COAHAYANA, Mexico — Five miles inland from the Pacific Ocean in Mexico's Michoacán state, banana plants stand thick and heavy with bunches of fruit ready to cut for processing and transport to market. World Council of Credit Unions, working with Caja Providencia, a local credit union, is developing a value chain financing program to assure that the growers harvesting the fruit get a fair market price for their crop to better support themselves and the local economy.
Value chain financing provides financial infusion to farmers at key points within the planting, growing and harvesting cycle to make sure they have sufficient funds to operate their businesses. In this agricultural coastal corridor of Mexico, acopiadors, or collection and processing agents, serve as linkages between the grower, the buyer and the credit union, through which funds are provided, to support the farming cycle. Farmers who are Caja Providencia members can become part of the value chain process, as well as gain access to additional credit union services.
"The value chain model has worked well to support rural growers, producers and craftspeople throughout Latin America," said Brian Branch, World Council president and CEO. "The partnership with Caja Providencia has made a positive difference in the lives of the members involved in this program."
The partnership with Caja Providencia is part of World Council's five-year Cooperative Development Program (CDP), supported by US$4 million in funding from the U.S. Agency for International Development. The program focuses on creating and testing agricultural and financial tools to improve rural economic and financial sector development, personal income and food security. Results from the program, which runs through 2015 and also operates in Guatemala, will include a scalable methodology to increase small farmers' access to markets, inputs and technical assistance.
Such programs also benefit the credit unions by increasing member growth and participation. In addition to providing funds through the value chain model, the $45 million Caja Providencia, which serves nearly 40,000 members, sees an opportunity to assist banana growers by helping improve production processes and provide the organization necessary to secure market-based prices from buyers.
World Council's partnership with Fideicomisos Instituidos en Relación con la Agricultura, a development bank that offers credit and guarantees, training, technical assistance and technology-transfer support to Mexico's agriculture, livestock, fishing, forestry and agribusiness sectors, has helped Caja Providencia members gain access to subsidized loans to grow their businesses. The growers use the subsidized loans, currently priced at 1.5% interest rate, to invest in better equipment, machinery and other inputs. This will, in turn, lead to higher quality crops that will increases prices and enable sale to buyers from markets currently out of reach of these farmers.
Members participating in the program are expected to increase production, improve their livelihoods and offer better financial support to their communities. Currently, a cuadrilla, or team of 15 workers, spends entire days loading up to 1,300 boxes totaling 23 tons of bananas into semi-trailer trucks for transport to market. Thanks to the efforts of Caja Providencia and World Council, those workers one day soon will be earning a fair price for the efforts, which will help them better care for their families and support their credit union.
For more information about World Council's value chain finance methodology, visit www.woccu.org/valuechainfinance. For more information about World Council's CDP program, visit http://improveruralincome.woccu.org.
The U.S. Agency for International Development administers the U.S. foreign assistance program providing economic and humanitarian assistance in more than 120 countries worldwide.
El Consejo Mundial de Cooperativas de Ahorro y Crédito es la asociación gremial y agencia de desarrollo para el sistema internacional de cooperativas de ahorro y crédito. El Consejo Mundial promueve el crecimiento sustentable de las cooperativas de ahorro y crédito y otras cooperativas financieras en todo el mundo a fin de facultar a las personas para que mejoren su calidad de vida a través del acceso a servicios financieros asequibles y de alta calidad. El Consejo Mundial realiza esfuerzos de defensa activa en representación del sistema global de las cooperativas de ahorro y crédito ante organizaciones internacionales y trabaja con gobiernos nacionales para mejorar la legislación y la regulación. Sus programas de asistencia técnica introducen nuevas herramientas y tecnologías para fortalecer el desempeño financiero de las cooperativas de ahorro y crédito y profundizar su alcance comunitario.
El Consejo Mundial ha implementado 290 programas de asistencia técnica en 71 países. A nivel mundial, 56,000 cooperativas de ahorro y crédito en 101 países atienden a 200 millones de personas. Obtenga más información sobre el impacto global del Consejo Mundial en www.woccu.org.