Challenges and existing solutions for smallholder farmers in Latin America.

1. Next generation partnerships in Latin America
to bring more positive impact to farmers
Business Seminar
Sustainability - Lessons Learned in Latin America
Geneva, October 10, 2017
Inès Burrus
ines.burrus@hesge.ch
1

2. Why do we
care?
Questions
Agenda
2
Which
challenges do
farmers
face?
Which
solutions exist
to tackle
them?

3. 3
Which challenges do
farmers face?
Which solutions exist
to tackle them?

4. PESTEL Framework
Farmer
Buyer Network
Primary
Processing
Politics
Economy Legal
Environment
Technology
Social
Warehousing
Merchandising
Export, shipping
& distribution
Manufacturer
Physical supply chain management
Price and performance risk management
4

5. 5
Abuse of power
Corruption
Political instability
Insecurity &
violence
Politics Corruption Perception Index
(Transparency International 2016)Very CleanHighly Corrupt

6. Coffee or Coca?
• Leaf rust affected 50% of the crop in 2013 (GAIN 2017).
• Since 2012 Drug Control National Strategy by the
govt incl. renewal of 80’000 ha of coffee (GAIN 2017).
• Production’s forecast 2017/2018 + 7% (GAIN 2017).
• Coca plantations: 42’000 ha in 2014 à
40,300 ha in 2015 (-6.1%) (UNODC 2016b).
• Price of coca leaves: US$ 3.7/ kg in 2014 à
US$ 3.2/kg in 2015 (-13.5%) (UNODC 2016b).
PERU
• Drought and leaf rust in coffee regions.
• Switch to coca: more drought and pest-resistant.
(Boucher 1991)
• Coca plantations: 69’000 ha in 2014 à
96’000 ha in 2015 (+ 39%) (UNODC 2016a).
• Price of coca leaves: US$ 1.07/ kg in 2014 à
US$ 1.09/kg in 2015 (+ 39.5%) (UNODC 2016a).
COLOMBIA
6
(Credit: Arboleda 2014)

7. Coffee vs. Gangs Project
ELSALVADOR
• Partnership: Kenco with the NGO Fundes
• Since 2014: « best possible chance of a new life ».
• Training of 20 young people to become coffee
farmers.
• «The first students are now building businesses of
their own, backed by funding from Kenco. We are
now in our 3rd year of the programme» (Kenco 2017).
HONDURAS
7
59.1
2016 homicide rate
per 100’000 persons
(Reuters 2017)
(Kenco 2016)
(Bargent 2014)

8. 8
Farm
management
Farmers’
revenues
Farmers’ costs
Farmers’ net
income
Lack of diversification of revenue streams.
.
Price fluctuations and currency risk impacting producers’ livelihoods.
Farming not perceived as an attractive economic activity.
Distortions in the New York terminal market, opportunistic market forces.
Difficult to invest in farm.
No minimum wage/ living income: 40% of coffee farmers in Nicaragua under the poverty line (Beuchelt & Zeller 2011).
Economics (1)
Lack of management and sustainable farming skills to produce more with less and understand quality requirements.
Limited land, low yields, low productivity growth.
High production costs.
High transportation costs.
High labour costs.
Low farm margins.
Coffee Price Fluctuations
(ICO 2016)

9. Coffee Profitability 9
ELSALVADORCOSTARICA
• Negative operating profits over the past
decade.
• Drop in revenues due to low yields and low
prices in years 2012/13 to 2014/15 (ICO 2016).
• Outbreak of coffee leaf rust
• Switch from coffee to cocoa, more attractive.
• Negative operating profits in recent years.
• Increasing rate of urban expansion in Central
America.
• Financial pressure to producers to sell their
land for development.
(ICO 2016)

