Despite the resurgence of interest and new investment in agricultural development, the supply of actionable data on the impacts of enterprises that work with smallholder farmers trails behind the demand.
Our impact studies, launched in 2011 as a complement to the social and environmental metrics collected during due diligence, seek to help address the knowledge gap in the sector. In the studies, we examine the impacts that our clients, small and growing agricultural businesses, have on the livelihoods of smallholder farmers and on the environment, and we determine if and how our services increase the enterprises’ impacts. Today we’re excited to release our first multi-site impact study — Improving Rural Livelihoods: A Study of Four Guatemalan Cooperatives.
The report synthesizes findings from four mixed-method studies, conducted in 2013 in collaboration with the Multilateral Investment Fund of the Inter-American Development Bank and the Committee on Sustainability Assessment (COSA). An executive summary and the full report can be downloaded here.
What was our methodology?
Among the four cooperatives, we surveyed 640 farmers, including 407 cooperative members and 233 non-members. The non-members, farmers living in the same communities as cooperative members, served as comparison groups that allowed us to correlate differences (i.e., in income, access to services, and production practices) with services provided by the cooperatives, though without proving causality.
By grouping together studies in the same country and sector, we aimed to identify common results that were not a function of one enterprise’s unique situation, but likely to be more broadly relevant. (We first wrote here about our data collection methodology, process and challenges.)
What did we learn about enterprise impacts?
Of the four businesses we profiled, we found that three were what we term “well-functioning,” meaning they reliably provided producers with valued services: higher prices, credit for production and agronomic training.
In these three well-functioning groups, cooperative membership was associated with:
- Greater levels of self-reported well-being
- Higher incomes
- Expanded access to credit and training
- More widespread application of sustainable farming practices linked to soil health and water quality
Guided by our Women in Agriculture Initiative, we also focused on differences in impact segmented by the gender of cooperative members. We found that women, a minority of cooperative members in three of the four clients, accessed cooperative services in similar rates as men, but their households earned lower incomes because they owned less land and therefore produced and sold less coffee.
What about the impacts of Root Capital?
Root Capital’s lending amplified the cooperatives’ impacts by enabling them to transition from paying farmers at the end of the season, after the crop had been exported, to paying farmers a base price upon delivery during the harvest. This practice allowed enterprises to compete with local traders and buy more of the farmers’ coffee. When farmers sell more to the enterprise, they receive a higher price per unit on a larger volume of coffee.
Notably, the fourth, less well-functioning group, Lirio, achieved the least impact on producers, and Root Capital’s lending had little incremental impact on this group. We believe that Lirio was too early stage commercially to reliably provide services to its members and to benefit from Root Capital’s financial services.
The study includes three chapters:
- Chapter 1: Impact of Cooperatives and Root Capital
- Chapter 2: Differences in Impact by Gender of Cooperative Member
- Chapter 3: Agricultural Practices and Environmental Performance
Over the coming weeks, we will share specific findings and new frameworks from each chapter. In the meantime, please download an executive summary or the full report.