generating funds: Other expenditure
Office costs
Audit, legal and professional fees
Support costs
Support and governance costs
Total expenditure 2020		 Raising
funds
£
21,802
-
16,074
-
-		 Charitable activities Governance
costs
£
-
-
-
638
10,219		 Support
costs
£
112,400
-
-
45,099
-		 2020
Total
£
253,848
246,573
16,074
51,667
10,219
East Africa
Programme
£
119,646
75,168
-
4,459
-		 Latin America
Programme
£
-
171,405
-
1,471
-
37,876
-
-		 199,273
90,149
-		 172,876
78,207
-		 10,857
(10,857)
-		 157,499
(157,499)
-		 578,381
-
-
37,876 289,422 251,083 - - 578,381

37

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

5 Net income / (expenditure) for the year

This is stated after charging / (crediting):

This is stated after charging / (crediting):
2021 2020
£ £
Depreciation 2,376 2,477
Auditor's remuneration (excluding VAT):
Audit 7,250 6,650
Other services: GRP Project Audit during 2019 643 448

Staff costs were as follows:

Staff costs were as follows:
Employer’s contribution to defined contribution pension schemes
Social security costs
Salaries and wages		 2021
£
436,891
24,835
28,504		 2020
£
224,657
14,635
14,556
490,230 253,848

One employee earned more than £60,000 during the year (2020: nil) - the CEO (2021 Annual salary: £68,000).

The total employee benefits (including pension contributions and employer's national insurance) of the key management personnel were £80,756 (2020: £56,763).

The charity trustees were neither paid nor received any other benefits from employment with the charity in the year (2020: nil). No charity trustee received payment for professional or other services supplied to the charity (2020: nil).

Trustees' expenses represents the payment or reimbursement of travel and subsistence costs totalling £0 (2020: £0) incurred by 4 (2020: 4) members relating to attendance at meetings of the trustees.

7 Staff numbers

The average number of employees (head count based on number of staff employed) during the year was 16.3 (2020: 8.5).

Staff are split across the activities of the charity as follows (full time equivalent basis):

Staff are split across the activities of the charity as follows (full time equivalent basis):
East Africa Programmes
Raising funds
Support
Latin America Programmes		 2021
No.
1.1
7.2
2.8
5.2		 2020
No.
0.7
4.0
-
3.8
16.3 8.5

38

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

8 Related party transactions

Aggregate donations from related parties were £109,030.95; (2020: £100,000).

Other transactions with related parties: Service Charge agreement paid from Producers Direct to Cafédirect: £4,296 (2020: £8,592). Producers Direct is connected to these related parties as follows:

Cafédirect plc: Cafédirect plc and Producers Direct have been linked through a Donation Agreement, dating from 28th September 2009, which outlines the terms under which Cafédirect plc makes an annual donation to Producers Direct to support producer programmes, and to strengthen Producers Direct's operational capacity.

9 Taxation

The charity is exempt from corporation tax as all its income is charitable and is applied for charitable purposes.

10 Tangible fixed assets

Tangible fixed assets
At the start of the year
At the end of the year
At the start of the year
Depreciation
Eliminated on disposal
Charge for the year
At the end of the year
Additions in year
Cost
Disposals in year
At the end of the year
At the start of the year
Net book value		 2021
2020
£
£
11,459
17,772
4,621
2,945
-
(9,258)
16,080
11,459
8,330
15,111
2,376
2,477
-
(9,258)
10,706
8,330
5,374
3,129
3,129
2,661
Computer Equipment
16,080 11,459
8,330
2,376
-		 15,111
2,477
(9,258)
10,706 8,330
5,374 3,129
3,129 2,661

All of the above assets are used for charitable purposes.

11 Fixed asset investments

Fixed asset investments
Disposals in year
Cost at the start of the year
Net loss on change in fair value		 2021
£
367,000
-
(367,000)		 2020
£
1,552,000
1,185,000
-
- 367,000

At end-2020, Producers Direct's shareholding in Wefarm was valued as a fixed asset investment of £367,000. This shareholding in Wefarm represented Producers Direct's only fixed asset investment. Wefarm Ltd closed in August 2022. Producers Direct's net loss of £367,000 in fixed assets investments during 2021 is a consequence of Wefarm closing in August 2022 as a post-balance sheet event. At end-2021, Producers Direct's shareholding in Wefarm was devalued from £367,000 to £0.