10. 10Reduce dependency on agrochemicals
Fazenda da Toca: 2’300 ha
Agenda Götsch
• Large scale agroforestry systems
• No irrigation, reduced demand for input: no need for fertilization after 2-3 years.
• Improved crop resistance and resilience.
• Soil restored via horticulture and fruit production. « Water can be planted »
• 70 to 80 ton of food per ha / year.
• System can be adapted to 80% of Brazilian lands.
BRAZIL
Lago Oeste, Brasilia
Ernst Götsch
(Credit: Agenda Götsch 2015)

11. 11
Linkage to
market
Financial
inclusion
Financial literacy
Lack of entrepreneurship skills.
Negotiation skills.
Marketing skills.
Access to financial infrastructure, services.
Access to financial products: insurances, loans, savings account.
Seasonal cash flow of agricultural income, financial risks.
Access to market information.
Non-existent or weak cooperatives.
Product transformation skills.
Economics (2)
(Credit: ANDINA 2015)

12. Microcredit gaps
High administrative
burden
Paperwork
Intermediaries
Collaterals
Access to insufficient
capital
Not taking into account
infrastructure costs,
Land price
High interests rates
Not attractive
Unreasonable
payback period
Missaligned with agri.
production cycles
Circa 1 year
Advisory & Monitoring
Lack of follow-up in agronomy
and finance to min. risks
12

13. Blockchain Microfinance by Everex 13
Necessary to assess interest rates, loan periods
and risk, based on user behavior, social data,
and spending patterns.
Automatically generated credit scores
Affordable instant access to micro-
credit and global fiat transaction
services.
Mobile devices
Collection of user data.
Mobile wallet application
51% Adults with an account in 2014 (Demirguc-Kunt et al. 2015).
Account penetration in Latin America
Request micro-loans in any
currency, anywhere, from
mobile phones.
Micro-loans
« Everex enables you to transfer, borrow, and trade in any fiat currency, anywhere. No Bank account required.
With settling times below 30 seconds, transaction costs of a few cents, and global support,
the world’s markets are in the palm of your hand »(Everex 2017).

14. 14
Social
Gender issues
Livelihood
resilience
Education
Aging population
High levels of illiteracy: in Colombia 16.8 % of farmers > 15yrs (DANE-CNA 2014).
Inequalities
Lack of vocational training.
Discrimination, lack of access to financial services.
Decision-making.
Access to health services, electricity, water and sanitation, road network.
Food security and nutrition.
Cultural norms and low social status.
Lack of quality education, low school attendence.
Youth distress migration. In Colombia a painter earns 2* the revenue of a coffee farmer (DANE-CNA 2014).
Increasing number of people dependent on one farmer.
Labour scarcity.
(Credit: Robinson 2010)

15. Generational disruption testimonies 15
Mr. C.
52 yrs dairy farmer
Mrs. M.
22 yrs
physiotheray
student
Daughter
Pirhuas
Bolivia
Mr. M
52 yrs dairy farmer
(Leavy & Hossain 2014)
At times [people] eat well and at times no,
when you grow old it is worse; for this, we
don’t wish that our children become
farmers.
Because of this, I think that the people of
the countryside will cease to produce, this
is already happening, they don’t manage to
live well, they suffer. I have seen it since I
was a child, starting with my father. In the
city, it is good to work and live here. This is
my dream.
To continue as a producer these days,
there would have to be a rent, we don’t
have retirement, there is no insurance for
the elderly, the dignity bond [old age
pension] isn’t enough to live. Now there
isn’t this care of the parents by their
children (…).

