Building farmers’ resilience in Peru
From 2016 to 2019, we supported Root Capital’s efforts to tackle rural poverty in Peru by providing access to capital, skills and markets for 62 small agricultural businesses, all cooperatives. These enterprises fall in the so-called “missing middle”, being too large to be eligible for microfinance, but too small and risky to attract commercial bank investments. Supporting the environmentally-friendly growth and development of these cooperatives benefitted 33,500 family farmers that work with them as suppliers and a total of over 165,000 individuals.
Smallholder farmers account for the majority of the world’s extreme poor. They are often unable to access resources and services and - lacking adequate skills - may have no choice but to adopt short-term survival tactics that trigger environmental degradation which in turn affects their livelihoods. Root Capital’s mission is to tackle this vicious circle.
The programme granted loans to small rural enterprises, all farmer cooperatives and associations that are too big for microfinance, but generally too small and risky to secure credit from conventional commercial banks, falling into the so-called “missing middle”. This financial assistance came with agronomic training and financial advice on how best to use the loans, supported by critical market connections. Access to credit helped these businesses grow and strengthen their supplier base, boosting family farmers’ productivity and incomes.
In three years:
- 62 rural cooperatives received loans and financial advice from Root Capital, enabling an average 27% increase in revenue. The cooperatives were able to pay their farmers on time at harvest and to invest in new machinery to uphold quality and certifications.
- Over 33,500 individual smallholder farmers (6,329 of them women) improved their revenue by 16%, improving the living conditions of over 165,000 family members.
- The 62 cooperatives operate in areas that are under critical threat from climate change. Root Capital’s credit enabled them to increase their climate resilience through organic farming, reforestation or diversified farm plots, and to manage 52,115 hectares sustainably. 36 cooperatives in particular have demonstrated a strong commitment to environmental stewardship, becoming true “climate-smart champions”.
Root Capital modified its lending strategy over the three years of the programme to deepen its financial support for cooperatives that are already a part of its network, rather than concentrating solely on increasing the portfolio of rural businesses served. The achievements of this increased focus and commitment led us to renew our support for a further three-year period.