Partnership between NCBA CLUSA and El Salvadoran bank to boost struggling coffee sector with over $6 million in loans

elsalvador coffee stanley 500 47ff5elsalvador coffee stanley 500 47ff5[NCBA CLUSA’s Chief of Party for the USDA Coffee Rehabilitation Project Stanley Kuehn, center, signs an MOU with President Nora Lopez of Banco Hipotecario.]Partnering with local bank Banco Hipotecario in El Salvador, NCBA CLUSA’s USDA Coffee Rehabilitation and Agricultural Diversification Project established a guaranteed fund expected to give coffee farmers access to over $6.5 million in loans. Access to credit and finance has long been a struggle for the coffee sector, especially as coffee rust in the region has added additional risk to investments.

Banco Hipotecario, locally known as one of the largest mortgage banks in El Salvador, will offer financial products backed by a Guarantee Fund provided by NCBA CLUSA through the USDA Coffee Rehabilitation and Agricultural Diversification Project. The fund, totaling only $325,000, will reduce risk for the bank and support farmers' access to loans totaling $6.5 million USD for the coffee sector. With a small guarantee, financial access is multiplied.

“This is an initiative that embraces the spirit of the institution, which is to support the different productive sectors of the country, in particular, those economic activities that have great potential in productive growth as well as in employment generation, under the philosophy of comprehensive care of small and medium-sized companies,” said Nora Lopez, president of Banco Hipotecario.

For Lopez, investing in the coffee sector was a clear way to boost El Salvador’s economy. She is a member of her local chapter of Women in Coffee and before her time at Banco Hipotecario, was president of a coffee co-op with 600 member-owners.

“She believes in the model we are working with,” said Stanley Kuehn, NCBA CLUSA's Chief of Party for the USDA Coffee Rehabilitation project. The official partnership with Banco Hipotecario began with signing a one-year memorandum of understanding in April this year.

With loans from the bank, coffee growers will have the necessary funding for crop loans, revolving working capital, milling, land purchase, rust control, coffee farm investments, purchasing of machinery and equipment, pre-export financing and new plantings.
This initiative will open access to credit to accommodate coffee production and harvesting especially for farmers producing over 800 meters above sea level, where some of the finest high-quality specialty coffee is grown in regions such as Apaneca-llamatepec, El Balsamo-Quezaltepeque, Tecapa- Chinameca, Cacahuatique, Chinchontepec and Alotpec-Metapán.

“We feel it’s our responsibility in our society to support the coffee sector,” Lopez said.

These loans will allow coffee co-ops to invest in technologies and techniques, ultimately increase productivity for coffee and diversified products. Increasing access to financing and improved inputs is key to the sustainability of the sector.


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