Let's talk about Norcafé, a coffee cooperative in Peru.

October 7, 2021

A key component of Kiva's efforts to connect people throughout the world is to partner with other trustworthy, high-impact organizations. We connect you with entrepreneurs in 65 different countries around the globe, and the truth is, we couldn’t do it without the help of our Field Partners.

The Field Partners we connect with are microfinance institutions or social enterprises. We make these connections through the Kiva Labs: Social Enterprises program, which is dedicated to addressing the “missing middle” and helping enterprises scale.

One example of a social enterprise we partner with is Norcafé, a cooperative helping small coffee producers in Peru. Right now, even though 25% of Peruvians work in agriculture, farmers aren’t getting the chance to grow their businesses. And organizations like Norcafé are working hard to help.

What’s happening in Peru?

To begin, since the early 1990s, about one-quarter of the Peruvian population has been employed in agriculture. A disproportionate amount of these agriculture workers are poor. So, when trying to address poverty reduction, government investment in the agricultural sector would seemingly generate the largest income increases for the poor.

According to the World Bank Group, "agricultural growth is twice as effective in reducing poverty as other types of growth.”

Unfortunately, poverty rates in more rural areas of Peru remain high. Poverty affects over 44% of the rural population compared to 15% of the urban population. This is largely because of the geographic disadvantages of not having access to basic public services.

Secondly, there’s not enough public spending on the agricultural sector. Post-harvest infrastructure, like processing and storage facilities, did not expand with the rapidly growing cities in Peru. This means food quality and safety issues have become problematic, in addition to inflicting higher losses on farmers.

Third, smallholder farms "engage in low-input/low-output agriculture", which relies on family labor instead of modern machinery. There is a limited use of fertilizer and pesticides due to the lack of financing. This is responsible for low productivity and harvest quality. Lower harvest quality harms the farm gate price, or the price the farmer receives for his or her harvest.

What’s Norcafé doing to help?

Our partner, Norcafé, improves the lives of small coffee producers by providing access to international markets and specialty premiums, which boosts farmer incomes. As a cooperative of over 400 smallholder farmers, Norcafé serves a lot of intergenerational farmers — A.K.A. young families who have inherited small farms.

Norcafé also offers technical assistance to youth, ethnic minorities, and rural inhabitants to increase agricultural productivity and quality.

While honoring its social, economic, and environmental commitments through a combination of Fairtrade and other organic/sustainability standards, Norcafé receives a Fairtrade premium. The premium is used to purchase new equipment, hire technical assistance, and pay an average premium of $10 USD per QQ of coffee to cooperative members.

Thanks to all this, most Norcafé cooperative members have been able to increase agricultural yields, generate additional income, and improve their quality of life.

Support groups like Norcafé today with a loan!

Written by Ciara Middleton with help from Jee Oh.