IFC, partners to provide long-term loans to coffee farmers in Nicaragua

The International Finance Corporation (IFC) will be providing long-term loans to Nicaraguan coffee farmers to help them deal with the effects of coffee rust fungus that has been damaging crops and threatening their livelihoods.

IFC is partnering with Atlantic (a subsidiary of the coffee trader Ecom), Starbucks, the Inter-American Development Bank and the Global Agriculture and Food Security Program (GAFSP) for the initiative.

Out of the $30m worth loans to be issued under the project, IFC will invest $12m. Additionally, the Inter-American Development Bank (IDB) will also invest $12m apart from the $3m investment by both Atlantic and Starbucks.

The GAFSP Private Sector Window will help in lowering risks and the level of interest charged to farmers by providing a 25% first loss guarantee for IFC and IDB’s investment.

The disease is said to have originated in farms in Guatemala in 2010. Since then, close to 11 countries, including Mexico and Peru have been affected by it. Reportedly, Central American countries have been the most affected.

Ecom coffee and cocoa CEO Edward Esteve said: "This partnership will help us provide farmers not only with financing to replace old, diseased plants with disease-resistant varieties, but also technical assistance to help them make farming practices more sustainable."

According to IFC, in some countries the disease has affected nearly 70% of their plantations.

The project aims to support around 500 of the affected farmers and will provide newer varieties of coffee that will be resistant to the fungus.

IFC Director for Manufacturing, Agribusiness and Services Alzbeta Klein said: "Small farmers are particularly vulnerable to the effects of La Roya, as they cannot access financing to purchase new plants and provide working capital to offset lost income for the years required for new plants to mature and produce income.

"In partnership with industry and with donors through the Global Agriculture and Food Security Program, we have developed a creative way to provide long-term financing farmers need."