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Project Context
Objectives, Activities, and Results
Providers
IHCAFE
Challenges faced
SHFs need renovation package including upfront inputs (seedlings and fertilizers) and ongoing inputs (fertilizers).
Solution
80% of the loan value is used to pay IHCAFE for inputs (seedlings and fertilizers). IHCAFE recommends varieties produced by local institutions and distributes them to farmers. The remaining 20% are used to pay for labor costs.
Providers
Fideicomiso Cafetalero.
Challenges faced
The PAPP serves the farmers with the lowest financial capacity. Default rate averages 30%.
Solution
Loans are highly concessional. The Fideicomiso-IHCAFE absorbs financial losses. The PAPP tries to improve its recovery rate. It is currently implementing a study6 to segment defaulting farmers, to understand causes of default and to design adaptation strategies.
Providers
IHCAFE agencies7
Challenges faced
The least productive SHFs have the highest TA needs. The cost of TA is higher for the bottom of the pyramid.
Solution
IHCAFE delivers TA to farmers through individual or group training. The PAPP wants to develop a differentiated Technical Assistance and Capacitation plan to better understand the personalized needs of farmers.
Note:
(1) On average, a production below 1.5 tons corresponds to a farm size below 1 ha.
(2) Interests are fully subsided by the IHCAFE and the Fideicomiso Cafetalero.
(3) HLN 12,500 to HLN 20,000.
(4) Default rate were higher during the first phase of the program (42%), 26% during phase 2, and 6% during phase 3.
(5) Decree N.56-2007, Ley de Reactivacion del Sector cafetalero.
(6) The study is supported by Nestle.
(7) IHCAFE is covering Honduran territory through a network of 7 regional agencies, 50 extension services agencies with 100 technical officers and 60 para-technical officers and 8 forest engineers.
Reaching SHFs at the bottom of the pyramid requires a specific program design that cannot be made on a commercial basis
SHFs reached by the PAPP have low or no connection to the market and have a low capacity to repay their loan. A program targeting this category cannot reach commercial viability. It should aim at creating positive social and economic impact.
Technical assistance for these beneficiaries should be intensive and designed
Providing TA to SHFs at the bottom of the pyramid is costly. Understanding precisely their needs and how to best answer them is crucial to reduce the costs of the project and to ensure a successful implementation.
There is a lot of work to be done to ensure the long-term supply of coffee from countries where the crop has long shaped the social and economic fabric. Learning to extend the life of their trees and improve yields helps farmers stabilize annual production and in turn, income, while the rest of the world benefits from a steady supply of quality coffee. Continue on to learn more about the immediate attention and action that is required to make this a reality.