- For the first time, small-scale coffee farmers in Chiapas, Mexico will receive low-interest loans through a $400,000 fund established by Conservation International (CI) and EcoLogic Enterprise Ventures, Inc, with a guarantee provided by Starbucks Coffee Company (Nasdaq: SBUX). The fund, named Eterno-Verde, or Evergreen, will further promote environmentally friendly coffee growing practices and conservation among the communities that surround the El Triunfo Biosphere Reserve in Chiapas.
CI is investing $250,000 from a program managed by the International Finance Corporation (IFC) and funded by the Global Environment Facility (GEF). Through a loan guarantee from Starbucks, EcoLogic Enterprise Ventures (EEV) is co-investing $150,000 in pre- and post-harvest credit. CI's Conservation Enterprise Fund (CEF) and EEV will jointly manage the Eterno-Verde fund.
"Starbucks is proud to support the Eterno-Verde fund and the work of CI and EcoLogic Enterprise Ventures in Chiapas," said Orin Smith, Starbucks president and chief executive officer, and new CI board member. "The Eterno-Verde fund is an example of the private and public sector working in harmony toward a common mission."
Farmers in Chiapas have traditionally received loans from banks and private individuals who charge between 10 and 20 percent each month, leaving farmers with high levels of debt every year. CI will distribute the loan at an affordable, below market rate of interest and with a requirement that the farmers start saving a percentage of the profits.
"We hope the success of the Eterno-Verde fund will help traditional financial sectors realize that lending to rural farmers can be profitable," said Jennifer Morris, director of the Conservation Enterprise Fund at CI. "Without wide availability of affordable credit that only commercial banks and companies such as Starbucks can help provide, small-scale coffee farmers will remain in a perpetual cycle of indebtedness to moneylenders."
More than 300 small-scale coffee farmers in Chiapas participate in one of three cooperatives working near El Triunfo Biosphere Reserve, which harbors the last remaining cloud forest in southern Mexico. It is within the Mesoamerica hotspot, one of 25 biodiversity hotspots-highly threatened areas designated by Conservation International. All together, hotspots claim more than 60 percent of total terrestrial diversity in less than 2 percent of the Earth's land area. Rare species such as the resplendent quetzal and the jaguar live in the reserve.
"A chronic lack of access to capital has stunted the growth of businesses rooted in poor communities with a stake in protecting local habitats," said William Foote, director of EcoLogic Enterprise Ventures. "By demonstrating the bankability of small farmer co-ops in El Triunfo to local financial institutions, the Eterno-Verde fund will prompt conventional lenders to recognize conservation-oriented enterprises for what they are, good business."
Farmers received their first loan in November prior to the harvest season, and will repay the loan in June once the coffee has been exported. These funds will become available once again the following fall. This rotating fund will continue for three years, and will leave a significant amount of savings that the cooperatives can continue to manage into the future. One of the goals of the effort is to decrease the farmers' dependency on external financing sources while establishing a credit record within a Mexican commercial bank.
"The Global Environment Facility is already the world's leading funder of parks and protected areas like El Triunfo biosphere reserve," said Mohamed T. El-Ashry, Chief Executive Officer and Chairman of the GEF. "Now we are increasingly partnering with agricultural producers and good intermediary NGOs to preserve global biodiversity in the working landscape."
Prior to next year's harvest, CI will work with the cooperatives to carefully review their financing needs, coffee quality, commitment to savings, and level of compliance with environmental regulations. CI will review loan applications and provide the cooperatives with financing that farmers may use to hire more workers, process the coffee more effectively, purchase equipment, transport their product for export, and improve other aspects of their business.
"The Eterno-Verde fund provides affordable credit, benefiting shade-grown coffee farmers while helping to conserve their vital mountain-forest ecosystems," said Maurice Biron, assistant program manager for the IFC/GEF Small and Medium Enterprise Program. The program provides loans to help fund projects that conserve biodiversity or mitigate climate change, two key objectives of the GEF.