Helping farmers improve their business skills in Huehuetenango, Guatemala
Every smallholder coffee farmer working with Nespresso tends to have a natural instinct for business, even if they do not have a formal education. But often, gaps in their knowledge mean they can struggle to profitably manage their farms.
Our partnership with Root Capital, a non-profit social investment fund that is pioneering finance for grassroots businesses in rural areas of developing countries, provides business support and advice for smallholder farmers. In 2010, Nespresso funded a project to improve the financial literacy and business skills of a large number of farmers in the Nespresso Huehuetenango cluster in the western highlands of Guatemala. Eight hours from the capital, Guatemala City, farmers in this remote region grow coffee in the foothills of the Sierra de los Cuchumatanes, the rich mineral soils warmed by the soft, humid winds from the Pacific Ocean.
Several hundred farmers from six farmer associations and cooperatives in the Huehuetenango cluster received support, advice and training to better manage their own credit systems, improve their accounting practices and ensure effective business decision-making. These skills will help the farmers run more profitable businesses, thereby increasing their incomes and improving the quality of life for their entire family.
The project was so successful that Nespresso has already committed to extending the program with Root Capital in 2011. Farmers already on the program will receive additional support and even more coffee growers in Huehuetenango can develop the skills needed to run successful and profitable businesses.
Testimonial: Margarita Chojolán, Root Capital
A lot of small farmers do not have formal education and although they know about production and market access they do not keep track of their costs or are unable to request a credit line. For example, one of the cooperatives we were working with has 41 years of experience. About 16 years ago they were able to get a loan from a bank, but this bank eventually went bankrupt. Even though the cooperative had repaid its loan, they still showed a large liability in their statements since the bank never issued a receipt and were unable to secure additional loans. Through this project they were able to put their accounting in order and are now able to request a loan.
By being able to manage their own credit system the organisations can lend to their own farmers in a responsible manner as they can make loan assessments for each farmer based on their production capacity, their ability to repay their loan and other factors. This ensures that their loan fund can function in the long-term thereby benefiting more farmers.
These organisations now have a strategic plan, a clear governance and hierarchical structure, and five out of six organisations will now be able to request loans. To achieve this, we conducted about fifteen different workshops, trained about 300 farmers and provided technical assistance. Most workshops were conducted in each organisation and personalised according to their needs. We used a lot of games and metaphors to make it easier for famers to understand the topics.
To our surprise famers were very interested in our workshops and would call to ask when the next workshop would be held.
Margarita Chojolán, Project Manager, Root Capital