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Innovations

Exportadora Café California packages financial instruments for increased long-term yield and farmer profitability.

Financial Services

Who are they?

Exportadora de Café California (ECC) is a leading coffee-service company with 20% of the domestic market share in Mexico.

About the SDM

ECC incorporated multiple financial instruments in the package to make renovation and professionalization attractive to farmers.

How it works

After the coffee rust severely affected coffee plantations in Mexico, ECC created the program Por más café in order to secure the supply of coffee for years to come by supporting smallholders with a package of services in the main coffee-growing states such as Chiapas, Veracruz, and Puebla.

In order to facilitate the adoption and correct application of the service package, ECC incorporated multiple financial instruments in the package to make renovation and professionalization attractive to farmers. In addition to inputs, technical assistance, and planting material, smallholders get a combination of three financial instruments:

  • Long-term farm renewal with a 7-year repayment period.
  • Annual short-term loan for inputs.
  • Bridge loans for a grace period of 2 years at no interest until the trees yield coffee.

Furthermore, as part of the financial instruments, farmers who rejuvenate their farm are paid for their labor while the farm is not productive.

Within the package, farmers pay for most of the services, leaving only a small portion that needs to be subsidized by ECC. ECC receives a return on investment through the increased quality and quantity delivered by these farmers. As the loans are provided by a commercial bank working with ECC and backed by a 5% first loss guarantee fund provided by the Mexican government, ECC can share risk and scale up more readily.

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Key Outcomes

As of 2019, more than 5,500 smallholders have made use of the services packages, renovating more than 4,000 ha of coffee in Mexico. 

These farmers have increased their productivity, having positive impact on their profitability despite low coffee prices.

Additional Resources

Insights report 2020 front page
Service Provision as a Viable Business: Insights Report
Learn about how our partners are getting sustainable returns for their business, while empowering farmers through service delivery.
Download
191211 webinar closing the smallholder finance gap final version
Webinar - Closing the smallholder finance gap
IDH and The Learning Lab invite three very different organizations we have worked with to share key insights on smallholder finance. 
Download
Sorghum
Insights Brief 2019
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SDM Case Study: Exportadora de Café California, Mexico