This month, Root Capital celebrated its first food security and nutrition loan in Central America, to a coffee and maize cooperative in Nicaragua. Our new client, La Cooperativa de Servicios Multiples Campesinos Activos de Jalapa (CCAJ) is a member of a larger coffee enterprise (PRODECOOP) that has a good credit history with Root Capital. CCAJ’s 700 members grow coffee for export, and are expanding into corn for both household consumption and sale on the local market.
It’s an important development for Root Capital and an exciting moment of “reverse innovation,” or a chance for us to transfer our learning and experience from financing domestic value chains in Africa, a younger market for Root Capital, back to our original innovation sandbox in Latin America.
Maize is a staple food and valuable source of nutrition in Nicaragua, where food security can be a concern, including in Jalapa where CCAJ is located. “It is part of our daily diet, part of our roots,” says Rosario Castellon, Root Capital’s loan officer for Nicaragua. In fact, maize is the subject of one of my favorite Nicaraguan folk songs, Somos Hijos del Maiz—We’re Children of the Corn, by Luis Enrique Mejia Godoy.
CCAJ’s buyers include the World Food Programme (WFP) of the United Nations, which purchases maize to supply its regional food security programs. Until recently, the WFP imported basic grains into food-insecure regions of Nicaragua. To increase farmers' incomes and reduce the need for food aid, WFP has begun to invest in developing local sources of supply among small-scale farmers. Now, local cooperatives like CCAJ are able to satisfy the WFP’s high quality standards while supplying maize for Nicaragua and other Central American countries.
I firmly believe that this dual strategy—growing both cash crops to increase rural incomes and staple crops to satisfy daily food needs—is one of the smartest ways to address food security in rural areas of the developing world. CCAJ is a prime example of this. By linking farmers to markets for maize in addition to coffee, CCAJ helps its members diversify their sources of income and contributes to food security in the second-poorest country in the Western Hemisphere.
As we expand our food security and nutrition lending portfolio throughout Latin America—into dried beans, indigenous potatoes, and grains like amaranth and quinoa—I look forward to sharing more news of our progress in helping businesses like CCAJ build sustainable livelihoods for small-scale farmers while ensuring that their basic needs are met.
Thank you for your support.
William Foote, Founder and CEO
Video: Growing Food Security in Kenya
Freshco is a Kenyan company that sells high-yield, hybrid, non-GMO seeds, especially maize seeds, to small-scale farmers. Maize is a staple crop in the region and is consumed on a daily basis by most Kenyans, 10 percent of whom are classified as food insecure. Maize seed that is optimized for the climates of Kenya's various regions can increase yields up to six times. In this video, you will visit farmers in the field and learn how improved seed is helping promote food security in Kenya.
Interview with Rick Peyser, Director of Social Advocacy and Supply-Chain Community Outreach at Green Mountain Coffee Roasters
Rick is the co-author of Brewing Change and the director of After the Harvest, Fighting Hunger in the Coffee Lands, a film based on his survey of Green Mountain Coffee producers in Nicaragua, Mexico and Guatemala. The survey found that 67 percent of a representative sample of Green Mountain Coffee producers suffered from food insecurity for three to eight months each year.
RC: What are the driving forces behind "los meses flacos," or the thin months, for coffee growers in Nicaragua and other Central America countries?
RP: The coffee harvest in Nicaragua ends in February and usually by the end of May most of the farmers' earnings from coffee are largely depleted. It's also a time when the rainy season begins and market prices for the basic staples, corn and beans, increase ahead of the harvest in the autumn. So farmers are faced with very little disposable income and rising prices. And due to the attraction and growth of the specialty coffee market, farmers have been putting more of their land into specialty coffee production at the expense of food production for the family’s consumption.
RC: What are the strategies for addressing food security among coffee growers?
RP: Two primary strategies have emerged. The first is to diversify the small-scale farmers’ land so that in addition to maximizing the yield of coffee, they plant food crops for the families' own consumption and as an alternative source of income for the local market. The second is, for those who have a little more land, to grow and store basic grains in small silos that often fit inside a house. The idea is that the family can draw on the stored grain for their own consumption, but when the market price is really high, they can sell some of that into the local market for additional income.
It's a great model that has the potential to make a huge difference for farmers in terms of their food security and their overall livelihood and quality of life.
RC: What role are cooperatives playing in addressing food security?
RP: PRODECOOP and some of the other coffee co-ops have started to put food security into their strategic plans. So this isn’t something that’s remote from the business; it becomes part of the business. I think they understand that the health of their co-op and their coffee business is inextricably linked to the ability of their small-scale farmers to provide for themselves, and to make sure that the basics— particularly food, water and shelter—are met.
RC: What role can Root Capital play in solving hunger in the coffee lands?
Root Capital came to Green Mountain Coffee Roasters with a proposal to develop internal credit facilities that would enable farmers to borrow money from cooperatives to improve their coffee production or to develop economic alternatives to coffee. The Root Link project was developed to help cooperatives develop internal credit systems for their farmers but to also provide the individual members with some coaching to make sure that what they did to diversify their incomes had a better chance at success.
What We're Reading
Voice of America: Africa Needs More Farmers, Not Aid, argues that an effective agricultural sector, which is not aid-dependent, is crucial both for ensuring food security as well as political stability.
In an article in the Stanford Social Innovation Review, Jackie VanderBrug, director of Women Effect Investments, elaborates on the importance of gender lens investing and investment vehicles, such as Root Capital’s Women in Agriculture initiative, that are working toward providing women with access to capital and improved opportunities.
Join the Team: Loan Officer (Independent Contractor) in Ivory Coast
The loan officer will be responsible for identifying potential borrowers; conducting due diligence on loan applicants using rigorous financial, environmental and social criteria; presenting loan analyses to Root Capital’s internal and external credit committees for decisions; closing loans, including ensuring complete documentation and monitoring of existing loans to assure timely repayment. Reporting to the vice president of global programs in Africa, the loan officer will also assist in coordinating training and technical assistance on financial management to selected candidates and clients.