By Staff Writer
August 30, 2022
Innovation is needed for the agricultural revolution in the Latin American and Caribbean (LAC) region as digital technologies rise and manufacturing is no longer seen as a natural vehicle for development.
An Inter-American Development Bank report, obtained by Caribbean Magazine Plus, “Competing in AgribusinessCorporate Strategies and Public Policies for the Challenges of the 21st Century,” says that the “premature deindustrialisation” of the region brought on by the rapid advancement in technology has brought about the need for the region to revert to exploiting their resource rich natural resources.
One such company the report highlighted was the Mercon Coffee Company that it hailed as a “unique case.” With offices in Guatemala, Nicaragua, Honduras and Panama in Central America as well as over 60 worldwide locations, they stand out because they have perfected the sustainability of coffee production.
“The sustainability of co ee production in Central America is threatened by some- times low co ee prices, low productivity, and the meagre incomes of most producers, as well as their limited access to credit, training, and technical assistance. In its opera- tions in this region, the Mercon Group has made the decision to directly over training, technical assistance, and financing to small and medium-sized producers within a framework of environmental and social sustainability and support for the educational development of coffee communities, something normally o ered by the public sector. The strategy has proven to be viable and successful. What has made this possible is changes in co ee demand due to the increasing concerns of customers and consumers about environmental and social sustainability in the industry,” the report said.
The report also said:”Starting in 1997, three decisions transformed the future of the company and the produc- ers that supply the co ee it exports. By 1997, CISA Exportadora’s nancing operations had reached US$9 million, and it was decided that it was not prudent for a portfolio of that size to be managed as a secondary business by a company that exports co ee. It therefore needed a company specialised in finance that, at the same time, had in-depth knowledge of the coffee industry.
“So Mercapital was launched to take over the entire loan portfolio in Nicaragua and provide technical support in the financing provided to the export companies in other countries, where the business volume did not yet justify the creation of a separate finance company.”
The report added: “The second decision was made between 2003 and 2005. Cafés Solubles—a business belonging to the family but independent from the Mercon Group—briefly ventured into the cultivation of Robusta coffee in the New Guinea region of Nicaragua. After selling its instant coffee brands, Cafés Solubles lost interest in the project, but Mercon took it over and expanded it.
“Based on a number of studies, Mercon concluded that production of this variety was viable, the product had better qualities than that of other Robusta- producing areas, and the crop had signi cantly better profit margins than the cultivation of cassava or cattle ranching (the traditional activities in New Guinea region).
“Mercon then launched an expansion process that by 2021 saw CISA operating a 1,300-hectare plantation from which it expects a harvest of 50,000 quintals. It also has a network of approximately 600 suppliers, from which it expects to acquire 80,000 quintals.”
The report also highlighted Sol Organica as an “excellent example” of an anchor company that connects small producers with international markets.
The report said: “Beyond marketing its products, it provides financing and technical assistance to its suppliers and helps them obtain certifications that allow them to get over the “quality hurdle” and access sophisticated markets.
“The company, which began by drying mangoes and other tropical fruits using solar dryers and exporting them to retail markets in the United States, today produces other ingredients such as organic fruit purees, and has managed to integrate into the global value chains of leading companies like Innocent Drinks (from Coca-Cola) and Happy Family (from Danone).
“Sol Orgánica’s strategy focuses mainly on competition based on credence attributes, such as protecting the environment (with organic and regenerative production) and social responsibility.”
The key to success for brands like Sol is their focus on providing assistance to smaller producers in terms of financing and other technical assistance as it drives sustainability for all.