16. Nespresso Retirement Program 16
Pilot in
Caldas
COLOMBIA
Farmer Future Programme: facilitates the generational
transfer of farms, ensuring opportunity for young people in
coffee producing regions.
• 2014: public-private-partnership: Fairtrade Intl, Aguadas
cooperative, Expocafé, the Colombian Government, &
FNC.
• Retirement fund for coffee farmers in the Nespresso
AAA Program.
• Works through the AAA - Fairtrade coffee bought by
Nespresso to the farming communities in Caldas.
• Payments made into farmers’ savings accounts:
blocked until retirement age.
• 800 farmers signed up.
• Aspiration to extend to 40’000 AAA coffee farmers.
53 average age of coffee
farmer in Colombia
20%
of what farmers invest
matched by the Colombian
government on a yearly basis
(Nespreso 2017)
(Credit: PT’s Coffee 2017)

17. 17
Technology
Access to internet
Access to energy
Lack of reliable data
Data collection &
analysis skills
« Imagine remote sensors sending data to a
digital dashboard that shows real-time analytics
on soil temperature and moisture levels;
drones flying overhead capturing high-
resolution thermal and visual images that show
yield variation row-by-row;
iPhone notifications telling you the optimal
time to apply fertilizer, where it’s most needed,
and its estimated effect on this season’s harvest
and on your bottom line. » (Foote 2016)
Outdated machinery
Low uptake of innovation
& technology

18. 18
High cost of
high-tech tools
Precision farming for family farmers?
FARMBEATS
Artificial
intelligence
• Compares aerial photos sensors’ data.
• Soil characteristics maps.
• Cheap soil sensors at few
patches around the farm.
• Connect to the internet in
remote rural areas through
unused television channels.
• Big picture of the farm
• No drones needed, helium
balloon-mounted smartphone
(Baragona 2017)
• Microsoft research project.
• AI and big-data technology to small-scale farms.
• Tests in US and India.
• System < $ 100.
(Credit: Microsoft)

19. 19Environment
Unproductive & aging
trees
Access to water, usage,
treatment & pollution
Agrochemicals, health
risks
Climate change
Loss of biodiversity
Deforestation
Plant nutrition & soil
fertility
Pests & diseases
(Credit: Blue VJ 2017)

20. 2020
Puerto Rico
Hurricane Maria: #YoNoMeQuito
• Sept. 20, category 4 storm.
• 16 persons died (Pitt 2016).
• 3.4 million people on the island left without power and water (Pitt 2017).
• In a matter of hours 80% of the crop value wiped out (Robles & Ferré-Sadurni 2017).
• Loss of $780 million in agriculture yields (Robles & Ferré-Sadurni 2017; Sheetz 2017).
PUERTORICO
Farms (USDA 2014)13,159
Farms with crop insurance
(Ortega Marrero 2017 )
3,500
(Almukhtar et al. 2017, National Oceanic and Atmospheric Administration,
Cooperative Institute for Research in the Atmosphere)

21. Insurance coverage 21
Not accessible to livestock
farmers
< 1yr coffee plantation not covered
Max. 1 plantation per farm covered
01
02
03
(Credit: Héctor Alejandro Santiago
In Associated Press 2017)
Honduras
Corporacion de Seguros Agricolas –
Departamento de Agricultura:
• Only alternative to secure crops for some
farmers.
• No private insurers that offer policies to this
agricultural sector.
• Insurance coverage obligatory to get
governmental incentives.
• Limitations of the insurances policies.
(Ortega Marrero M 2017)
PUERTORICO

22. 22
Legal
Land tenure
Logging
Labour conditions
Policies /
interventions
(Noth 2012)

23. Land title fraud 23
Honduras
Officially to register land10 months
In reality6 years
60 % Undocumented land (Chavez-Dreyfuss 2015).
The Honduran Property Institute:
• Corruption and mismanagement (Transparency International 2014)
• Abuse of power: “politicians using land titles to buy votes
from impoverished citizens.” (Transparency International 2014)
• “The country’s database was basically hacked. So
bureaucrats could get in there and they could get
themselves beachfront properties.» (Chavez-Dreyfuss 2015).
• 400 staff members fired (Transparency International 2014).
HONDURAS
(Credit: Jose Elvir 2017)

24. 24
Access to Land Rights
HONDURAS
Contracts without relying on institutions
Better visibility of collaterals
Enhanced access to credit
01
02
03
• Project with US company Factom & Epigraph.
• Blockchain technology to build a permanent and
secure land title record system.
• Land claims registration (Sutherland et al. 2017).
• Assets registration (eg livestock) (Chinaka 2016).
• In 2015 project has stalled due to political
roadblocks (Kirby 2015) .

