Felix Asdrúbal Sánchez, General Manager of COCAOL, began working with the cooperative in 2007. Credit: COCAOL
Cooperativa Cafetalera Olancho Limitada (COCAOL), one of the oldest and largest specialty coffee producers in Honduras, has long been a symbol of resilience. Throughout its 56-year history, COCAOL has endured macroeconomic instability, political turmoil, and escalating climate emergencies, like the hurricanes and tropical storms that have devastated the region and forced many other coffee farms to close.
Felix Asdrúbal Sánchez, General Manager of COCAOL, has helped the cooperative weather many storms, both literally and figuratively.
The Challenge
The coffee industry in Honduras has faced numerous economic and political challenges over the past 50 years, including a military dictatorship, a revolutionary regime, and high rates of emigration. All of these factors have had a profound impact on the industry at large, affecting coffee prices, the producer workforce, and access to international markets.
In 1998, Hurricane Mitch, the deadliest Atlantic hurricane in 200 years, flooded COCAOL’s facilities and wiped out all of their existing records. In the wake of this catastrophe, membership plummeted from over 300 members to less than 21—the number required by law to operate as a cooperative.
Facing imminent closure, “One of the associates had the idea to bring in farmers’ wives as members,” Felix explains. COCAOL began providing these women with land and, through these new members’ industriousness and leadership, the cooperative was able to save itself from the brink of collapse.
But the solution was not a long-term fix. When Felix first joined COCAOL in 2007, the cooperative was struggling and available loans were charging interest rates of up to 30%.
“I was an agronomist and knew nothing about management,” says Felix. “I saw the debts, the scarce and expensive funding, and associates waiting for money from three years back, and I thought—what am I going to do now?”
Credit: COCAOL
Our Collaboration
In 2008, Root Capital provided COCAOL with a $200,000 loan.
“For us, the collaboration with Root Capital was a blessing,” Felix remarks. “We only had to pay a low interest rate and some of our producers who were owed money for the past three harvests were even able to buy a car because they got the money in a lump sum. That’s when the co-op started to grow.”
Recognizing the continued risk of climate disasters, especially to the region, Root Capital’s financing to COCAOL has been supplemented with a suite of advisory services, such as agronomic and climate resilience advisory services (ACRA). Through ACRA, Root Capital has guided COCAOL on a tailored climate adaptation journey, focusing on improving soil fertility, water conservation, and the use of timber trees for shade-grown coffee. COCAOL has also received Root Capital resilience grants and a soil regeneration loan to support the in-house production of organic fertilizer.
Through these comprehensive services, COCAOL has been able to implement regenerative agricultural practices, which contribute to carbon removal, soil health, improved biodiversity, and higher yields (which translates to higher farmer incomes). These practices also help agricultural land become more resilient to future climate shocks, like the hurricanes and tropical storms that plague the region.
The Impact
“After receiving Root Capital’s funding, we started to see a huge growth curve,” says Felix.
The cooperative’s new stability paved a pathway to negotiate better conditions and fairer interest rates with traditional financial institutions. COCAOL also managed to eliminate the supply chain intermediaries they relied on and begin working directly with international buyers. COCAOL coffee–which is Fairtrade certified–is now exported worldwide, with buyers in Europe, Israel, the United States, and Asia.
COCAOL is committed to sharing its successes with the local community and has been able to regularly donate materials and resources for critical projects, like the renovation of schools and clinics after extreme weather events. With the financial and advisory support of Root Capital, COCAOL is now a thriving cooperative ready to withstand future challenges and embrace new opportunities.