Investing in Agricultural Enterprises to Build Rural Prosperity in Colombia

Colombia is the world’s third largest producer of coffee by volume, and a leader in quality; the coffee sector is the largest source of rural employment. And yet, farmers contend with significant challenges: small plots of land, high costs, stagnating yields, and stifling government intervention. Colombia’s National Federation of Coffee Growers (the Federation) provides government subsidies to farmers, including low-cost credit and free inputs, on the condition that farmers export exclusively through the Federation—making those farmers subject to its largely undifferentiated international marketing strategy, and hurting the relative competitiveness of those who seek out other options.

Root Capital is aiming to unlock local prosperity by empowering enterprises representing thousands of small farmers to fulfill their potential in rural communities where the governmental structures of the Federation have often hindered their prospering. The “credit plus capacity” model helps eliminate obstacles for creative individuals in remote rural communities by equipping coffee enterprises to pursue an alternate, market-driven path through business advisory services in combination with access to finance.

No matter an enterprise’s stage of growth, increased access to credit builds the essential foundation for independence, competitiveness, and resilience. Root Capital’s loans enable enterprises to pay their supplying small farmers higher prices for premium coffee than the Federation offers, and to pay them upfront and on time for their crop. These practices lead farmers to sell their crop consistently to the enterprise, and helps the enterprise hone the quality of its supply, boosting its reputation and market share with specialty coffee buyers.

Contribution to enhancing freedom

Investing in underserved agricultural enterprises by building their entrepreneurial capacity and increasing their access to finance transforms individual lives: it enhances enterprises’ ability to create opportunity for thousands of people in rural communities, through quality employment for enterprise workers and improved market access for farmers. With growth and increased capacity, enterprises can improve farmer livelihoods while also increasing resilience, sustainable resource use, and market-driven social impact.