Mt. Elgon (and the foothills where I live) is a coffee growing region - 100% Arabica. The picture here is a coffee plant. Inside the purple things you see are coffee beans. Each of these contains two beans. It is grown by small, local farmers and sold after being harvested, husked, fermented, dried, and washed. It takes a lot of time and effort to go through the process from a seedling to a dried bean. During October, the streets are lined with farmers drying their beans and preparing to sell them. Most locals need the money so bad that they sell them almost immediately for a little over a dollar per kilo (about 50 cents per pound). If they just wait six months until March, they can sell for at least double that, depending on the quality. Generally, the beans are sold in October or November and the money is spent by January. If financial management were better, the same crop could bring in twice the money and the same farmer could live off of it for twice as long. After a spending few hours here, it was obvious that some kind of "bridge financing mechanism" or something of the sort needs to be created in order to get higher prices for the farmers. One local man simply buys up about 10,000 kg per year (still less than 20% of the area's coffee), holds on to it, and sells it in March. That's great for him, but it doesn't spread the wealth.
As a pilot and as a small fundraiser for the local men's health group to provide basic health needs (like blankets for remote households in the mountains or mosquito nets to prevent malaria), I'll be loaning a little over $100 to buy about 200 lbs of coffee which should in theory sell in March for $200 or so. I'll just get my money back and give the proceeds to the men's health group. This kind of return would be a dream for a wall street investor (percentage-wise, not dollars), but this kind of dilemma isn't meant to be solved by investors seeking huge returns. Even if the farmer could borrow at an annual rate of 20%, their cost would only be 10% on a six month term and their coffee income would still almost double.
For a coffee growing region to live in poverty like this is shocking. We always see Fair Trade labels in Starbucks, but I'm seeing first hand that coffee farmers are flat broke. Though it doesn't relate directly to my job at the health center, my FIMRC supports a comprehensive aproach to community development and they're more than willing to have me allocate some time to this kind of activity.
A couple of days ago, I was on a motorcycle boda and passed a peace corps volunteer a couple of miles away who I talked to only long enough to learn that he decided to leave this area due to some problems he was facing. Yesterday, I met his local counterpart who works with our young men's health group and had been distraught that his economic development plans had slowed down with his volunteer leaving. We talked about getting together with his community and with mine to brainstorm and figure out some ways to improve the coffee supply chain. Financing is one part, but if they can improve their quality and their yield, their coffee income may enable them to take some forward steps in development.
If you'd like to make a six month loan and get a 10% return, I would give that money to our men's health group who would do what the "rich" guy in town does - buy some coffee now at 50 cents/pound and sell it in March for $1/pound. 55 cents would go back to the investor and the remaining 45 cents would be split to provide some public health essentials and to invest in the improvement of the coffee supply chain. Like I said before, this kind of model doesn't represent a long term solution because the farmers are still selling for too cheap, but it's keeping more money local, it's helping public health, and it's contributing to a longer term solution, which I'll develop with the community over the next year. If you're interested, send me an email or comment on this posting. You can either mail a check to my sister (who doesn't know about this yet) or deposit it into my Bank of America account. You'll get 110% back in March. I would actually appreciate it if you could send this link to more people who might have $100 or more to loan to this cause. Otherwise, thanks for reading and keep drinking coffee!


