A look at the challenges and decisions that agricultural entrepreneurs experience over the course of a year.
PART I: HARVEST
Last year at this exact time, Patricia, the general manager of a coffee cooperative in Nicaragua*, delighted as coffee farmers lined up one by one to drop off their bright red coffee cherries for processing and export. The cooperative was abuzz with the activity of a good harvest, and business — for the cooperative and the farmer members it serves — was good.
But this year is different.
Nicaragua has been hit by severe drought, and coffee farmers have shouldered the burden. Yields are significantly lower than they were last year at this time, and that means incomes have been slashed, too.
Patricia knows that, especially during hard times like this, coffee farmers struggle to make ends meet: they’re forced to make difficult decisions between putting food on the table and sending their children to school, between staying on their land and migrating to the city.
She needs to pay the farmers for their coffee beans on the spot — or she’ll risk losing much of that product to “coyotes,” predatory middlemen buyers who pay farmers immediately but at prices much lower than her team would offer. And lower prices, combined with lower yields, would spell disaster for these farmers and their families.
To ensure that Patricia can offer these timely payments, she’s partnered with Root Capital for a trade credit loan. The loan allows Patricia to focus on purchasing the farmers’ beans, which she’ll later sell to buyers like Intelligentsia, Keurig Green Mountain, and Starbucks. Timely financing from Root Capital helps ensure the cooperative can thrive, and so continue to increase incomes and stabilize employment opportunities for people in her community.
Banks look at Patricia as a risky bet. Root Capital sees Patricia and her business as an economic engine for community transformation. You can play a critical role in kick-starting that engine.
The harvest is just one part of a cycle of ups and downs for farmers and cooperative managers each year. What comes next for Patricia? Read on, part two is below...
PART II: EXPORT
It’s now April, the middle of the three-month season when seasonal workers at Patricia’s business spend the day loading truckloads of now-processed specialty coffee to ship to buyers around the globe.
But the drought significantly reduced farmers’ yields, and the amount of coffee Patricia and her team are exporting this year is much lower than last. With supply reduced, the cooperative is struggling to make good on its contracts with buyers.
Patricia’s worried for her business. While there is the risk of buyers not coming back if contracts go unfulfilled, Patricia is more concerned about the cooperative members — because this wasn’t the first drought, and it won’t be the last.
How can she help farmers be prepared? She turns to Root Capital for support.
Root Capital and Patricia’s team collaborate on a plan to build resilience for her business and the farmers it serves: the cooperative will apply for a Root Capital loan for a coffee mill that uses significantly less water, and Root Capital will facilitate trainings with agronomic experts on climate-smart practices such as wastewater management.
This is a moment when Patricia’s leadership really matters. Even in hard times, she wants to invest in her business and in the future of her farmer members. And so do we.
PART III: THE LEAN MONTHS
They call these los meses flacos, the lean months. The hunger season. Why?
Farmer members of Patricia’s business, like most other coffee farmers around the world, are paid once a year: upon the sale of their beans during the harvest. Over the last few months, farmers have relied on one lump-sum payment to make ends meet, but since their yields were significantly lower this year, their money is running out sooner than expected.
Now, in the middle of August, many farmers are facing very real food insecurity: they’re eating smaller portions, with less protein, and parents are being forced to choose who eats. And they won’t be paid for coffee again until the next harvest — still five months away.
As part of her effort to respond to the needs of her members, last year Patricia engaged Root Capital to help improve the cooperative’s internal credit fund. Through the credit fund, administered entirely by the cooperative, farmers have been able to access short- and long-term microloans.
The fund, now serving more farmers than it did just the year before, is helping members weather this season with low-interest loans to launch side businesses that generate income or improve food security, such as fertilizer or beekeeping supplies. Some investments, for instance in livestock, can do both.
Patricia stands with her farmers even when there is no coffee to buy. Will you stand with Patricia by becoming a monthly donor to Root Capital?
PART IV: PRE-HARVEST
Severe drought, slashed incomes, hunger: this year’s been incredibly difficult for smallholder farmers throughout Central America.
It’s been hard, too, for Patricia, the general manager of the Nicaraguan coffee cooperative whose story we’ve been sharing over the last few days.
Luckily, there’s a light at the end of the tunnel. The coffee harvest is on the horizon, and recent rainfall, combined with last year’s investments in climate-smart practices and stronger financial management, means Patricia can project a prosperous season.
Patricia has taken out a pre-harvest loan from Root Capital that will help keep the cooperative’s internal credit fund humming. Through this fund, farmers will take out small loans to tide them over until the harvest begins, allowing them to spend the next several weeks watering and pruning their crops instead of seeking work in the city. They’re not out of the woods yet, but things are surely looking up.
There are no simple answers to the types of challenges smallholder farmers face at any given point in the year. Committed, impact-driven leaders like Patricia are critical to helping farmers cope in hard times. And it’s our mission, made possible with your support, to give the Patricias of the world the tools — capital, training, access to markets — to do so.
Now that you’ve journeyed from harvest to harvest with us, will you continue the journey as a monthly donor? We can’t continue to stand with Patricia, and leaders like her across Latin America, Africa, and Indonesia, without your ongoing support.
Here’s to sustaining prosperity, peace, and the planet together.
*Patricia’s story is a representation of the experiences of several different Root Capital clients. For client confidentiality purposes, we have combined these stories into one, using a single pseudonym.