39

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

For the year ended 31 December 2021
12
13
Programme related investments
Fair value at the start of the year
Repayment of loans
Fair value at the end of the year
Investments comprise:
Loans
Ankole (ACPCU)
Kayonza Growers
Rungwe and Busokelo Tea Co-operative Joint Enterprise (RBTC)
Prepayments and accrued income
Trade debtors
Debtors		 2021
£
39,638
52,899		 2020
£
41,123
8,643
92,537 49,766
2021
£
-
46,024		 2020
£
3,240
(3,240)
46,024 -
2021
£
12,497
20,929
12,598
-		 2020
£
0
0
0
-
46,024 -

During 2021, Producers Direct partnered with three smallholder producer organisations in Uganda (Ankole and Kayonza), and Tanzania (RBTC), and micro-finance institutions associated with each organisation, to enhance farmers’ access micro-loans to support them take-up or strengthen on-farm beekeepeing practices. Interest on loans is being charged below market rates in Uganda and Tanzania. Loans are being made to further the charity's objectives and not solely to generate a financial return.

14 Creditors: amounts falling due within one year

Creditors: amounts falling due within one year
Taxation and social security
Trade creditors
Loan payments due within a year
Accruals		 2021
£
136,187
3,081
18,342
9,340		 2020
£
18,171
3,413
14,294
15,072
166,950 50,950

40

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

Non-Current Creditors: amounts falling due beyond one year
UK Bounce Back Loan
CAF Venturesome Loan		 2021
£
35,802
29,950		 2020
£
45,094
39,106
65,752 84,200

During 2020, Producers Direct secured two loans to support cash flow management and to invest in testing branded honey sales in East Africa. These were a CAF Venturesome loan for £50,000 of unsecured debt finance, on a 5 year repayment terms at an interest rate of 6% per annum, and a UK Government Bounce Back unsecured loan of £50,000 at a 2.5% per annum interest rate after the first 12 months on 5 year repayment terms.

16 Pension scheme

The charity operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the charity. The annual contributions payable are charged to the statement of financial activities.

17a Analysis of net assets between funds (current year)

Analysis of net assets between funds (current year)
Tangible fixed assets
Analysis of net assets between funds (prior year)
Tangible fixed assets
Investments
Long term liabilities
Net current assets
Long term liabilities
Net current assets
Net assets at 31 Dec 2021
Net assets at 31 Dec 2020		 General
unrestricted
£
-
572,309
(65,752)		 Restricted
£
5,374
334,884
-		 Total funds
£
5,374
907,193
(65,752)
506,557 340,258 846,815
General
unrestricted
£
-
367,000
1,015,125
(84,200)		 Restricted
£
3,129
-
13,680
-		 Total funds
£
3,129
367,000
1,028,805
(84,200)
1,297,925 16,809 1,314,734

17b Analysis of net assets between funds (prior year)

41

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

18a Movements in funds (current year)

Movements in funds (current year)
Restricted funds:
Africa - Innovate UK
Africa - UKAid
Africa - MercyCorps AgriFin
Africa and Latin America - Bayer AG
Latin America - CIAT
Total restricted funds
General funds
Latin America - World Food Programme
Total unrestricted funds
Unrestricted funds:
Latin America - GIZ
Latin America - Pret a Manger
Latin America - Producer Partners
Total funds		 At 1 January
2021
£
-
-
-
-
-
-
-
16,809
-
-		 Income &
gains
£
-
28,600
99,607
66,464
235,443
139,211
43,471
100,000
25,937
-		 Expenditure
& losses
£
-
(31,469)
(99,607)
(52,635)
(12,398)
(21,005)
(43,471)
(65,643)
(35,507)
-		 Transfers
£
-
-
-
-
-
-
-
-
-
-		 At 31
December
2021
£
-
(2,869)
-
13,829
223,045
118,206
-
51,166
(9,570)
-
16,809 738,733 (361,735) - 393,806
1,297,925 249,626 (1,094,542) - 453,009
1,297,925 249,626 (1,094,542) - 453,009
1,314,734 988,359 (1,456,277) - 846,815

The narrative to explain the purpose of each fund is given at the foot of the note below.

