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Providing an Alternative to Coca Production in Peru


Cooperativa Agraria Cafetalera Pangoa (Pangoa) is a Fair Trade and organic-certified coffee cooperative located in San Martín de Pangoa, Peru. Pangoa's 207 active members are smallholder farmers who cultivate shade-grown coffee on the slopes rising from the lowland jungle to the highlands in the region of Junín.

Client Profile: C.A.C. Pangoa

These steep hillsides are home to microclimates that nurture a rich biodiversity. They are also well-suited to growing coca plants, and the region has been named a "red zone" for its concentration of drug production and trafficking. By linking its members to international markets that pay premium prices for its specialty coffee, Pangoa offers economic alternatives to coca production.

During the 1980s, the Pangoa region became an epicenter of violence between the Shining Path guerrillas and the Peruvian government. Campesinos were caught in the middle of this struggle and hundreds disappeared or were murdered, thousands more abandoned their land in fear, and most local farmers' cooperatives disintegrated. Through the commitment of Pangoa's members and the leadership of its general manager, Esperanza Dionisio Castillo, the cooperative survived these grim years and is now thriving. Esperanza has been recognized internationally for her effective managerial skills and impressive commitment to the cooperative members and the broader community.

In 2001, the cooperative entered the Fair Trade market and initiated a program to teach members best practices of organic production. Farmers have adopted sustainable practices and Pangoa has been extremely successful in accessing specialty markets in the U.S. Still, the cooperative faces a constant struggle to maintain enough working capital to support its operations. Loans from Root Capital provide Pangoa with much-needed liquidity.

Pangoa is well known for its innovative community programs and initiatives. The cooperative uses revenue from Fair Trade coffee sales to sponsor projects in reforestation, health, and education. Pangoa is noted for promoting female leadership and gender equality. The Women's Development Committee works to benefit female members, wives, and daughters, and ultimately all the coffee producing families. Projects by this committee include both organizing medical check-ups for all women over 30 for disease prevention and detection, and providing microloans to women.