Author: Meredith Husar

Benefit sharing is uneven in the specialty coffee industry with smallholder farmers and agri-SMEs—who perform the majority of the work and assume a disproportionately high amount of the risks—not sharing equally in the profits along the value chain. Smallholder farmers in particularly remote communities are distant from larger buyers and often left as price takers with little negotiation power. Valentina Duque, frustrated with this dynamic, founded the Siruma Coffee Company in 2017 to connect coffee-farming communities with specialty buyers in order to generate a positive social impact.

Due to the security situation in Colombia, coffee farmers in many regions of the country remain disconnected from the market—including the departments of Caldas, Cauca, and Tolima where Siruma operates. The lack of knowledge and training for farming and processing specialty coffee is evident in these coffee-growing communities. Siruma launched a unique joint venture with one of their buyers, Falcon Coffees, to overcome the challenges that buyers and exporters each face in navigating the process of getting coffee from rural farmers to overseas roasters. The result of this joint venture has been higherquality coffee and greater consistency in product as a result of a set of workshops and projects done with the growers. Partnerships where agri-SMEs and buyers have more equal power and decision-making ability are rare, but are necessary if we hope to overcome the challenges facing rural farmers and the whole supply chain.

In 2022, Root Capital provided Siruma with its first loan from a CSAF lender, a line of trade credit that enabled Siruma to increase their volume and fulfill progressively larger contracts. In 2023, Incofin extended an additional line of credit to the business, helping Siruma grow their sales 63% year-over-year. This is one of the many women-led businesses that Incofin lends to as part of their intentional investment in expanding their gender lens investing (GLI) approach. Working through CSAF’s partnership with Value for Women, Incofin built internal buy-in for GLI and expanded their own gender-inclusive practices. Learn more about the tailored engagement with three CSAF members, including Incofin, in the joint report: Closing the gender gap in agricultural investments.

Beyond business growth and farmer incomes, Siruma invests in promoting the environmental health of producers’ farms and the planet. In 2023 alone, Siruma installed 30 solar dryers to help coffee farmers adapt their coffee processing to increasingly unpredictable rains caused by climate change. Siruma also trained 800 farmers on good agricultural practices last year and financed carbon emission reduction in the region through the replacement of traditional cookstoves with more energy efficient alternatives. As the business has grown, Duque and her team are investing in the long-term productivity of local farmers and environmental sustainability of the region.

Over the past two decades, Kenya has been a growing force in the global macadamia market. The country nearly quadrupled production in the 2010s and today ranks as the world’s third-largest exporter. Much of that growth has been powered by smallholder farmers growing macadamia alongside other crops on small plots of land. While macadamia is one of the most expensive nuts in the world, Kenyan farmers typically earn little of the value attached to its high supermarket price tag. In 2017, three businesswomen set out to change that, acquiring a then-defunct business so they could deliver higher prices for local farmers.

Jane Maigua, Charity Ndegwa, and Loise Maina use their combined thirty-plus years of agribusiness experience to run Exotic EPZ Ltd. with the goal of supporting rural communities in their native country through economic empowerment, environmental sustainability, and greater employment. When they started as an essentially new business with no track record, the entrepreneurs struggled to access financing to unlock their vision. In addition to the typical hurdles that agri-SMEs face when looking for credit, these women entrepreneurs faced the additional challenge of needing to overcome bias related to their gender. Eventually, Exotic received its first CSAF member loan from Root Capital in 2018, enabling it to grow its business and establish a track record that would unlock additional financing in the future. Since then, Exotic has diversified its capital mix, borrowing from Rabo Rural Fund, Common Fund for Commodities, and other impact investors over subsequent years. Today, the business reaches 10,000 farmers, connecting them with stable markets and providing on-farm training to improve their productivity. The solar-powered factory and offices employ over 100 people with a special focus on expanding leadership opportunities for women and young people.

However, challenges persist for the Kenya macadamia industry overall. A fall in demand that began at the onset of the pandemic and the subsequent collapse of global macadamia prices has made forecasting and contracting more difficult in the industry while driving down farmers’ incomes. The market shift has driven a decrease in annual CSAF member disbursements for Kenya macadamia from $19.5M in 2018 to $10.5M in 2023. Amid this challenging environment, CSAF lenders have continued to support macadamia businesses. Since 2020, they have provided Exotic with a cumulative $5.6M in trade financing along with training in agronomic extension, processing standards, and business management. Ongoing financing enables Exotic to continue facilitating market access for farmers and deliver positive impact for rural communities.