42

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

18b Movements in funds (prior year)

Movements in funds (prior year)
Restricted funds:
Africa - World Bank
Africa - Producer Partners
Latin America - World Food Programme
Latin America - Peru Partners
Latin America - Rikolto
Total restricted funds
General funds
Total unrestricted funds
Total funds
Africa - Global Resilience Partnership
Africa - Innovate UK AgriTech
Latin America - Community Fund
Latin America - Pret
Latin America - HenriNestle
Unrestricted funds:
Africa - GHR		 At 1 January
2020
£
(2,586)
(163)
7,288
(29)
21
5
21,479
5
679
6.8
48		 Income &
gains
£
(4,682)
-
-
17,899
-
-
102,500
-
61,465
4,690
-		 Expenditure
& losses
£
7,268
163
(7,288)
(17,870)
(21)
(5)
(107,169)
(5)
(63,944)
(6,427)
(48)		 Transfers
£
-
-
-
-
-
-
-
-
1,800
1730
-		 At 31
December
2020
£
-
-
-
-
-
-
16,809
-
-
-
-
26,754 181,872 (195,346) 3,530 16,809
1,551,387 133,102 (383,034) (3,530) 1,297,925
1,551,387 133,102 (383,034) (3,530) 1,297,925
1,578,141 314,974 (578,380) - 1,314,734

Purposes of restricted funds

Africa - Global Resilience Partnership: Funding co-sponsored by USAID, the Swedish Government and UKAid) to develop and scale digital tools that support smallholder farmers in East Africa to enhance their resilience and engagement in agricultural value chains.

Africa - World Bank: Funding from the World Bank Data Innovations Fund to support the development of Producer Direct's farmer-led data system in East Africa, with the aim of supporting smallholder farmers to respond to climate risks.

Africa - GHR: 2018-2020 Bridgebuilder Challenge funding awarded from the GHR Foundation and OpenIDEO to support YouthDirect –focused on promoting youth engagement with agriculture across Kenya, Tanzania and Uganda.

Africa - Innovate UK: Funding from Innovate UK's Agritech 9 funding window over 24 months from August 2020, sub-granted from Climate Edge, to support the expansion of the initial soil kit testing work undertaken in 2019, and trial low-cost advisory services to support soil quality management, and from Innovate UK's Global Challenges Research Fund (GCRF), sub-granted from Climate Edge, to support the testing of software that enables producer organisations to more effectively provide digital advisory services to smallholders. The fund balance of -£2,869 at end-2021 is due to programme activities running through into 2022, and a pending payment from Innovate UK for activities undertaken in 2021 expected in early 2022.

Africa - Mercy Corps AgriFin / Starbucks Foundation: £66,464 secured for 2021 expenditure to support the next phase of the Covid-19 information campaign that was undertaken during 2020, with focus on targeting updated Covid-19 health and safety materials to smallholder farmers across Kenya.

43

Producers Direct

Notes to the financial statements

For the year ended 31 December 2021

Purposes of restricted funds (continued)

Latin America - CIAT: In October 2020, Producers Direct was one of the 2020 CGIAAR Inspire Challenge winners for our Croppie concept. The prize funds of £43,471 sub-granted from the International Centre for Tropical Agriculture Centre (CIAT) to Producers Direct supported activities from January – October 2021 in partnership with CIAT to design a digital tool that supports smallholders access yield prediction data for their crops - starting with coffee, and provide field-level data to enable continual improvement of the yield predictions generated by AI (Artificial Intelligence) and machine learning models.

Latin America - GIZ (German Development Agency): 700,445 Euros secured over 24 Months (2021 Q4 - 2023 Q3) to support the expansion of Croppie - our digital tool focussed on data-driven yield predictions for smallholders in Peru and Colombia.

Latin America - World Food Programme (WFP) Innovation Accelerator: 2020 and 2021 funding to test Producers Direct’s ‘Digital Cooperative’ concept and its potential to support women smallholders in Las Lomas, Peru, to aggregate and collectively sell their surplus food crops to enhance their incomes. The fund balance of -£9,570 at end-2021 is due to programme activities running through into 2022, and a pending payment from WFP Innovation Accelerator for activities undertaken in 2021 expected in early 2022.

Latin America - Pret a Manger Coffee Fund : Funding to support Peruvian Partners, particularly Cenfrocafe, to implement a youth leadership training programme.

Latin America - Producer Partners: Funding from Peruvian producer partners to undertake a market research study on opportunities for income generation from the sale of diversification crops.

19 Legal status of the charity

The charity is a company limited by guarantee and has no share capital. The liability of each member in the event of winding up is limited to £1. There was one member at 31 December 2021, Cafédirect Producers Limited.

20 Post balance sheet events

Wefarm Ltd went into administration in August 2022. Producers Direct's net loss of £367,000 in fixed assets investments during 2021 is a consequence of Wefarm closing in August 2022 as a post-balance sheet event. At end-2021, Producers Direct's shareholding in Wefarm was devalued from £367,000 to £0.

44