In a recent blog entry, we discussed Central America’s coffee market and how the WBCSD-SNV Alliance is investigating ways to professionalize the Honduran coffee production with a view to improving its competitiveness.
But coffee is also a focus of the Alliance’s work in Peru, thanks to Perales Huancaruna S.A. (Perhusa), the country’s leading coffee exporter that accounts for around 30% of total coffee exports, for an equivalent of roughly US$ 150 million, and a volume of 855’000 qq for the year 2005 (1 qq = 46 kg). In coordination with the Alliance, Perhusa is setting up an inclusive business that will improve the commodity’s quality and traceability, and will in turn provide increased incomes for small producers.
Only about a quarter of the 150’000 Peruvian coffee producing families are organized and have direct access to export markets for special types of coffee through cooperatives and other associations supported by the funds of international cooperation entities. This means that more than 100’000 families have difficulties accessing export markets, with their dependency on local intermediaries yielding much lower prices than the average export rates.
Given that the coffee market has started to place new demands, especially related to quality and traceability, Perhusa is engaged in efforts to replace its traditional intermediary channels and instead link itself directly to small producers. The company has prioritized direct brokering with small coffee producers in the Amazonas, Cajamarca and San Martin regions, located in northwest Peru, thereby contributing to improving its own and its suppliers’ competitiveness.
Other key stakeholders of this initiative include the Corporación Financiera de Desarrollo (COFIDE) from the government side, which is interested in facilitating the farmers’ access to credit; the Multilateral Investment Fund of the Inter-American Development Bank as well as the Corporación Andina de Fomento, which are interested in co-financing the initiative; and local capacity builders and business solutions providers for technical assistance and technologies (Caritas, Caja Sipán and the Peruvian Consortium of Private Organizations for the Promotion of micro-and small and medium enterprises, COPEME).
Perhusa has been a pioneer in organic coffees since 1991, developing new technology for the production and processing of the coffee with an aim to increase its quality and sustainability. All-round farm management and monitoring practices have strengthened the relationships with these coffee producers.
Directly linking small coffee producers with large exporting companies that have a safe and sustainable market access usually results in better prices for the producers, in addition to facilitating their access to technical assistance and credit for investments.
In this particular initiative, the Alliance expects, within a three year period, to increase by at least 50% the income of 3’000 coffee producing families in the abovementioned regions by favoring their sustainable insertion into the market thanks to their direct link to Perhusa. This would be coupled to an effective access to financial and non-financial services and investment.
According to Ricardo Huancaruna, Managing Director at Perhusa, “the opportunity to work with small producers and obtain mutually beneficial results in terms of profit and cost‑cutting is an alternative that we hope to continue to explore in the future.”
With Perhusa fully committed to the success of this inclusive business, the Alliance is currently developing the project for investment.
More information
For more information on the Alliance’s work in the coffee sector in Peru, please contact José Luis Segovia, National Business Facilitator, or Manuel Fernandini, SNV Peru.
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