By Kelsey Quam, KF12 Ecuador

The agricultural work of cacao farmers of the rural loan group ¨Progreso Comunitario¨(¨Community Progress¨) in the subtropical region of Ecuador is not easy. They laugh when asked how they spend their free-time– agriculture is a full time job. Lately, farmers have been griping about pests called “mal de machete” and ¨escoba bruja¨ that have destroyed a large part of the cacao harvest this year. In addition, heavy rains have stripped cacao plants of their red color and have left them black. Members of ¨Progreso Comunitario¨ look to Kiva loans as a means to invest in pesticides to resist pests and to purchase start-up farming supplies. Through investment they are likely to achieve a more productive cacao harvest.

The cultivation of cacao, a tropical plant whose seeds are used to make cocoa powder and chocolate- is the main source of income for the group ¨Progreso Comunitario.¨ Group members own plots of land lined with cacao trees whose seeds are harvested several times per year. Cacao seeds grow in a large red pod on short trees in humid, tropical climates. Cacao is cultivated extensively throughout Southeast Asia, western Africa, and the Americas.

The woes of cacao farmers of ¨Progreso Comunitario¨ illustrate how microfinance and the characteristics of microloans offered by the Cooperative San Jose facilitate access credit and improve economic and familial livelihoods.

· Average interest rate and fees (portfolio yield) paid by borrowers at Cooperative San Jose is 16%, whereas the average interest rate and fees charged to borrowers for MFI peers in Ecuador is 19%. (The average portfolio yield of all Kiva partners is 38.29%). Below-average interest rates and fees increase the likelihood that borrowers will be able to pay back the loan without difficulty and will be able to take out future loans.

· Loans at the Cooperative San Jose are administered through ¨Ventanillas¨ (Rural Loan Groups) of 15-20 people from a given community. Members receive the same amount of credit, make payments on the same dates, and often work in the same areas, such as cacao or corn cultivation. The Cooperative San Jose offers ¨ventanilla¨ groups whose members work in agriculture the option of bullet-loans, or loans that are paid back once at the end of the loan term. This flexible means of repayment suits farmers well. It allows them to invest capital in seeds, fertilizers, and start-up equipment while using the profits of their harvest (depending on the crop, the harvest may occur up to a year or more from the date of the disbursal of the loan) to pay back the loan balance.

· Microfinance also helps farmers, most of whom live in isolated and rural locations far from the nearest branch office of the cooperative, to access capital. For example, members of ¨Progreso Comunitario¨ live near the community of Tambo, a small town that is separated from the nearest branch office by a sharp mountain range that descends into the tropical valley. The dirt road that links the two towns is impassible during heavy rains. However, travel to the branch office is rarely necessary because loan officers travel to communities to hold meetings, open accounts, and deliver financial education services. This saves borrowers travel time, bus fares, and the opportunity cost of losing a day of work on the farm. By bringing services closer to clients, microfinance reaches more borrowers that would potentially be excluded from access to financial services due to location.

Below-average interest rates, flexible bullet-loans, and access to credit support the cooperative´s overarching goal of empowering farmers, giving them the tools to invest in their work, and to expand the productive possibilities of their crops. Support a borrower at the Cooperativa San Jose.


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