Message from the CEO![Willy Foote]( "Willy Foote")
Mexico’s poorest province, Chiapas, produces more than half of the nation’s coffee and one-third of its cocoa. It’s also the cradle of the Zapatista Rebellion, a hardscrabble guerrilla movement that erupted in 1994 to fight the Mexican government on behalf of the indigenous population of Chiapas. The timing reflected Mexico’s signing of the North American Free Trade Agreement, which the Zapatistas believed would widen the gulf between the rich and the poor. Yet most saw the conflict as a larger, almost desperate cry for dignity for the descendants of the Mayans who had long suffered from hunger and poverty, lack of health care access, loss of agricultural land, and deeply entrenched racism. In June I traveled to Chiapas with Root Capital board members, Peter Bernard and Juan Morillo. Peter is chief risk officer for a large, global hedge fund, D.E. Shaw, and Juan Morillo is a partner at the law firm of Cleary, Gottlieb, Steen & Hamilton LLP. Though both are well-traveled, neither’s day job takes them regularly to Mesoamerica’s remote agro-forests, much less to battle fields of recent insurgent movements. In Chiapas today there’s little talk of Zapatista demands for autonomy from the government, redistribution of land, or legal recognition of Indians. Most of these objectives never materialized, yet the conflict has ebbed. People in rural areas have gotten back to the business of raising families and making a living off the land, even as poverty and painful memories of conflict still reign in the countryside.
We found a microcosm of this story on a visit to a Root Capital client called Maya Vinic, an enterprise of 500 coffee farmers and artisanal beekeepers, all of whom belong to the Tzotzil ethnic minority group. We left the colonial town of San Cristobal de las Casas, where Root has its 10-person Mexico office, at dawn to make a breakfast meeting half way across the state with the co-op’s board of directors. Ascending into the cloud-forested mountains, San Cristobal’s cobblestone streets quickly gave way to winding, unpaved roads. At the end of the four-hour trek, we came to Maya Vinic’s warehouse and processing plant for coffee and honey, the most substantial structure for miles. In a timeless, sacred oral tradition, the co-op managers shared their enterprise’s rich history and founding story, one by one.
Maya Vinic formed in 1999 as a peaceful response to the armed conflict raging around their rural communities, and, in particular, to the December 22, 1997 massacre of 45 Tzotzil people – many of them women and children – at a Catholic mass in the town of Acteal. The massacre, perpetrated by paramilitaries associated with Mexico’s ruling party, drew world attention to indigenous rights in Chiapas.
Maya Vinic’s founding members hailed from a pacifist group called Las Abejas, or the bees, named to honor the indigenous value of working communally, and they aspired to work together to overcome the low coffee prices offered by local intermediaries. Root Capital began lending to Maya Vinic in 2006, with a $50,000 loan to finance three containers of coffee (roughly 56 tons). Since then the cooperative’s productive capacities have steadily grown. It now exports twice as much coffee to specialty buyers in the Europe and the U.S., and uses the price premiums to provide educational scholarships to its members’ children. It also commercializes honey for European and local buyers to help its members further stabilize their incomes. For me, Maya Vinic powerfully exemplifies the potential of sustainable agriculture to help communities rebuild after conflict—and it was an honor to witness that potential with Root board members at our side. Born of non-violent resistance to a largely rural battle that enflamed the poorest, most forgotten part of southern Mexico, Maya Vinic now affords indigenous farmers the tools they need to achieve greater economic security and lasting peace and prosperity. Your support makes that possible, and for that I offer my deepest thanks.
![Willy Foote Signature]( "Willy Foote Signature") William Foote, Founder and CEO Here are a few additional photos from Maya Vinic: ![Maya Vinic]( "Maya Vinic") ![Honey Tasting]( "Honey Tasting")
Root Capital board members, Peter Bernard and Juan Morillo, and Root Capital loan officer Beatriz Ocampo taste honey at Maya Vinic. Maya Vinic board members with Root Capital board members, staff and family.
Featured Media: Fair Fruit—Adding Value to Fresh Vegetables![Fair-Fruit Video]( "Fair-Fruit Video") Guatemala is the world’s third-largest exporter of snow peas and sugar snap peas, and indigenous farmers living in the highlands produce 99 percent of the crops. Gaining access to fair trade vegetable markets can make a big difference for these farmers, who are among the nation’s most impoverished, with 70 percent living below the international poverty line.
Watch the video Read the profile: Adding Value to Fresh Vegetables
Interview: Bernard, Managing Director and Chief Risk Officer, D.E. Shaw & Company![Peter Bernard at Maya Vinic]( "Peter Bernard at Maya Vinic")
Peter has served on Root Capital’s board for three years, and for four years on our Credit Committee. He’s a seasoned risk manager, with decades of Wall Street experience, and one of the board’s two amateur beekeepers. Hank Cauley, formerly senior officer at Pew Charitable Trusts and a long-time expert in corporate sustainability practices and natural resources conservation, is the other. We spoke with Peter about his first field experience with Root Capital and his view on how Root Capital is managing risk in today’s turbulent coffee market. Q: How was it for you, as a beekeeper, to visit with beekeepers in Mexico? I really enjoyed seeing someone else keep bees because I don’t get a chance to see that very often. There were amazing commonalities between the way they keep their bees and my own processes. The process was essentially the same, from the way they pump cool smoke over the bees to calm them to the way they harvest the honey. They did a honey tasting to show us well-filtered honey and honey that had too much smoke taste to it, honey that was too raw, and honey that was good and marketable, which I found to be common to my little hobby. The biggest thing that wasn’t common was that honey gathering matters to these guys, and to me it’s just a fun pastime. They don’t make a huge percentage of their revenues from honey; most of it comes from coffee. But honey is a good companion crop; it’s a good diversifier. You stick the hives out in the middle of the farmland; and the labor to make the honey is pretty cheap—it’s just the bees—and the time and effort it takes to make the honey is relatively straightforward. Q: Was this your first trip with Root Capital? Even though I’ve been involved with Root Capital for four years now, this was my first trip.