For Nicaraguans buying cabbage at their local grocer, the chances are high that it’s grown by a farmer-member of Cooperativa de Servicios Múltiples Padre Odorico de Andrea R.L. (COOSEMPODA). This small cooperative aggregates produce from members, washes it to market standards, and sells it onward to supermarkets—supplying 80% of the country’s market for cabbage along with significant amounts of carrots, green peppers, and potatoes. Yet, this hasn’t always been the case. Until recently, the cooperative didn’t have facilities large enough to process all of their members’ products, forcing farmers to sell much of their crop for lower prices to predatory offtakers.

In a country hit hard by the 2018 U.S. political sanctions, having a strong domestic market for nutritious food is critical. That was especially true in early 2020 as the COVID-19 pandemic threatened the national food supply. To help the cooperative commercialize more product for its members at better prices, Kampani offered COOSEMPODA a USD $215k subordinated loan to buy a new washing facility, start producing seedlings for farmers, and procure a refrigerated truck. Kampani was able to make this loan in part thanks to the technical assistance support that COOSEMPODA had received since 2016 from Rikolto, a partner of Kampani that builds the business management skills of agriSMEs. Rikolto helped COOSEMPODA professionalize their business operations, formalize their governance, and build their credit readiness. Technical assistance partnerships like these make investments in agri-SMEs less risky for lenders while expanding the level of impact that the borrower can have on its farmers.

This seven-year loan contains inclusion clauses, meaning that the cooperative has committed to increase its membership base by 50%, place at least one woman on the Board of Directors, and grow total participation by young people and women to at least 15% each. Together, COOSEMPODA and Kampani are boosting incomes for smallholder horticulturists, increasing inclusion in the industry, and ensuring a stable supply of nutritious food among political and economic uncertainty.

In 2008, a number of small farmer groups in northern Peru gathered together to found the Sol & Café cooperative with the goal of accessing higher prices on the international market. In 2009, the cooperative received a loan for $400k from Root Capital—their first from a future CSAF member—to finance their exports of 670 metric tons of coffee to three international buyers. Over the years, Sol & Café has diversified its financing— working with six CSAF lenders for loans totaling $12M in the latest harvest—and has used those partnerships to grow steadily, even in the face of economic, political, and climate risks.

In the mid-2010s, the coffee leaf rust crisis struck northern Peru, imperiling farmer yields and the cooperative’s business. Sol & Café used technical assistance and coffee farm renovation loans from CSAF members to withstand that crisis and rebuild in its aftermath. When the COVID-19 pandemic struck, steady access to finance from CSAF lenders ensured that Sol & Café could continue to commercialize their coffee amid supply chain breakdowns and uncertain financial circumstances. Most recently, in 2022, the cooperative faced the same price risks as many other Peruvian coffee businesses amid significant political instability in the country. Sol & Café emerged strong from this latest challenge, but it highlighted the continued risks facing agri-SMEs and the importance of trusted partners to manage those risks.

Now, the cooperative is planning ahead to mitigate one of its most existential threats: climate change. In 2021, Root Capital advisors worked with Sol & Café to pilot a climate vulnerability dashboard, combining farm-level data with best-in-class climate mapping from CIAT to direct adaptation resources to the farmers who will be most impacted by climate change. This successful pilot has since been scaled up to more than 70 businesses globally, helping other businesses use their own versions of the dashboard to mitigate their climate risk.

Since CSAF started collecting data in 2013, the cooperative has leveraged more than $73M in disbursements from CSAF lenders to triple its workforce, diversify its buyer base to a dozen customers, and become one of the largest coffee cooperatives in Peru. Since that first CSAF loan, the cooperative has grown fourfold, exporting 2,700 metric tons of coffee in the 2022 harvest and reaching 1,100 farming families. This long-term partnership shows what is possible when borrowers receive stable support from trusted partners, unlocking meaningful growth for their business and the farmers they support.

