May 28, 2021
IDB Invest, a member of the IDB Group, agreed to provide up to $50m worth of financing for Grupo Mercon, a deal that will support Latin American coffee’s value chain, especially in Guatemala, Honduras, Colombia, Peru and Brazil, promoting growth and economic recovery.
The investment is part of a $500m regional syndicated loan facility, structured, managed and administered by Rabobank, with prices linked to key sustainability initiatives, aligned with Mercon’s strategy of raising the standard of living of coffee-growing communities in the region, promoting a positive environmental and social impact.
The project will directly support small and medium coffee producers in rural Latin American populations, considering that over 90 percent of Mercon’s coffee suppliers are SMEs. The investment will facilitate access to financing for producers to guarantee the sustainability of their businesses and protect jobs. This is decisive for reducing poverty and improving the quality of life in these communities, particularly at a time of limited liquidity due to the COVID-19 pandemic. It is worth mentioning that coffee is Central America’s second largest export, producing more than 10 percent of the coffee exported worldwide and generating around 2m jobs in the region. Likewise, the project will promote climate-smart practices to reduce crop losses, improve efficiency and reduce greenhouse gas emissions.
The financing price could include a discount based on compliance with sustainability performance indicators, helping Mercon’s LIFT program focused on supporting coffee producers to improve their productivity levels, incorporating sustainability practices together with the Semillas para el Progreso Foundation, that contribute to the general well-being of coffee-growing communities. IDB Invest will be Sustainability Coordinator for the operation, along with IFC, Rabobank and ING Capital LLC.
For its part, IDB Invest will support, through technical assistance, Mercon’s LIFT program by supporting the pilot test of a price protection mechanism for coffee producers that will help them manage financial risks through financial risk management tools. In addition, IDB Invest will design tools that facilitate the implementation of a carbon credit scheme that results in economic benefits and helps large coffee roasters meet their carbon neutrality commitments. Both components of technical assistance will incorporate a gender perspective that will allow more LIFT program participants to be women.
The deal potentially contributes to five of the United Nations Sustainable Development Goals (SDGs): Zero Hunger (SDG 2), Decent Work and Economic Growth (SDG 8), Sustainable Consumption and Production Patterns (SDG 12), Climate Action (SDG 13) and Revitalize the global partnership for sustainable development (SDG 17).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $13.1bn in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Mercon
Mercon Coffee Group is a vertically integrated global green coffee supplier, committed to consistently providing the correct quality of coffee to customers creating wellness in coffee communities on the basis of sustainability. Founded in 1952 as a coffee exporting company, Mercon’s headquarters is located in the Netherlands and is among the top 10 coffee suppliers in the world, providing tailored services for customers in more than 60 countries, from offices located in America, Europe, Africa and Asia. Mercon is a leader in terms of sustainability and drives a number of initiatives, including its LIFT program that focuses on innovation and prosperity in coffee communities around the world. Additionally, Mercon actively supports the Semillas para el Progreso Foundation, a non-profit organization that aims to improve education to help the coffee growing communities of tomorrow grow. Mercon has built an integrated coffee supply chain, recognized for its excellence in commercial and specialty coffees, as well as its operations in agriculture, production, export, logistics and risk management. For more information visit: merconcoffeegroup.com.