Sustainable coffee production – Nicaragua

Key Facts

• Client: UCA San Juan Rio Coco
• Term: 1-year revolving loan with a 4 year commitment
• Guarantee instrument: Pari Passu Guarantee
• Guarantee exposure: 40% of loan value
• Effective date: December 2022

Deal Summary

AGRI3 is supporting the mobilisation of USD 2m from Oikocredit for UCA San Juan.

The UCA San Juan Rio Coco is a co-operative which operates in the rural region of San Juan del Río Coco. It buys, processes and exports coffee produced by associates and third parties, and also provides technical assistance and lower cost processing to associates.

The Oikocredit facility is to be used to increase the avaliability of working capital for farmer-members of the cooperative, to support the annual harvesting and sales process.

Investment Rationale

The facility will provide medium term committed working capital financing for small fairtrade / organic coffee producer organisations, which is not readily available from commercial parties/lenders. Because of the small size of the farmers, relatively high transaction costs and higher perceived risk profile of especially for the disbursements that take place before all coffee contracts are completed, these cooperatives are not readily served by regular commercial banks, while for international banks financing in Nicaragua is difficult due to country risks.

This will help to provide essential support to the continuation and expansion of exports by the cooperative, supporting maintenance of 2,320ha coffee under sustainable management (in line with certification standards). The facility will also support existing employment, training and support to farmers including premium pricing compared to average market producer prices for coffee

Impact Targets

Sustainable Agriculture

2,320ha coffee under sustainable management

Rural Livelihoods

480 farmers supported of which 23% female