Cocoa is a risky business. Between long timelines from planting to harvest, climate vulnerability, and a volatile global market—farmers and agri-SMEs alike face myriad challenges. In the Philippines, Kennemer Foods International (KFI) manages these risks for its business and the 20,000 farmers it supports on Mindanao Island. In 2017, Alterfin provided the business its first working capital loan from a CSAF member—$700k to allow KFI to expand its purchasing. Over the past six years, Alterfin grew its financing, bringing in Rabo Rural Fund as a co-investor. Over time, Common Fund for Commodities and Fondation Grameen Crédit-Agricole have begun working with the business as well through working capital and capital expenditure loans. Together, they have helped KFI become the Philippines’ largest supplier of cocoa beans to the international market while supporting a strong social mission. Farmers working with KFI can experience an increase in yields of 400%.

However, this growth has not come without challenges for KFI along the way. It is risky for farmers to convert their farms to cocoa due to a long timeline for tree maturity—it takes nearly three years from planting a seedling until it bears fruit. To counteract this, KFI launched a subsidiary, Agronomika Finance Corporation, to provide farmers with long-term microfinance that defrays the risk of converting to cocoa or renovating old farms to ensure they are productive for years to come. KFI also helps their farmers buy microinsurance to protect against weather events, reducing risk to the farmers and ensuring they’ll be able to rebound in the event of an emergency.

Additionally, KFI is helping farmers to diversify their cocoa farms, supporting farmers to practice beneficial intercropping while providing an alternative revenue stream for the farmers and for KFI. The enterprise buys and commercializes other crops from farmers including fruits, corn, and abaca fibers—yet KFI is thinking beyond crops to grow revenue. In 2022, the business began working with Mirova Land Degradation Neutrality Fund to launch carbon credits programs linked to reforestation and forest conservation projects being undertaken by KFI. The relationship between KFI and Mirova is not only diversifying business income and contributing to conservation; the due diligence process of Mirova also helped fast track Grameen Crédit Agricole Foundation’s investment in the cocoa and banana activities extensions, showing how greater collaboration can make partnerships more efficient for everyone involved.

Francine Nahimana and Immaculée Mukamana started with 20 hectares and a vision of a brighter future for their community in rural Rwanda. As their neighbors continued to rebuild in the wake of the Rwandan Genocide, these two women launched Nyamurinda Coffee to aggregate their community’s crops and sell directly to buyers in Europe. This direct market access earned farmers better incomes, but without access to capital, Nyamurinda could only provide farmers with high prices for a portion of their crop and the business could not grow. Local banks offered loans with high interest rates and burdensome collateral requirements— sometimes as much as three times the total loan amount. These banks weren’t willing to shoulder the risk of lending to an early-stage business.

Against this backdrop, Alterfin stepped in to provide Nyamurinda with its first-ever loan—a $100k line of credit. To hedge against the risks posed by lending to a nascent business like Nyamurinda, Alterfin relied upon a 50% risk-sharing mechanism from the Alterfin Guarantee Fund in addition to financial incentives from Aceli Africa, which defrays a portion of the transaction costs on this smaller loan that would not otherwise have been profitable.

Now, Nyamurinda has expanded to reach over 1,400 farmers, the majority of whom are women, and has grown its sales by 60% since starting to work with Alterfin. Financing has enabled Nyamurinda to reach additional buyers and a recent analysis by Alterfin showed the results carry through to the farm level. Since beginning the lending relationship, Nyamurinda has increased their provision of seedlings and inputs to farmers while training more producers on good agricultural practices. Over three-quarters of farmers reported improvements in their living and working conditions with greater income to invest in education, housing, and health for them and their families. What’s more, 80% of the women farmers reported that their decision-making power in the household has increased, empowering the women who have rebuilt this community. Alterfin recently approved their third line of credit with Nyamurinda and Root Capital has become its second lender, extending its first line of credit in 2022. These two CSAF lenders are deepening their impact on Nyamurinda and the hundreds of farmers it supports.

“Thanks to Alterfin’s loan, we’ve earned the trust of many international buyers who feel confident about working with us. Alterfin has undoubtedly had a catalyzing effect on our company… and we hope to further strengthen our relationship in the future.”

– Immaculée Mukamana, Director of Nyamurinda