More than Just Microfinance
This is Arlene Montejo, a small-scale farmer from the beautiful yet isolated mountain village of Sudlon II on the outskirts of Cebu City in the Philippines. Arlene, like millions of poor people around the world, relies solely on farming to generate an income and support her family. She grows a variety of vegetables including lettuces, cabbages, cucumbers and aubergines. When I met Arlene at her farm two weeks ago she told me that lettuce is the most popular item, selling an average of 300kg a week.
Arlene is a member of our partner microfinance organisation in the Philippines: Lamac Multi-Purpose Cooperative. She joined the cooperative almost two years ago as a beneficiary of their calamity loan programme, an asset-based loan product offered at very low interest to those farmers whose livelihoods were impacted by Typhoon Haiyan. Arlene told me with great sadness how the typhoon wreaked havoc on this small mountain community, destroying land and devastating crop production – a story too commonly heard in the Philippines since one of the strongest storms in history struck the archipelago in 2013. With little assistance from an over-stretched government, Arlene used the seeds, fertilisers and pesticides provided by the cooperative to restart production and now successfully farms one hectare of land with the help of her husband and five local labourers.
However, like all good development initiatives, Lamac’s assistance did not end there. I discovered during my conversations with Arlene that there were two additional benefits to cooperative membership that were having a life-changing impact on Arlene and her fellow farmers.
Access to the market through Lamac’s Farmer Entrepreneurship Program
In 2013, Lamac partnered with the Jollibee Group Foundation (the charitable arm of Filipino Food Corporation, Jollibee) to help expand the economic opportunities of Filipino farmers through improved access to key markets. Arlene is one of 42 farmers who has taken part in the pilot phase of this programme and through training and support from the cooperative she is now selling her produce to national supermarket and hotel chains. This fantastic initiative ensures Arlene and her fellow farmers are able to: generate a regular income (the buyers commit to a weekly supply over a fixed term); receive a fixed price for their products (so are not susceptible to local price fluctuations); and have access to key institutional markets (including advice and support from agricultural experts and marketing/business training). The cooperative helps organise the farmers into small clusters, links the cluster to markets and buys and delivers the produce. It is the farmers themselves who negotiate price and quantity and manage supply, which empowers the farmers to own the business relationship and gain crucial access to a valuable supply chain. One farmer told me that his income had increased significantly since joining the cooperative. His yields had increased by 80% because he was now able to cultivate more land using the inputs he received. He was also getting a consistently higher price for his vegetables, thanks to these links with the market.
Building savings deposits
In addition to supplying goods for the market, Arlene was delighted to tell me that since becoming a member of the cooperative she had been able to build up a decent amount in savings. Lamac really encourages its members to save regularly, even if it is very small amounts. In fact, more of its members are savers (63%) than recipients of loans. To really try and entrench a savings culture, Lamac offers farmers the opportunity to save by swapping extra produce for savings deposits. Arlene told me that when she can, she submits a little excess cabbage or lettuce to the cooperative in exchange for the cash equivalent in savings. Arlene was thrilled that she now had the security of her own savings, which is understandable since just two years ago she lost everything. She now feels confident that she would be able to withstand any small shocks her family might face in the future.
Access to affordable and appropriate loans, links to key institutional markets, and encouragement to collect vital savings are just some of the ways our partners are supporting poor and low-income people around the world to create sustainable incomes, and ultimately to help them find routes out of poverty.
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This blog was previously published on Lendwithcare.org, and is reproduced with permission.