25. Questions?

26. Thank You
26
Inès Burrus
ines.burrus@hesge.ch

27. References (1) 27
Agenda Götsch (2015) Da horta à floresta – From garden to forest. https://www.youtube.com/watch?v=C7h-JbaJjn4
Almukhtar S, Bloch M, Fessenden F, Jugal K Patel (2017) Maps: Hurricane Maria’s Path Across Puerto Rico
https://www.nytimes.com/interactive/2017/09/18/world/americas/hurricane-maria-tracking-map.html
Baragona S (2017) Small Farm, Meet Big Data
https://www.voanews.com/a/agriculture-technology-small-farms-big-data/3918239.html
Beuchelt TD, M Zeller (2011) Profits and poverty: Certification's troubled link for Nicaragua's organic and fairtrade coffee producers.
Ecological Economics 70(7):1316-1324.
Boucher DH (1991) Cocaine and the Coca Plant. BioScience 41(2): 72-76.
Chavez-Dreyfuss (2015) Honduras to build land title registry using bitcoin technology.
http://in.reuters.com/article/usa-honduras-technology/honduras-to-build-land-title-registry-using-bitcoin-technology-
idINKBN0O01V720150515
Chinaka M (2016) Blockchain technology- applications in improving financial inclusion in developing economies. Case study for
small scale agriculture in Africa. Master of Science in Management Studies at the Massachusetts Institute of Technology.
DANE-CNA (2014) Caracterizacion de los productores residentes en el area rural dispersa censada.
http://www.dane.gov.co/files/CensoAgropecuario/entrega-definitiva/Boletin-2-Productores-residentes/2-Presentacion.pdf

28. References (2) 28
Demirguc-Kunt A, Klapper L, Singer D, P Van Oudheusden (2015) The Global Findex Database 2014. The World Bank Group.
http://documents.worldbank.org/curated/en/187761468179367706/pdf/WPS7255.pdf#page=3
Everex (2017) Blockchain-Powered Money Transfers And Microfinance Services https://www.everex.io
Foote W (2016) Can Silicon Valley's Big Bet On Agriculture Help Small-Scale Farmers In Developing Countries?
https://www.forbes.com/sites/willyfoote/2016/03/16/can-silicon-valleys-big-bet-on-agriculture-help-small-scale-farmers-in-developing-
countries/#175d08851648
GAIN (2017) Coffee Annual : Peruvian Coffee Production Bouncing Back.
https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Coffee%20Annual_Lima_Peru_5-3-2017.pdf
ICO (2016) Assessing the economic sustainability of coffee growing
http://www.ico.org/documents/cy2015-16/icc-117-6e-economic-sustainability.pdf
Kenco (2016) Coffee vs Gangs [Official TV Advert – 30’’] https://www.youtube.com/watch?v=GkyxpuSd5u4&feature=share
Kenco (2017) Coffee vs gangs. https://www.coffeevsgangs.com
Kirby P (2015) A humble update on the Honduras Title Project
https://www.factom.com/blog/a-humble-update-on-the-honduras-title-project
Leavy J, N Hossain (2014) Who Wants to Farm ? Youth Aspiration, Opportunities and Rising Food Prices. IDS Working Paper 439.

