Mexico's Credit Unions Help Coffee Farmers Go Organic
World Council Program Supports Rural Economic Growth
February 09, 2012
VERACRUZ, Mexico — Buying a cup of coffee may soon be the newest way to improve the livelihoods — and lives — of credit union members in developing countries. Through a coffee value chain financing program being implemented in rural Mexico with the support of World Council of Credit Unions, farmers gain access to new financial and agricultural tools that enable them to improve their organic coffee crop, sell it at higher prices and increase their personal financial returns.
The five-year Cooperative Development Program (CDP), launched in late 2010 with US$4 million in funding from the U.S. Agency for International Development, focuses on creating and testing agricultural and financial tools to improve rural economic and financial sector development, personal income and food security. The resulting "toolbox" for credit unions includes a replicable and scalable methodology to meet the financial service needs of small farmers and increase their access to markets, inputs and technical assistance for production. In addition to Mexico, the CDP program is also being implemented in Guatemala.
"The CDP program applies an innovative approach that addresses both the financial needs and market barriers for rural producers in a more integrated way than methodologies used in the past," said World Council President and CEO Brian Branch, who this week led a delegation that visited program implementers in the rural highlands of Mexico's Veracruz state. "The result will be higher levels of personal income that will benefit both participating farmers and their communities."
Part of the strategy currently being implemented by Caja Zongolica, one of two pilot credit unions involved in the CDP program in Mexico, involves helping farmers switch to organic production methodologies that result in coffee that commands a higher market price. Certified organic products require stringent growing requirements for three years prior to certification, which increases production costs. The value chain financing supported by the credit unions provides farmers with financial stability throughout the field-to-market process to produce the organic coffee.
Currently, nearly 25% of the 122 farmers participating in the program who have switched to organic production also work as promotores, or internal inspectors who provide peer-to-peer technical assistance and guidance to other farmers interested in organic production. Participants see value in making the switch, which all but ensures a higher price for their crops, as well as the inherent strength in working collectively as part of the World Council-supported program.
Caja Zongolica, established 15 years ago to serve coffee farmers, for several years has been implementing the Semilla Cooperativa [Cooperative Seed] program, which sends credit union representatives by motorcycle and on foot to conduct credit union transactions where the farmers live and work. Later this year, the credit union will update the personal digital assistant (PDA) mobile transaction technology developed by World Council that allows field officers to remotely conduct loan monitoring, evaluation and approval processes in real time.
The past success of Caja Zongolica technology applications was the inspiration for a similar program launched last year by California's Ventura County Credit Union, which remotely serves farm laborers and others at their respective worksites. Both initiatives will be the focus of this year's engagement study programs sponsored by World Council's Global Women's Leadership Network. Learn more about the network and its programs at www.cuwomen.org.
"Participating credit unions are strengthened when farmers become part of the program, but this is also about making linkages that enable members to earn more stable and higher incomes," Branch said. "It's about supporting a move to more sustainable crop production, which means more stability for the community itself."
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.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 60,500 credit unions in 109 countries serve 223 million people. Learn more about World Council's impact around the world at www.woccu.org.
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