Download Impact Report Q1 2011

Impact Report Q1 2011
From the Founder and CEO
The first quarter of 2011 marked a period of rapid growth, record
disbursements, and deepening social and environmental impact.
We surpassed our lending projections by 17 percent, disbursing
$24 million to 93 small and growing businesses that source from
smallholder producers in remote areas of Africa and Latin America.
These rural enterprises strengthened agricultural livelihoods for
105,000 farm households in 17 countries.
We continued to move into new geographies, such
as West Africa, and exciting new industries, including
artichokes, cotton, nuts, and sesame. Yet as we
accelerate our growth, our primary focus remains on
agroforestry crops such as coffee and cocoa—crops
that forge an extraordinarily powerful bond between
human well-being and healthy ecosystems.
Consider the Amazon River Basin with its
unparalleled biodiversity, water resources, and
carbon sinks. The expansive forests of the Amazon
trap greenhouse gases and produce more than
20 percent of the world’s oxygen. The Amazon’s
watershed nourishes local agriculture, livelihoods,
and human health.
Yet here and across the world, economic
stagnation and environmental degradation go
hand-in-hand. Without viable livelihoods, rural
people are forced into short-term money-making
strategies like slash-and-burn agriculture and
unsustainable logging. Ultimately, this triggers a
downward spiral of ecological destruction that
further spurs abject poverty.
Root Capital’s clients provide a stable economic
environment that helps reverse that vicious cycle.
In the upper basin of the Amazon watershed,
particularly in Peru, Colombia, Ecuador, and Bolivia,
we support dozens of farmer cooperatives and
agricultural entrepreneurs who are practicing
climate-smart agriculture. For example, we finance
coffee and cocoa enterprises that maintain tree
cover by cultivating shade-grown crops while
providing employment opportunities and stable
incomes to rural communities.
Across the globe, agricultural markets are
demanding higher social and environmental
performance of commodity production chains.
Working with nearly one hundred buyers from
North America and Europe, Root Capital helps
meet that demand by providing financing
that enables farmers and forest communities
to maintain natural resources in the face of
encroaching deforestation and industrialization.
The following pages describe an example of
one Root Capital client, Mountain Coffee, which
aggregates more than 450 farmers practicing
shade-grown agriculture in the eastern foothills
of the Peruvian Amazon. I hope you are as
inspired as I am by the tremendous power of
capital and markets to grow rural prosperity and
protect our environment.
Sincerely,
William F. Foote
Client Profile: A.P.C.E. Mountain Coffee
Eliseo Condor Ayre is a small-scale producer of shade-grown organic coffee in
Chanchamayo, Peru’s coffee center nestled in the lush, eastern slopes of the Andes.
Peru is home to the largest number of bird species in the world and the third largest
number of mammals, the majority of which are concentrated in the high Andean
jungle and neighboring lowlands. These foothills owe their rich biodiversity to the
Amazon River and its tributaries, which weave together the most complex ecosystem
in South America.
Yet, the Amazon hangs in a precarious balance,
threatened by increasing pressure to convert tropical
forests into croplands and a lack of economic options
for the region’s inhabitants. As a result, people in
this region have typically turned to the immediate
economic benefits of logging and clear cutting.
Alternative models exist: ones that anchor on the
link between creating sustainable economic wealth
and conserving the environment. “We entered the
world of environmental conservation as a result of
certain demand from our buyers,” says Eliseo, who
is also the general manager of the Asociación de
Productores de Cafés Especiales (A.P.C.E.) Mountain
Coffee, a 10 year-old coffee cooperative with more
than 450 members that has been a Root Capital
client for three years. “Because of that, we produce
organic coffee and sustainable coffee.”
The shade-grown organic coffee produced by
Mountain Coffee is planted among other, taller
trees, often alongside other subsistence or cash
crops; it can thus be incorporated into existing
farming and agroforestry systems or polyculture
production systems. A traditional shade-grown
coffee farm often resembles a forest because of
its many layers of trees, which support numerous
plant, animal, and bird species. Shade-grown
coffee trees also boast a longer productive life
than their sun-grown counterparts and can play a
role in helping farmers adapt to climate change:
recent studies reveal that shade canopy produces
a cooling effect of 3–7 degrees Fahrenheit, which
helps maintain product quality by offsetting rising
temperatures and pest outbreaks.
