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Setting up a service unit for smallholder farmers in Honduras

Neumann Kaffee Gruppe (NKG) is the largest coffee trading group in the world, providing services related to farm management, quality control, exporting and importing, logistics, risk management and financing. BECAMO, a member of the NKG, is currently the second-largest coffee exporter in Honduras, exporting approximately 15% of the country’s annual coffee production.

NKG proposed the establishment of a Smallholder Service Unit (SSU) at BECAMO that would allow smallholder farmers to gain access to a bundle of services to improve their livelihoods, build their asset base and establish greater resilience to external shocks—particularly resilience to threats related to climate change and to commodity price fluctuations. Services provided by the SSU to smallholder farmers include:

  • financing;
  • high-quality input supply, such as seedlings of high-yielding, resistant coffee varieties;
  • capacity building measures; and
  • access to markets, particularly to higher margin specialty markets more independent of coffee commodity price fluctuations.

NKG employed IPC to design the establishment of the SSU at BECAMO, with IPC experts ultimately designing and implementing a complete toolset for BECAMO with a strategy, business plan, analysis tools, organisational set-up, operational framework, credit risk policy, training material, IT systems, and a monitoring and evaluation mechanism for the SSU.

In order to do this, IPC conducted detailed field interviews with smallholder farmers, farming co-operative managers and other Honduran coffee value chain stakeholders to understand the characteristics of the local market. Based on this, IPC was able to establish profiles of typical BECAMO co-operatives and smallholder farmers, understanding their businesses (e.g., farm scale and productivity) and their levels of financial/technological literacy.

Following an institutional analysis of BECAMO that assessed the exporter’s existing products for farmers and existing staff capacity, IPC designed a framework for the SSU, along with a plan to support BECAMO in piloting and rolling out the SSU throughout Honduras.

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