Long-term finance from Hivos-Triodos Fund provided to the Nicaraguan producer organisation Aldea Global will secure enduring income for small-scale rural farmers and sets an example for eco-friendly coffee plantation renovation.
Gradual renovation programme
Renovation of coffee plantations is critical since 60% of all plantations in South America are in their final production phase. Overall yield levels are declining as a result and production levels may fall significantly in the coming years. This means that the source of income for coffee farmers, in particular for small-scale farmers, is at risk. Faced with this prospect, Associacion Aldea Global Jinotega (Aldea Global) in Nicaragua has developed ‘Ecoforestral’, a gradual renovation programme that will increase yield in the medium and long-term but safeguards small-scale farmers’ annual income in the first years of the programme. In addition, the plantation will be restructured according to an eco-friendly design. For example, four varieties of coffee will be grown that are least vulnerable to diseases and require little fertilisation, and special plants will be sown below the coffee plants to cover and improve the soil.
Strong commitment
This programme reflects Aldea Global’s strong commitment to its more than 1,000 members and to the promotion of sustainable agricultural practices. The association is active in the mountainous region of northern Nicaragua. Its key activity is the sourcing and exporting of organic, fair trade and speciality coffee from small-scale farmers to buyers in Europe and the United States.
An essential component of the success of Aldea Global’s renovation programme is providing access to long-term finance. Diédericks Aldea, Finance Manager at Aldea Global: ’The biggest challenge for small-scale coffee farmers who are considering renovating their coffee plantations is that they have to wait more than three years before they any income. The long-term finance provided by Hivos-Triodos Fund bridges that gap. This loan helps us to give small-scale farmers an incentive to renovate in an eco-friendly manner and they get the financial resources they need to manage their coffee plantation efficiently.’
Deeper into the value chain
Aldea Global has been a partner of Triodos Investment Management through the short-term trade finance loans provided by Triodos Sustainable Trade Fund. Nelleke Veenstra, Senior Investment Officer at Triodos Investment Management: ‘This type of long-term finance is new to us and takes us, as a financier, deeper into the value chain. We hope that Aldea Global’s innovative project and the funding provided by Hivos-Triodos Fund will be an ideal pilot case from which other renovation programmes can be facilitated.’
About Hivos-Triodos Fund
Hivos-Triodos Fund Foundation (Hivos-Triodos Fund) was founded in 1994 as a partnership between Triodos Bank and Hivos . Hivos-Triodos Fund invests in microfinance institutions with a higher risk profile and which are active in underdeveloped markets that focus their services on vulnerable target groups. Building on the specific knowledge and experience present in Hivos and in Triodos Bank, Hivos-Triodos Fund has reserved funds for financing broad sustainable development in developing countries in the coming years. The focus will primarily be on sustainable energy and agriculture. Total assets amount to EUR 70.2 million at year-end 2011.