By linking economic opportunities with environmental
stewardship, Mountain Coffee is providing a positive
model for protecting the fragile biodiversity of the
Amazon. Increasing demand for specialty coffee
in global markets has clearly played an important
role. “The success of Green Mountain Coffee is
inextricably linked to the success of our farmers
and planet,” says Michael Dupee, Vice President of
Corporate Social Responsibility for Green Mountain
Coffee Roasters, Inc. “By purchasing Fair Trade
Certified organic coffee from environmentally and
socially responsible producers like Mountain Coffee,
we’re able to reduce our environmental footprint,
strengthen our value chain, and meet the burgeoning
demand for specialty coffee head on.”
At Mountain Coffee, credit and commodity
markets have led to economic development and
environmental conservation. Eliseo reflects, “If it
weren’t for the opportune financing we receive
from Root Capital, we might not be able to realize
our plan to foster quality, better organic production,
and social responsibility.”
Above: Eliseo Condor Ayre, Mountain Coffee’s
general manager and a small-scale producer of
shade-grown coffee.
Facing: Coffee cherries ripening on a tree.
CLIENT
A.P.C.E. MOUNTAIN COFFEE
COUNTRY
PERU
PRODUCT
COFFEE
LOAN TYPE
TRADE CREDIT
LOAN AMOUNT
$850K (2011); $600K (2010); $200K (2009)
PRE HARVEST CREDIT
$150K (2011)
AMAZON RIVER
BASIN
PERU
COFFEE AT A GLANCE
THE AMAZON BASIN AT A GLANCE
The specialty coffee industry is worth approximately
$60 billion worldwide. It is a primary export for many
developing countries, with as many as 25 million
people depending on coffee for their livelihoods
VALUE
Peru is one of the leading exporters of fair trade and
organic coffees
Biodiversity: the Andean mountain range and the Amazon Rainforest are home to more than
half of the world’s species of flora and fauna
Water resources: one-fifth of the world’s fresh water is in the Amazon Basin
Carbon sinks: in a normal year, the Amazon Rainforest absorbs 1.5 billion tons of carbon
dioxide and produces more than 20 percent of the world’s oxygen
Eighty percent of the world’s coffee is produced by
smallholder farmers
Shade-grown coffee contributes to the maintenance
of soil quality and habitats for numerous species of
plants, birds, and other animals
Mountain Coffee
Ecosystems: critical to agriculture, local livelihoods, and human health
THREATS
Deforestation at a rate of 20,000 square miles each year due to escalating pressure to
convert tropical forests into croplands
Expanding emissions of greenhouse gases from the region, potentially doubling current
emissions which are now about four percent of the world-wide total
Species loss
Contamination
Pollution and oxygen depletion in streams and rivers
Disruption of indigenous and traditional agrarian communities
ROOT CAPITAL PERFORMANCE DASHBOARD Q1 2011
For a complete review of Root Capital’s dashboard, please see our Quarterly Performance Report. This report is produced for all financial partners and supporters
and is available on our website at www.rootcapital.org/performance.
$24M/93/95/$47.5M/
105K/$171M/$134M/
21K/172K/30/
Loan disbursements
Borrowers
Farmers/Artisans reached
Female farmers/
artisans reached
Loans
Outstanding portfolio
Enterprise revenue
Hectares under
sustainable cultivation
balance
Enterprise payments
to rural producers
Rural producer
groups trained
ROOT CAPITAL IMPACT
Through our Lending program and Advisory and Training activities, Root Capital strengthens
rural small and growing businesses (SGBs). While our ultimate goal is to improve farmer
household income, our financing also strengthens local communities, promotes sustainable
landscapes, and increases the availability of commercial sources of capital.
Outputs: Capital and Financial
Training
We disbursed $24M to 93 rural SGBs and
trained managers from 30 enterprises
during Q1.
Enterprise Level Outcomes:
Small and Growing Business
Growth
In Q1, our borrower enterprises
generated $171M in revenue.
Household Level Outcomes: Higher/Stable
Incomes and Improved Livelihoods
Our clients purchased $134M in coffee, bananas,
cashews, cocoa, cosmetic ingredients, cotton, fisheries,
handcrafts, mango, rice, seeds, sesame, shea butter,
spices, and vegetables from 105,000 local suppliers
during Q1. On average, these purchases contributed
$1,285 to annual household income.
Community Level Outcomes: Sustainable
Landscapes and Gender Equality
In Q1, we supported approximately 21,000 women
producers. In addition, our clients managed nearly
172,000 sustainable hectares of agricultural, forested,
and wild-harvested land.
Capital Market Level Outcomes: Dynamic
Capital Markets and Rural Economies
In Q1, 37 percent of our borrowers accessed commercial
capital. Our clients also received $1.5M in co-investment
loans from our partner financial institutions.
For additional information, please go to www.rootcapital.org or email [email protected].
©2011 Root Capital. All rights reserved.