This morning, we met with Banco Union, the bank that manages the Bolivian Government’s Banco de Desarrollo Productivo (Productive Development Bank) Fund for the organic growth of Quinoa for Oruro and Potosi Departments. They give loans that range from $100 to $600,000 USD. They finance activities from primary production, the transformation process as well as export financing. We spoke with Rolando Pereyra who helps manage the program.
Around 60% of the loans provided to farmers in this region have been used for the purchase of organic inputs such as fertilizers- this is where we come in, and this is why it was such an important meeting to have for our venture. Of this 60% of the loans, 45% is used to buy organic fertilizer products (such as manure) and 15% is used to buy animals for their fields, mostly llamas (by the way, one llama is approximately $75-$100 USD).
Their lending criteria is:
- Minimum of 3 years as a certified organic grower
- Good financial standing according to the credit bureau of Bolivia
- Amount of production/ sales
- Property as collateral
- Personal guarantee and guarantee from their association
Their program has been very successful. They have 100% repayment rate. Their interest rates range from 7-8% annually. To justify the investment/loans in business ideas, the farmers or entrepreneurs need to submit a business plan along with their proposal.
Pereyra mentioned that many development organizations have been trying to get farmers to compost or do wormcomposting. The issue is that it has not stuck as a common practice, it takes too long in this harsh climate (about 1 year), and the worms usually die in the cold. If the worms acclimate, they only yield 1 quintal (100 pounds) of hummus per year, while the farmers need around 200. He mentioned that if there was a third party that did this, and then sold it to the farmers it would be a great business. But, we get to the same roadblock we’ve been hitting- there is not enough supply, and transportation costs can be prohibitive. One thing he mentioned that we think is a great idea would be to finance corrals in the Quinoa production areas (where they currently don’t herd llamas anymore) and make a cost-comparison analysis to show farmers how much they will be saving in fertilizer in the long run.
Technical assistance will still be something that is needed in this area. To teach farmers how to build a corral, how to manage the manure and apply it to the soil. Currently, 7 people work in Oruro and in Uyuni implementing and managing BDP’s fund. Overall, it was a great meeting, to understand the costs and financing options that exist in this area and what can be realistically implemented.