As aid to Haiti slows, a private coffee co-op scores loans and turns heads(Read article summary)
COOPCAB, a Haitian coffee co-op that now includes 5,000 members, markets its products internationally while investing money in local reforestation efforts.
On the third anniversary of the quake that killed nearly 300,000, a growing coffee co-op is writing its own success story with loans and homegrown management.
Haiti can seem like a place where relief efforts lead only to more disasters, especially in the agricultural sector. Though 70 percent of Haitians are farmers, 60 to 70 percent of the countryâ€™s food is imported due to reduced tariffs designed to lower food prices. Meanwhile, further natural disasters have hindered recovery efforts and the Clinton Bush Haiti Fund has announced that it is winding down operations, removing an important source of funding.
At the same time, American lawmakers recently extended farm legislation, including subsidies that allow U.S. agricultural imports to undercut the prices of local Haitian products, which are often produced using centuries-old farming techniques.
This is why agricultural lender Root Capital is providing loans and consulting expertise to COOPCAB, a Haitian coffee co-op that markets its products internationally while investing money in local reforestation efforts that improve its own production. The cooperative, which has expanded six-fold under Root Capitalâ€™s guidance, now includes 5,000 members and has attracted the attention of dignitaries such as Paul Altidor, U.S. ambassador to Haiti.
Managing COOPCAB comes with its own set of challenges. Meeting them requires a model that creates local business leaders rather than simply employing foreign relief workers. Root Capitalâ€™s Willy Foote explains:
"COOPCAB ... is managed by local Haitian farmers with little formal training in financial management and accounting. ... As a consequence, weâ€™ve had to innovate and hone our business model in Haiti, slowing our lending in the short term while accelerating and deepening our financial advisory services program."
Perhaps it is this emphasis on training that has made COOPCAB more successful than similar efforts. Critics complain that Haitian farmers focus too heavily on short-term projects, preventing long-term success. They point to the Federation des Associations Cafetieres Natives, a coffee co-op that received $10 million in investment but failed to produce sustainable profits. The brand now exists on paper only.
Government bureaucracy and outdated farming methods also stand between Haitians and their success. There is the story of Steeve Khawly, a rice importer who tried to bring commercial rice milling to Haiti. Because Haitian farming is less efficient than modern practices in developed countries, local farms did not produce enough local rice to make Khawly's effort profitable, so he packed up his mill and sent it back to Guyana.
He still believes that rice production in Haiti could exceed 160,000 tons per season if agricultural practices were modernized, but this would require large inflows of capital and the strengthening of supply chains. However, when commercial producers Riceland Foods tried to move production to Haiti, they ran up against impenetrable red tape, foreign policy reports, and eventually gave up.
There are signs of hope, however. Soon, Haitian entrepreneurs may find new opportunities to replicate COOPCABâ€™s model, as Ambassador Altidor has asked Foote to help advise formal policy decisions. Haitian minister of agriculture Thomas Jacques also plans to create a rice commission focused on increasing domestic production through the creation of "technology packagesâ€ť for farmers.
Without further access to capital and a government that simplifies the investment process, agriculture in Haiti canâ€™t succeed. However, to transform Haiti from an aid-dependent economy to a market-driven one, startups also need to have good business sense. COOPCABâ€™s emphasis on training producers to be businessmen and letting local Haitians take the lead points to a model that other startups and social enterprises could emulate.
â€˘ Learn more about COOPCAB at its website.