Financing Fair Trade Coffee from Haiti -- Willy Foote, Root Capital

Willy Foote, Founder and CEO of Root Capital, with a Haitian rooster

Willy Foote, "non-profit" lender to one-acre farmers and grower coops, is as often seen with a guitar in his hand as a calculator, lyrically praising the virtues of impact investing to end rural poverty. Promising investors 1-3% interest (below market rates) on 3-year loans, Cambridge-based Root Capital has made millions in loans to strengthen groups of small-scale rural producers in countries across Sub-Saharan Africa and Latin America. After the earthquake, Willy traveled to Haiti to see if Root Capital's model could help Haiti recover, and has written his reflections here.

"I was keenly aware that one of the greatest challenges to Haiti's development has been the lack of a strong agriculture sector. Agriculture accounts for 25 percent of GDP and 51 percent of employment – yet transportation and agriculture combine to account for less than 1 percent of total bank credit extended in Haiti.

"Six months after the earthquake, which caused damage worth an estimated $7.9 billion (160 percent of the country’s GDP), Root Capital staff and I made site visits across most corners of Haiti assessing the need for our capital and financial training services and identified significant demand for export finance in coffee, mangos, and handcrafts.

"On December 20, we disbursed our first loan to a small and growing business in Haiti. Founded in 1999, the Fair Trade certified Coffee Growers Cooperative of Belle Anse (“COOPCAB”) is a network of nine coffee cooperatives with 4,000 members located in Thiotte, in the southeast region of Haiti. Our $150,000 loan will allow COOPCAB to purchase approximately two shipping containers of coffee from its smallholder farmers for export to its primary buyer in Japan. In addition to providing much needed income to members, the cooperative will also contribute to the region’s economic growth by funding school fees for children and a new medical center.

"From an environmental perspective, COOPCAB’s success translates into landscape preservation. In a country where only 1.5 percent of the total area is forested, the production of coffee is very important, for coffee trees require shade from other trees. COOPCAB delivers 120,000 tree seedlings to its members annually in order to renew coffee fields.

"USAID's 2009 report, A Guide to Economic Growth in Post-Conflict Countries notes that access to credit is often one of the most challenging components of reconstruction. However, the report also observes that 'Farmers are the most commonly found entrepreneurs in low-income post-conflict countries... Agriculture frequently offers the most promising immediate source of livelihood for the majority of the population in post-conflict countries; for this reason, it is a critical aspect of early recovery efforts.' Root Capital's early-stage work in Haiti offers potential to deliver post-disaster financial services where they are needed most."

Supporting Fair Trade growers strengthens the local community because buyers pay a higher price for product above world market prices, including a "social premium" that is returned to the worker's cooperative for investment in production equipment or local projects. The cooperatives must meet rigorous standards to receive the Fair Trade imprimatur, including fiscal accountability, democractic decision making processes, and progress towards environmentally sustainable growing practices. To learn more about Root Capital see www.rootcapital.org

To see a coffee cooperative supported by Root Capital, and hear Willy Foote talk and sing about investing in small businesses for an environmental, social and economic impact watch