A visit to Central America

Last month, our colleague Michelle Steggerda traveled to Central America to visit some PlusPlus entrepreneurs. Especially for us, she put her experiences on paper. Read all about her trip to this region in her personal travel blog.



Hi, I'm Michelle Steggerda from the PlusPlus Investment Team and in this travel blog I'm taking you along to Honduras and Nicaragua. Last month, me and Lars, our Investment Manager, visited our local colleagues who are responsible for deal origination and supporting companies for PlusPlus. During this trip, we visited companies that have already been funded by PlusPlus' crowdfunders or are interested in a loan through PlusPlus.



We'll have coffee for breakfast tomorrow, won't we?" we're asking our hostess of the hotel in Honduras on the first day. “Un cafesito es lo mas importante” (“a cup of coffee is the most important thing”) is her answer. The importance of coffee in Honduras will become more clear over the next few days.

Being a coffee farmer in Honduras is a “lifestyle”. During our drive from Comayagua to Marcala, we're passing many small-scale farms of 3 to 5 “manzanas” (1 manzana = 0.7 hectares), on which a mix of coffee and bananas are cultivated. Bananas offer the farmers a steady income stream, because you harvest them constantly and earn a few dollars every week. Coffee is a seasonal product - the harvest is from November to March - and the price fluctuates much more than banana. Yet people continue to grow coffee, because that is what they have always done. It has become part of the culture.

Climate change has made it too hot in some places to grow good coffee. People are switching to other varieties, which unfortunately often yield less refined coffee and therefore generate less money. Another option is to plant forest trees among the coffee trees; when fully grown they provide shade and thus a cooler microclimate. These trees also remove CO2 from the atmosphere; in the future farmers could get paid for this with “carbon credits”, thus generating an additional source of income.


Coffee cooperatives

Most coffee farmers are united in cooperatives. Together they are stronger than alone, and the main task of cooperatives is therefore to aggregate the coffee of its members and sell it for a good price. But there are also many cooperatives that provide their members with inputs (such as young plants or manure) and help them obtain a fair trade or organic certification.

Cafe Pule Lenca is such a coffee cooperative. They were the first company in Honduras who received a loan through PlusPlus. When we're entering their terrain for a visit, our local colleague recalls that these office buildings were still under construction a year ago when she first came here. Now it looks very organized. From the 1st floor you have a panoramic view of the rest of the site: a compost factory, seedlings for forest trees, and a mix of coffee, banana and forest trees.

We sit down to have a conversation with the board of Cafe Pule Lenca. Marco Tulio, the president of the cooperative and a coffee farmer himself, immediately starts talking with pride about the compost. Since 2017, the cooperative has been producing organic compost for its members to enable them to fertilize of their crops in an environment friendly way. Before the PlusPlus loan came in, they were able to provide compost to 50% of their 71 members. With the help of the 2 PlusPlus loans totaling EUR 50,000, they will soon be able to provide 100% of their members with compost. The first results of the switch from chemical fertilizers to compost are already visible: productivity has increased by 50% and the quality of the soil has improved considerably. In addition, the high prices of chemical fertilizers have also made it much more attractive for members to switch to compost.

Then Nidia Vargas, the secretary of the cooperative, takes the floor. She mentions that their goal is to attract more female members. They do this by providing training and removing obstacles. The biggest barrier for women to joining the cooperative is that they do not formally own the land on which they grow coffee. That is why the cooperative helps them with land registration and sometimes also with consultation with their spouses.

The long and interesting conversation with the board members clearly shows that they are also farmers and entrepreneurs themselves, which makes them closely connected to the reality of farmers. At the end of the conversation, the board members also provide us with feedback about the investment process of PlusPlus; we are happy with this and we will definitely take this into account in the future!


Live connection between PlusPlus investors and entrepreneurs

After the conversation, we move to the coffee bean storage room, which is currently empty due to the season. The space has been set up as a conference room where a number of other entrepreneurs will soon arrive. Everything shows that care has been taken to receive everyone. The wall is decorated with pretty letters that make the words “meeting PlusPlus” and “welcome to Cafe Pule Lenca”, fresh flowers have been placed and there are paintings by a local artist (also a member of the cooperative). Of course there is also coffee for all participants.

After the entrepreneurs of 4 coffee cooperatives, 1 honey company and 1 juice company have arrived, we make a live connection with a few PlusPlus investors via the beamer. The investors who are participating online get the opportunity to ask questions to the cooperative. Then there are also questions from entrepreneurs in the room to the investors. For example, one entrepreneur asks for the motives of the investors to invest in projects such as Cafe Pule Lenca.

It is very special to see this live connection between investors and entrepreneurs. For entrepreneurs, the live connection makes the concept of crowdfunding, which is new to most of them, more tangible and real. The fact that they have made the effort to come to the venue -some have driven 5 hours to get here- shows an interest in what we as PlusPlus are trying to achieve: affordable, direct loans to agri entrepreneurs that make an impact.



A few days later we drive from Honduras across the border to Nicaragua. The mouth mask can be taken off here. We go through different counters before we can enter, and according to our local colleagues, things are going very fast by Nicaraguan standards. Winding through the vegetation covered hills we drive towards Matagalpa, our next stop. In Matagalpa we are able to walk around a bit more freely than in Honduras, and there is also a lot less security here.


Thinking about the future

In Matagalpa we're visiting Cosecha, where we talk to the program manager Walter and the financial person Paul. They were able to put the first loan from PlusPlus to good use for the pre-financing of cocoa beans. It was a relief that they could pay the cocoa farmers immediately and that they had little stress about the payment term of the customer. Since the cocoa season is now over, they expect to be able to prepay loan early soon.

In addition to cocoa farmers, Cosecha has recently started working with coffee farmers, to whom they have introduced macadamia trees. Macadamia trees will eventually provide an additional source of income and will be more resistant to climate change than coffee trees. The extensive presentation makes it clear to me that Cosecha thinks beyond one season and wants to be an impactful and future-proof company.


Doing Business in Nicaragua

Driving through Managua, the capital of Nicaragua, is not that straightforward for us Dutch people. Traffic is busy and chaotic. Between the cars you sometimes see horse carts. According to our colleagues, Managua is the only capital in Central America where horse carts can still be observed.

On the last day of our program, we pay a visit to a branch of La Colonia, the supermarket chain of Central America, together with honey entrepreneurs Aurora and Hector. They take us through all their products on the shelves: honey, honey soap and pollen. We also visit a drugstore that sells their best-selling product: a cough syrup made of honey, ginger and lemon.

When we then sit in their office with Aurora and Hector, I start to realize that they are real entrepreneurs. They are constantly working on product development and expanding their customer base. They also help other small entrepreneurs by marketing their products -for a fee- at various retailers. Their problem is not that they make too little profit, but that they often lack cash to pre-finance the products. A small loan through PlusPlus would help them enormously.


Looking back

After the intensive week in Honduras and Nicaragua, I have gained a lot more admiration for the work of our local colleagues, who succeed well in bridging the gap between the reality of the entrepreneurs and the criteria and processes of PlusPlus. I have also become even more aware that the timing of the loans is crucial for most agricultural entrepreneurs as they have to deal with seasonal fluctuations. In addition, it appears that euro loans in countries in Central America are not ideal and that we need to look into alternatives. All in all, we learned a lot from this visit and got a lot of input on how we can successfully scale-up deal origination in Central America.