For the past three months I’ve had the pleasure of working with an exciting new Kiva partner.  PAC (Association for People in Community Action) is an agriculturally focused economic development organization in Nicaragua.  They specialize in rural productive value chain integration by offering their clients three primary services: loans, technical assistance, and access to markets.
PAC's Logo

PAC offers microcredit to meet a variety of agricultural needs.  Kiva is beginning their partnership with PAC by supplying loan capital to support coffee farmers.  Kiva loans will generally follow the following three themes:
  1. Coffee Production & Maintenance.  Loan capital under this theme helps farmers increase their crop yields by enabling them to obtain products and labor needed to clean and conserve fields, improve water delivery systems, prune branches, fertilize soil, plant trees to shade coffee plants, and much more.
  2. Field Renewal.  These loans enable farmers to swap out old unproductive plants for new ones.  New plants generally take three to five years to reach full coffee producing capacity, as such, loan repayment terms are structured over multiple years to match the borrower’s repayment capacity. 
  3. Agricultural Infrastructure.  These loans are catered towards medium sized farm owners for the purpose of investing in farm assets such as water filtration systems and coffee bean drying equipment.  Infrastructure loans are structured with longer repayment terms since loan amounts are generally higher than normal.
Technical Assistance
In conjunction with loans, PAC also offers technical assistance to clients.  This service is essentially agricultural consulting in which PAC’s team of experts educates clients regarding best practices, technical knowledge, business strategy, and risk mitigation. 
Access to Markets
PAC’s market access services link their clients to buyers and help them obtain higher prices for their crops.  Higher prices are generally realized through assisting farmers in obtaining various certifications for organic and/or sustainably grown products, such as Fair Trade, 4C, and Starbucks’ C.A.F.E Practices. 

Through their comprehensive model, PAC empowers borrowers with the knowledge, resources, and connections that lead to sustainable success.
PAC assists farmers in obtaining various certifications, including Fair Trade

Kiva’s partnership with PAC is highly catalytic because available capital in Nicaragua’s agricultural sector is extremely limited due to historical risk.  This reality is a lingering effect of Nicaragua’s 2008 microfinance crisis known as the “No Pago” (“I won’t pay”) movement.  The movement encouraged rural borrowers to stop repaying their loans and the resulting impact on Nicaragua’s microfinance industry was devastating.  Due to widespread default, many international investors elected to pull funding from the country, most notably from the agricultural sector.  The lack of foreign capital caused some of the most prominent microfinance institutions in the country to go bankrupt.  Although the microfinance climate has improved in Nicaragua, international capital is still scarce.  Kiva is one of the few organizations that have remained invested in the country throughout the crisis and views funding of agricultural loans in Nicaragua as a catalytic opportunity to help where help is needed most.   
Meet Elba, the first-ever Kiva borrower posted by PAC!
Elba on her coffee farm

Elba is 47 years old and lives with her husband and six children on a small coffee farm in rural Nicaragua. She makes a living growing coffee with her family, which has been their main source of income for more than five years. They also plant basic grains for their own family consumption. Elba's farm is Fair Trade certified, which proves its compliance with economic, worker, and environmental criteria required by the certification.  Elba’s 2012 / 2013 harvest cycle was diminished due to the spread of the Roya Fungus (coffee-leaf rust) in the country, which is a disease that has had a devastating impact on coffee production in the region.  Reduced production along with the fall of coffee’s market price has diminished her liquidity. She has decided to request a loan to take on a comprehensive farm management plan. With the loan capital she will be able to invest in the purchase of preventative and restorative fungicides as well as supplies to fertilize her coffee farm in order to achieve stability in her production. Elba is sure that with dedication and perseverance she and her family will be able to stabilize and increase their production in the coming years.
As evidenced by Elba’s story, an additional challenge currently facing many borrowers in PAC’s coffee portfolio is the spread of Roya.  Roya is a fungus that has had a crippling impact on coffee production throughout Latin America this past harvest season.  Many farmers I’ve interacted with have lost over half of their 2012 / 2013 harvest, as such, it is evident that loan capital is extremely vital to help combat the fungus and stabilize future production. 
Coffee farm in rural Nicaragua

Nicaragua’s productive agricultural potential is extremely high due to fertile land and an ideal climate for a wide variety of crops.  In reality, however, the country’s agricultural industry is plagued by underperformance caused by a lack of expertise, technology, and infrastructure generally due to the absence of capital.  Kiva is excited for the opportunity to support PAC in its work to provide farmers with the resources needed to improve production and spark economic development.
Your help is needed!  Loan capital is critical to improving Nicaragua’s agricultural industry and PAC is an organization that truly takes an effective, all-encompassing approach by empowering their clients with the tools necessary to succeed.  You can help the cause by lending to PAC’s borrowers by clicking HERE (keep checking if there are no loans available as PAC will be regularly posting new ones).
You can also keep up with future lending opportunities and connect with other lenders who support PAC by joining PAC’s Lending Team on HERE.

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