C.A.C. Pangoa: A Peruvian Coffee Cooperative Plans for Long-Term Success

Throughout Latin America, the coffee industry was crippled by the spread of coffee leaf rust—known as la roya—in 2013. Yields fell by as much as 80 percent. Some cooperatives failed. But at the foothills of the Andes mountains, C.A.C. Pangoa had developed the vision and tools to help farmers weather the storm.

Pangoa first became a Root Capital client in 2006. For decades, the surrounding region had been devastated by conflict. Without the business infrastructure to get their crops to market, many farmers could only survive by harvesting illegal coca plants. C.A.C. Pangoa was one of the few local endeavors that offered an alternative—but without financing, they couldn’t grow. Root Capital was one of few lenders willing to help them thrive.

Over the last 12 years, Root Capital has provided Pangoa with more than $7 million in cumulative credit. Since our first loan of $150,000, we’ve accompanied the business in its growth, most recently disbursing a $1 million working capital loan.

“We were unable to provide traditional collateral for the Root Capital loans, so the only thing that we provide is a contract that we have with our buyer,” says Pangoa’s general manager, Esperanza Dionisio Castillo. “Root Capital understands and has confidence in agricultural businesses like Pangoa, and that is invaluable for us.”
Photo: Grazioso Pictures, Inc.
Photo: Grazioso Pictures, Inc.

To support Pangoa’s appetite for well-planned organizational development, Root Capital has provided a plethora of advisory services in addition to loans. Our experts have trained Pangoa managers and employees in financial analysis, internal credit systems, harvest forecasting, mobile technology, and agronomic assistance, among other topics.

"Root Capital doesn’t just give us the capital and walk away--it helps us through training and consulting that improve our knowledge,” says Esperanza.

As Pangoa grew, it was able to purchase a wet mill and drying machinery to process increasing yields of coffee, as well as obtain fair trade certification that enables them to sell crops at higher prices on the international market. With keen foresight, their team also invested in the future: they helped members diversify into honey and cocoa farming to generate alternative income sources, and launched sustainability initiatives, such as a seedling nursery and organic fertilizer plant, to fortify local coffee production for years to come. With these deep investments in resilience already well underway, Pangoa’s leaders were able to react swiftly to the coffee leaf rust crisis of 2013 by activating a program to renovate and rehabilitate disease-ridden coffee farms.

With a vision for the future and Root Capital by its side, Pangoa continues to defy the odds.