29. References (3) 29
Nespresso (2017) Project Backgrounder.
https://www.nestle-nespresso.com/asset-library/Documents/Nespresso%20Project%20Backgrounder%20-
%20AAA%20Farmer%20Future%20Program%20-%202014.pdf
Ortega Marrero M (2017) Las opciones de seguro son escasas para el sector agrícola.
https://www.elnuevodia.com/noticias/locales/nota/lasopcionesdesegurosonescasasparaelsectoragricola-2358353/
Pitt D (2017) Farmers say Maria wrecked bright spot of Puerto Rico economy.
http://www.chicagotribune.com/business/ct-hurricane-maria-puerto-rico-economy-agriculture-20170929-story.html
Reuters (2017) Honduras murder rate falls slightly in 2016 – report.
http://uk.reuters.com/article/uk-honduras-violence/honduras-murder-rate-falls-slightly-in-2016-report-idUKKBN17S2YR?il=0
Robles F & L Ferré-Sadurni (2017) Puerto Rico’s Agriculture and Farmers Decimated by Maria.
https://www.nytimes.com/2017/09/24/us/puerto-rico-hurricane-maria-agriculture-.html?mcubz=0
Sheetz M (2017) Hurricane Maria wiped away around 80% of Puerto Rico’s agricultural industry
https://www.cnbc.com/2017/09/25/hurricane-maria-wiped-away-about-80-percent-of-puerto-ricos-farming-industry.html
Sutherland WJ et al. (2017) A 2017 Horizon Scan of Emerging Issues for Global Conservation and Biological Diversity. Trends in
Ecology and Evolution 32(1):31–40.

30. References (4) 30
Transparency International (2014) Honduras : Beating Corruption in Land Registration.
www.transparency.org/news/feature/honduras_beating_corruption_in_land_registration
Transparency International (2016) Corruption Perception Index.
https://www.transparency.org/news/feature/corruption_perceptions_index_2016
UNODC (2016a) Colombia Monitoreo de territorios afectados por cultivos ilicitos 2015.
https://www.unodc.org/documents/colombia/2016/Julio/Censo_Cultivos_Coca_2015_SIMCI.pdf
UNODC (2016b) Peru Monitoreo de territorios afectados por cultivos ilicitos 2015.
https://www.unodc.org/documents/crop-monitoring/Peru/Peru_monitoreo_coca_2016.pdf
USDA (2014) 2012 Census of agriculture. Puerto Rico. Island and Municipio Data.
https://www.agcensus.usda.gov/Publications/2012/Full_Report/Outlying_Areas/prv1.pdf

31. Pictures 31
Agenda Götsch (2017) Ernst Götsch. http://agendagotsch.com/pt/ernst
ANDINA (2015) Peru, financial inclusion model for Latin America, says AFI.
http://www.andina.com.pe/ingles/noticia-peru-financial-inclusion-model-for-latin-america-says-afi-579044.aspx
Arboleda R (2014) AFP/Getty Images http://time.com/3855670/cocaine-surge-usa/
Associated Press (2017) Farmers say Maria wrecked bright spot of Puerto Rico economy.
http://www.dailymail.co.uk/wires/ap/article-4932190/Farmers-say-Maria-wrecked-bright-spot-Puerto-Rico-economy.html#ixzz4uelgGzUn
Bargent J (2014) Hidden Meaning of Honduras Mara Gang Tattoos Explained.
http://www.insightcrime.org/news-briefs/hidden-meanings-honduras-mara-gang-tattoos
Blue VJ (2017) Puerto Rico’s Agriculture and Farmers Decimated by Maria.
https://www.nytimes.com/2017/09/24/us/puerto-rico-hurricane-maria-agriculture-.html?mcubz=3
Elvir J (2017) Partnering to deliver land titles justice in Honduras. http://www.partnersworldwide.org/land-titles-justice-honduras/
Noth P (2012) Limited government, next 600 miles. New Yorker Cartoons.
PT’S Coffee (2017) Farmer Profile Rigoberto Herrera. http://ptscoffee.com/farmers/rigoberto-herrera
Robinson P (2010) Land Ownership, Guatemala and a History of Agrarian Struggle.
https://smallfarmersbigchange.coop/2010/12/10/land-ownership-guatemala-and-a-history-of-agrarian-struggle/