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Our funding approach
Family farming, like the one that exists in Peru, is one of the pillars of our global community. Farmers provide us with basic foods and are closely related to the land, which makes them the main people in charge of our environment. Despite their key role for food security and environmental sustainability, small producers in Peru, who work 60% of the arable land, are mostly poor.
They face enormous obstacles, such as:
- Little information about where and how to sell their crops
- Degraded soil, mainly due to erosion and poor management
- Inefficient water management
As a result, many Peruvians in rural areas struggle to earn a decent living. For example, more than 36% of the poor Peruvian population lives in the rural highlands, and almost 60% of this population lives in conditions of extreme poverty (INEI, 2009). The great difficulties these farmers face lead them to migrate to urban areas in the hope of finding a better job.
There is a variety of organizations that we fund because of their interest in the financial success of small farmers. We are convinced that if there is a symbiotic relationship in which the two participants need each other to thrive, there is a greater chance that the two will be sustainable.
Financial institutions increasingly seek our capital to lend to farmers in turn. These loans are designed to increase agricultural productivity or to reduce the cost of production. Example of purchases made with these agricultural loans include:
- Improved dairy cattle
- Equipment to thresh quinoa
- Milking equipment
The “social” initiatives for smallholder farmers are increasingly looking for projects in which everyone wins. The businesses that we finance with medium-term loans normally use our loans to purchase productive assets such as processing equipment. These businesses offer improved services to farmers in their supply chain, such us payments by cell phone to farmers, vaccination of their livestock or more accessible farming supplies, which help increase the loyalty of the farmer and reduce the risk to the supply of essential raw materials.