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Incentivizing farmer-led renovation in Guatemala

Carlos Cano, at a farmer-financed nursery in San Marcos, Guatemala. Photo by Oscar Leiva for CRS.

Carlos Cano, at a farmer-financed nursery in San Marcos, Guatemala. Photo by Oscar Leiva for CRS.

A few months ago, in the offices of Anacafé in Guatemala City, the II Cumbre de la Roya was held, 2 years after the initial meeting.  The objective of the meeting was to take stock of what has happened since the first meeting and to see how the Central American coffee sector was recovering from the last outbreak of coffee leaf rust, or roya.  The good news is that there are signs of slow recovery in Central America.  We know that in order to be prepared against the next outbreak, we need institutional alignment, early warning systems for producers and greater availability of rust resistant varieties and increased technical support. However, the bottom line is that solutions for recovery are slow and they don’t come cheaply.  Root Capital recently released a learning report on Financing Farm Renovation and in the first pages, they cite an estimate for the global need for renovation and rehabilitation in coffee for 5 million hectares that will cost about 41 billion dollars.  This is a staggering sum.  Yet on first glance, our initial reaction is that this is framed as an external investment into the farm and farmers.  At CRS we have been working on ways to create resilient farm families who can save and invest in their own farm.  It starts with our approach to microfinance, called SILC.  Before we get there, let’s review the need for investment and how the concept of resilience goes beyond characteristics on the farm.

A farm devastated by roya needs investment from the farmer to recover.  It needs capital – financial to pay for renovation, human capital to improve the management of the farm, and social to access the support networks, extension services.  It is perhaps one of the most sadistic truths of agriculture – the moments of crises when a farmer needs to invest in his farm are the times that they are least able to do so.  A coffee farm that has its production slashed by roya provides no extra income for the farmer that allows him to re-invest into his farm’s productivity.  This is not only for the year of the outbreak, but the incurred costs and the loss of profit follow the farmers for 2 to 3 years after the outbreak.

This is not the first disease epidemic that has laid coffee farmers out.  Nor will it be the last.  In Africa, farmers are battling another fungal disease – coffee berry disease – that to date has not spread to Latin America. We haven’t even considered the role of climate change and the effect it could have to spread these diseases by creating more favorable conditions.

As we rebuild farms and replant coffee trees, we have an eye to the uncertain future.  To prepare for this uncertainty we are trying to make farms and farm families more resilient to the shocks that come from weather or the market.  How do we make a farm and a farm family more resilient?

A deeper dive into what we understand about what creates resilience for smallholders will have to wait for another post.  However, we know that in order for farmers to adapt, absorb or to transform in response to shocks and changes, they need more than just diverse sources of income and good farming practices.  They need access to capital – both financial and social.  Yes, social capital.  Social capital refers to the collective value of social networks (beyond FB!) and the benefit or good that people in these networks do for each other.

I’ve talked about this before.  In Western Guatemala, in our Café Verde project, we have been promoting savings and financial literacy through a hybrid model of SILC – Savings and Internal Lending Communities- in conjunction with coffee farm management plans. We are seeing some fantastic results.   The first result is the newly found ability of the participants to invest in their own farms and their own renovation.  During the first year of the project, CRS assisted farmers in the renovation of 150 hectares of coffee in San Marcos.  In the 2nd year, the participants (small farmers who average 1 ha of coffee) renovated 114 hectares, investing their own savings from the SILC groups that they had formed.  For every dollar that CRS invested in renovation, the participants matched it with .80 cents of their own savings. Using this community financed renovation model, participating farmers will be able to renovate their 1 hectare plot of coffee over a period of 4 years using their own savings without the need of taking on additional debt in an uncertain market. After two years, they are already halfway there!

The second one is harder to measure.  Michael made mention of this in this comment on my previous post on SILC.  It is the social and human capital that we are currently building that will provide benefits in the long term.  In Nariño, these SILC groups have evolved into marketing groups – farmer associations who process and sell coffee together.  One of the recent efforts to quantify and create an index for resilience is led by the FAO.  They define resilience as a function of 10 different variables.  Amongst these are non-agricultural assets and social safety nets.  These are key components of resilience, allowing for the empowerment of the farmers, who are investing their own money into renovation.



– Kraig Kraft and Daniel McQuillan

1 Comment

  • Connor Garbe says:

    You mentioned that coffee berry disease has yet to spread to Latin America. I’d never considered cross continental spread of disease affecting coffee crops. Do you know if there are there primary preventative measures being taken to prevent a spread like this and what they might look like?


    Connor Garbe

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