We know that farmers do a lot to benefit our communities and those who go above and beyond should be recognized and celebrated in doing so.
So when our friends at Rainforest Alliance told us about their newest initiative, we are excited to share it with you.
One of the biggest issue for farmers who want to adopt better practices is having access to funding. While sustainable management practices can help farmers increase productivity and incomes, it also often requires an initial financial investment — one they understandably cannot afford. As such, farmers who are seeking to adopt sustainable management practices that will qualify them to earn the Rainforest Alliance Certified TM seal can now secure loans in order to improve production practices and pursue certification, through Rainforest Alliance’s newly launched Sustainable Finance Program.
“The agriculture and forestry sectors are considered high-risk areas for financial institutions, especially for long-term loans,” explains Alexandra Tuinstra, manager of farmer finance at the Rainforest Alliance. Not only are the institutions reluctant to provide funding, but producers are often uninformed about the loan application process.
“Our main goal is to connect producers with financial institutions, under the premise that farms and forests that have adopted standards for sustainability are less risky and therefore more creditworthy than those who have not demonstrated commitment to sustainability.”
In March, the Rainforest Alliance helped three groups of farmers in Guatemala obtain financial support (more info here). The groups were first informed about the various funding options available. The Rainforest Alliance then helped them prepare the necessary documentation and supported them during negotiations with funding institutions. They also provided and have continued to provide the farmers with technical support to strengthen their farms and management practices so they can access credit lines on their own.
“Access to financing is key for all association members because we don’t have the capital that we need throughout the year, especially at the beginning of the harvest season, when we need to prepare the wet mill and invest in worker housing,” said Cifuentes Matías, general manager of ADESC, a group of Rainforest Alliance Certified coffee smallholders in Guatemala. “The Rainforest Alliance’s support has been really important for us in securing a loan, and we have already been able to access some small credit lines.”
“The greatest challenge for producers is to secure long-term loans,” says Tuinstra. “These financial resources are critically important, especially when dealing with a crisis such as Roya, a fungus that is devastating coffee plants in Latin America. Loans are urgently needed to treat and replant affected crops.”
Most financial institutions deny loans to producers due to a lack of credit history and lack of collateral. But as a result of the technical support and training provided to Rainforest Alliance Certified farms, “these groups are better organized and have more confidence when applying for credit lines,” explained Mario Lopez, future projects coordinator at the Rainforest Alliance.
In addition to supporting sustainable financing for producers, the Rainforest Alliance works to inform loan officers about what sustainable management entails and how it helps to mitigate risk. Recently, the organization held a workshop in Costa Rica for financial fund executives at Root Capital, an investment institution that provides credit and financial management training to small agricultural enterprises and farmers in Latin America and Africa. As part of the workshop, participants visited two Rainforest Alliance Certified farms. “The goal of this workshop was to educate attendees on the principles of sustainable agriculture and how it addresses issues like pests and diseases,” said Lopez.
According to Jerónimo Bollen, VP of global programs for Latin America-Root Capital, these efforts are the beginning of a closer relationship between the financial world and sustainable producers in developing countries. “This collaboration allows the credit team at Root Capital to strengthen its ability to underwrite loans for producers with strong environmental performance, while reducing costs and risks across the value chain.”
The Rainforest Alliance is currently focused on supporting financing for sustainable agriculture and forestry in developing countries but plans to expand to other industries including tourism, for example, where access to funding can play a significant role in the protection of biodiversity and the wellbeing of forest communities.
To learn more about sustainable agriculture visit: www.rainforest-alliance.org