There’s nothing like seeing [our work] first hand to really bring home the impact of Root Capital’s mission on its clients—and the farmers they aggregate. You travel through quite poor areas and then see these plots of land and businesses and beehives flourishing. For me, it’s an interesting way to bring the board work back to a personal level. One of my past jobs was running the Latin American capital markets group for JP Morgan, so I’ve traveled extensively to Latin America but only to the cities where the big-bank finance occurs. It’s almost the flip side of Root Capital’s mission and the reason why we exist. The big banks don’t go out to the rural areas and grease the wheels for those small and growing businesses. Q: Was there anything that surprised you about traveling to the field to meet with clients? I think the operational sophistication of these coffee cooperatives in the midst of pretty much abject poverty and a relative lack of sophistication in the financing operations was the most surprising. They have quite high standards and processes for producing coffee and honey. They have the machines, the organic certification, and the ways to bring this stuff to market. They’re working on branding and their "corporate" image. But they’re still learning the nuts and bolts of accounting and they’re operating in a quite challenging socioeconomic environment. Q: So Root Capital has a clear role to play through financial advisory training? That became much clearer to me when I was in Chiapas. Because the advisory stuff doesn’t hit Root Capital’s financial statements with the impact that loans do, it’s been a little bit of a blind spot for me personally. But I was really able to understand when I saw the way our financial advisors interact with the customers and play the role of trusted financial advisors. I think that was a level of impact that I probably underestimated, or at least underappreciated. Q: As a seasoned risk manager, how do you think Root Capital is managing risk in today’s challenging coffee market? I think "prudently" is the key word. When the coffee price is high, when the crop is healthy, when the market is strong, this is a relatively easy business. But the world doesn’t work only in strong markets and good times, so you have headwinds from time to time. And in expectation of those headwinds you have to carefully watch the various parts of your business.
The additional complication for Root Capital is that unlike a for-profit company, its mission is of predominant importance. If you’re a for-profit company, of course you have long-term versus short-term considerations, but your basic allegiance is only to the bottom line, whereas Root Capital has a dual allegiance to its bottom line and to its clients. It’s sometimes a challenging tradeoff, but it's a necessary one. You have to insure, above all, your survivability for the long term because your clients are there for the long-term and it doesn’t really help them if you’re not going to be there in another couple of years.
New and Noteworthy-
Several Root Capital staff members attended the fifth annual Aspen Network of Development Entrepreneurs’ (ANDE) Metrics Conference in Washington, D.C. This year, in a testament to the growth of our sector, selected practitioners were invited to share their reflections on the Skoll World Forum and Forbes blogs. See this blog post from Root Capital’s director of Strategy & Impact, Mike McCreless.
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Root Capital participated in an Agrilinks #AskAg twitter chat on smallholder access to improved technology. A collection of tweets, links and re-tweets from the chat can be accessed here.
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Our Financial Advisory Services team held its first training in West Africa this month. The four-day training, held in Kumasi, Ghana, focused on basic financial management skills, budgeting and producing cash flow projections. Participants from 10 small and growing businesses attended the workshop.
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Root Capital was the recipient of a special World Fair Trade Day promotion organized by the Fair World Project this past May. A percentage of sales from Alaffia, Alter Eco, Divine Chocolate, Dr. Bronner’s Magic Soap, and Equal Exchange in 145 participating cooperative groceries were donated to Root Capital, resulting in a $5,000 donation, as well as a matching gift from the National Cooperative Grocers Association (NCGA). We are truly grateful to be honored for the second year in a row, and thank Fair World Project, the participating companies, and NCGA for their generosity and vote of confidence in our work to promote sustainable livelihoods across the globe.
What We're Reading- Using Bananas to Fight Gender Imbalances on Cocoa Plantations, a blog post from the CGIAR Research Program on Climate Change, Agriculture and Food Security, explores the link between female empowerment, cocoa production and under-nourished children and how a focus on banana tree planting in West Africa can help all three. For additional information on women’s access to agricultural resources, see this infographic from FAO.
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The USDA’s International Food Security Assessment, 2013-2023 projects that the number of people experiencing food insecurity will rise by 23 percent to 868 million by 2023. In 26 of the nations studied, more than 40 percent of the population currently faces hunger, with the biggest concentration in Sub-Saharan Africa.
Join the Team: Lending & Innovation Officer – West AfricaRoot Capital is seeking a Lending & Innovation Officer to join our team in Dakar, Senegal. The Lending and Innovation Officer will research and develop new lending opportunities that push the frontier of Root Capital’s lending expertise. His/her core responsibilities will include researching lending opportunities in new industries, identifying and building relationships with potential clients and underwriting new loans of strategic importance to Root Capital. These responsibilities will require the LIO to engage local stakeholders to strengthen our network of partners, document lessons learned, identify case studies, and provide content for global collaboration in thought leadership, strategy, investor relations, and communications. View additional employment opportunities at Root Capital
Follow us on Twitter. Retweet our top posts!"When Measuring Social Impact, We Need To Move Beyond Counting" We now loan in the #DRC! Meet the Furaha Coffee Coop which is helping to rebuild livelihoods after years of #conflict The key to future #foodsecurity & #greeneconomy? Low carbon #agriculture |
