Long term impact
Co-operative Cafetalera Capucas Limitada (Capucas) was formed by a group of 55 farmers, who wanted to grow good quality coffee and create a better quality of life for people living in the region. The co-operative is named Capucas after the community in which it was founded.
Despite several years of suffering low international coffee prices, Capucas is one of the few co-operatives in Honduras to maintain a high level of Fairtrade exports, and they have a reputation for creating a significant social impact.
We began our relationship with the co-operative in 2015, when we approved a Commercial Export Credit (COEC) facility, which meant that Capucas could support farmers on the run up to harvest time. Capucas now have 33 employees (33% women) and work with 919 farmers (23% women).
By paying farmers in advance, Capucas enables them to care for their crop, and maintain their farms. Without pre-finance, farmers struggled to prepare their land, leading to reduced yields, below the quality expected by buyers. Their only option was to sell their coffee to ‘coyotes’ - local middlemen who offer a low price and sell the goods on for their own gain.
Capucas General Manager, Omar Rodriguez said: “We have had cases before of producers saying they cannot deliver the typical production volume because no pre-finance was provided.”
Capucas has also received finance from other social lenders and our research shows that this has been influential in local banks changing their approach to providing finance. In fact, in 2016, local banks began to finance coffee co-operatives more extensively.
Omar continued: “This is also another indirect benefit of the contribution of Shared Interest and other social lenders - making the local banking system more open and competitive.”
The Capucas community has also benefitted from the co-operative’s Fairtrade Premium over the years. In 2010, they paid for the construction of the first community medical centre in partnership with the local university, Universidad Nacional, who provided the specialist knowledge to design the building. This project has since expanded to include dental care, with further plans to build a maternity ward.
More recently, Capucas launched the Virtual University, which provides further education to the more rural region of Honduras. The University is open to all community members, and offers a range of courses including microfinance and coffee business management. Capucas also supports the community primary school, paying a teacher’s salary, as well as scholarships for 18 primary school students.
Furthermore, Capucas is situated in the largest area of Central America to be certified as Bird Friendly, with 4,000 hectares designated as a renewable tree plantation. This certification guarantees that every bean is produced organically and under high-quality shade. Capucus also produces coffee under this certification.
For over a decade, Capucas has carried out reforestation activities, planting over a million timber trees in the region, and has supported farmers to diversify into organic fertiliser production, beekeeping, and growing lemongrass.
Omar concluded: “The support of social lenders throughout the last five years has helped Honduran coffee farmers to increase their production, productivity, quality, and exports, and now the recognition of our coffee is far better. In addition, the income to rural areas has also increased, improving livelihoods in rural areas such as Capucas. Without the component of the pre-harvest finance, all this will not have been possible.”
Over 20 years ago, Capucas launched a women’s project supporting the wives of producers to establish a small roasted coffee business. As the project grew, other women from the community joined the initiative. To mitigate the effects of climate change, Capucas also established a peer-to-peer learning programme on good agronomical practices, with the aim of reducing soil erosion and water consumption, as well as increasing biodiversity and shade in the farms through the planting of trees.
Capucas coffee farmer, Jose Francisco lives with his wife, less than 1km from Capucas’ main facility. We interviewed Jose in September 2020. He told us he has three small farms, which produce honey, coffee, and lemongrass which he sells to Capucas. He also grows avocados, oranges, and lemons for household consumption. Jose has been a coffee farmer for 30 years and has received various types of support from Capucus, to increase the productivity of his farms. He used the first loan to build a sundryer and the second loan to improve the infrastructure of his wet mill. He also told us the loans have helped convert his farm to organic, as well as improving the sustainability of his farm.
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“The pre-harvest loans are important for me so i can cover all the expenses during months with limited income. The biggest accomplishment was definitely to gain all this valuable knowledge around coffee. Knowing about organic farming, sustainability. Having the capacity of leaving a sustainable business to my children. Since 1999, I have also been able to improve my house conditions, especially the flooring.
But a more important use of the coffee income was the possibility to educate my daughters. Three completed high school and the youngest is about to finish it.
I see Capucas as my home and family. I cannot be disloyal to the co-operative because I would be disloyal to me, and to my community.”