Photo: Small Farmers in Latin America Get Boost
The Inter-American Development Bank (IDB) has closed a $3.6 million loan to provide access to finance for smallholder producer groups and farmers associations in nine Latin American countries through a loan to the “Fund for Small Small Rural Producers in Latin America” or “Fondo para los Pequeños Productores en América Latina (FOPEPRO).”
The loan to FOPEPRO is comprised of $2 million from IDB’s Opportunities for the Majority initiative and $1.6 million from social investors Deutsche Bank Trust Company Americas, Calvert Foundation and Monarch Community Funds. The IDB acted as the lead arranger and book runner for the transaction.
FOPEPRO is the first private, locally managed investment fund of its kind in the smallholder agricultural sector in Latin America. Although the Fund will initially target producer groups in Bolivia, Colombia, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Peru and Paraguay. If FOPEPRO exceeds its funding goals, there are plans to further scale the Fund’s activities throughout the region, so as to better serve the vast unmet financing needs of small rural producers.
Headquartered in El Salvador, FOPEPRO is seeking to raise a total of $20.5 million to finance onlending credit lines and investment loans to organized farmer cooperatives and associations. This market that has been traditionally underserved in the Latin America since many financial institutions lack the expertise to mitigate the risks in agricultural lending – from seasonality of the production cycle, weather risk, geographic disparity of clients and lack of physical collateral.