Financial innovation that facilitates access to credit for Honduran producers

Honduran producer with cocoa beans.


Since the beginning of this year, the ETEA Foundation – Instituto de Desarrollo de la Universidad Loyola Andalucía has been working on the project “Microfinance Innovations for Agricultural Development in Western Honduras“, an innovative initiative financed by the Cabildo Catedral de Córdoba, which uses micro confirming and micro factoring to provide small Honduran producers with access to financing by obtaining liquidity.

This new work approach arises from the permanent need for financing of small Honduran producers, who do not usually have access to the formal financial market due to the lack of guarantees to access credit, so providing them with credit products is really important for them. This is explained by Mª José Vázquez, coordinator of the project at the ETEA Foundation, who explains that “the modality of credits specifically aimed at financing purchases and sales allows producers to obtain advantages with suppliers and customers, which gives them a better position in relation to their competitors”.

The objective of this project is therefore to improve the quality of life and contribute to the economic growth of cocoa and coffee producers in three cooperatives in western Honduras through access to credit, which will enable them to stabilize their liquidity throughout the production cycle and improve their competitiveness in terms of sales conditions.

To this end, a financing fund will be allocated to each of the three cooperatives and micro factoring will be used (the producer assigns its sales invoices to a factor, the cooperative, which anticipates the collection of the product and manages the deferred payment) and micro confirming (the cooperative takes charge of managing payments to suppliers before the due date). Training workshops will be particularly important to ensure that all stakeholders understand the concepts they will be dealing with and are able to act consistently with each phase of the production cycle. “Producers are not familiar with factoring or confirming financial products, which are very technical. However, they understand perfectly well the advantages of paying their input suppliers earlier or anticipating payments for their product sales,” says Mª José Vázquez.

This initiative, on which Michela Accerenzi, Erika López, Mª Carmen López, José Manuel Martín and José Antonio Arcenegui, members of the ETEA Foundation and Loyola Andalucía University, are also working, hopes to train producers and producers’ cooperatives in credit management, so that in the future they can face similar operations with other financiers and even manage other funds. “The most immediate result for producers is to obtain credit for production, which is especially important in the coffee sector, where the production cycle, and therefore the obtaining of income, is annual and this endangers the survival of many farmers, who must face high production costs throughout the year, which can suffocate them financially,” concludes Mª José Vázquez.

Background in the coffee and cocoa sectors

The Honduran coffee sector has received support from the ETEA Foundation since 2005 and, together with the Asociación Denominación de Origen Café Marcala (ADOPCAM), is part of the “HN Coffee Net” platform, created by the Honduran Coffee Institute (IHCAFE) to coordinate the sector in Western Honduras.

Since 2013, the ETEA Foundation has been developing interventions to promote sustainable cocoa production in the area. This is intended to improve living conditions and ensure food security for families in rural areas. To this end, the ETEA Foundation and the Honduran Foundation for Agricultural Research (FHIA) are supporting 300 producers in strengthening the cocoa value chain.