Global Partnerships (GP), a US-based nonprofit investor in microfinance institutions (MFIs), recently announced that it partnered with Sustainable Harvest, a US-based specialty coffee importer focused on sustainable supply chain practice, to provide USD 963,000 in loans to two fair-trade coffee cooperatives based in Latin America: USD 465,000 to Aprocassi of Peru and USD 498,000 to Café y Desarrollo/REDCAFES of Mexico. The structure of these transactions, which were made by Global Partnerships and fully-secured by coffee sales contracts from Sustainable Harvest, allows the cooperatives to in turn provide low-cost financing with flexible terms to small-scale coffee growers located in their respective regions of operation.
The cooperatives may benefit from the loan structures as they can receive an initial disbursement, make payments as coffee is shipped and obtain additional disbursements from GP, all without having to complete a standard closing process each time. This helps to lower the cost of borrowing for the cooperatives, thereby allowing them to provide flexible financing based on the cash flow needs of their members. In addition, the securitization of the loans with signed coffee sales contracts between each cooperative and Sustainable Harvest may reduce risk of default for Global Partnerships and its investors.
David Griswold, president and founder of Sustainable Harvest, said, “We are excited to work with Global Partnerships on this new opportunity to support sustainable smallholder coffee cooperatives in Latin America. Our partnership is facilitating access to credit for coffee farmers in many remote communities, enabling them to increase their household income and build their assets by selling specialty coffee to the global market.”
Café y Desarollo/REDCAFES consists of 1,500 cooperatives that produce both fair-trade and organic certified coffee and operate in five of the poorest states in Mexico, namely Veracruz, Puebla, Oaxaca, Guerrero and Chiapasone. Aprocassi consists of 400 members that also produce both fair-trade and organic certified coffee. As of May 2011, GP has invested USD 40.2 million in 28 MFIs that serve a total of 880,000 borrowers in seven Latin American countries.
By Carol Kim, Research Associate
About Global Partnerships (GP): Established in 1994, GP is a US-based non-profit organization that supports microfinance institutions in Latin America. GP raises capital through a microfinance investment fund strategy and provides low-cost loans through its four debt-based microfinance investment funds. The company has staff based in Seattle, in the US state of Washington and Managua, Nicaragua. As of May 2011, GP has invested USD 40.2 million in 28 MFIs that serve a total of 880,000 borrowers in seven Latin American countries.
About Sustainable Harvest: Sustainable Harvest is a US-based specialty coffee importer focused on sustainable supply chain practice with the “relationship coffee” model, which builds direct, transparent market linkages for coffee growers while investing in training and management. The relationship coffee model is based on five areas of investment: training, trade credit, traceability, technology, and transparency. Sustainable Harvest does not report its financial information to US-based nonprofit data provider Microfinance Information Exchange (MIX).
Sources and Additional Resources:
Global Partnerships Press Release: “Global Partnerships and Sustainable Harvest partner to help Latin American coffee growers succeed”, July 20, 2011, http://www.globalpartnerships.org/sections/newsinfo/newsinfo_nr_SustainableHarvest.htm
MicroCapital.org: “MICROCAPITAL BRIEF: Global Partnerships (GP) Renews Existing Loan, Makes New $500k Loan to Pro Mujer Nicaragua; Converts $1.2m Loan into Local Currency for Credivision Peru”, April 11, 2011, https://www.microcapital.org/microcapital-brief-global-partnerships-gp-renews-existing-loan-makes-new-500k-loan-to-pro-mujer-nicaragua-converts-1-2m-loan-into-local-currency-for-credivision-peru/
MicroCapital.org: “MICROCAPITAL BRIEF: Global Partnerships (GP) Microfinance Funds Loan $1m to Enlace of El Salvador, Cafe y Desarrollo of Mexico”, April 11, 2011, https://www.microcapital.org/microcapital-brief-global-partnerships-gp-microfinance-funds-loan-1m-to-enlace-of-el-salvador-cafe-y-desarrollo-of-mexico/
MicroCapital’s Universe Profile: Global Partnerships, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Global+Partnerships
MicroCapital’s Universe Profile: Sustainable Harvest, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Sustainable+Harvest
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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