By Daphna Berman
For Marvin Tercero, a farmer along Nicaragua’s remote Caribbean coast, summertime — with its relentless sun, minimal cloud cover and little rainfall — has long been the most challenging time of year. His herd of cows often struggled to find food and as they grazed amidst parched, withered pastures, the weakest calves often died of starvation.
That started to change in 2020, thanks to an IFC initiative that supported Financiera Fondo de Desarrollo Local (FDL), Nicaragua’s largest microfinance institution. With support from the Private Sector Window of the Global Agriculture and Food Security Program (GAFSP), IFC provided advisory support to FDL over the course of three years, helping the company deliver technical assistance to boost farmer incomes and resilience in the face of climate change. The training, which included in-person visits, also featured agronomist-led WhatsApp groups and a call center — providing ongoing and responsive support to farmers at a lower cost to FDL.
Marvin Tercero on his
farm, where milk production has increased 27 percent. Photo: Nitlapan
“Price volatility and climate change have left farmers vulnerable,” said Eva Garcia, Deputy Manager of Commercial Operations at FDL. “They need technical and financial support to become more resilient and transform Nicaragua’s agricultural sector because they can’t do it alone.”
IFC and GAFSP’s relationship with FDL began in 2013, with a $7 million investment that helped the company expand its agricultural lending. Though that project has since closed, the investment helped the company reach rural borrowers, who comprise 70 percent of FDL’s portfolio.
In Nicaragua, where agriculture accounts for 15 percent of the country’s GDP and employs 30 percent of the population, climate change has left farmers across the country’s rural communities reeling, as they struggle with extreme weather. Hurricanes and cyclones are becoming more frequent and in 2020, for the first time in history, Nicaragua was impacted by two category four hurricanes that made landfall within two weeks of one another during the coffee harvest, with devastating effects on three million people — or nearly half the population. Rising temperatures have also introduced diseases and pests in completely new geographies: mutations in coffee rust, a fungus that causes disease in coffee plants, have increased rapidly and crop-eating insects are becoming more common, even in mountainous areas that never experienced them before. Indeed, in a recent survey commissioned by IFC, nearly half of the coffee and livestock farmers interviewed said that they have been affected by climate change in the last four years — with loss of harvest, loss of productivity, soil erosion and an increase in production costs among the most common impacts.
The result is that for farmers like Tercero, maintaining production has become harder than ever before. As part of the technical assistance provided, program agronomists taught him to reduce the size of his paddocks and plant more nutritious, drought-tolerant pastures, so that his cows had reliable access to quality forage, regardless of the season. He also learned to safeguard the forest abutting his land and preserve water in the nearby creek and river — which meant that his family, cattle and crops had a reliable water source, with minimal erosion and less flooding. And with healthier cows, a 27% increase in total milk production and extra income, Tercero invested in a biodigester, which converts manure into gas for cooking and also generates bio-fertilizer that he uses on his pastures, helping him avoid additional fertilizer costs. “We don’t need to cut down or burn trees anymore,” he said.
On Marvin Tercero’s farm, a biodigester converts manure into gas for cooking and also generates bio-fertilizer for pastures. Photo: Nitlapan.
Indeed, it’s been a win-win for farmers — and climate smart agriculture. “About 80 percent of food production in the country is in the hands of smallholders and so supporting them as they deal with climatic shocks, with training and financial services, is critical,” said Carlos Guerrero, Director of the Business Development Services Program at Nitlapan, a research and development institute at Nicaragua’s Central American University (UCA) and the provider of technical assistance for FDL’s clients. “It’s the only way to help the farmer — and FDL — mitigate their risks because producers who are struggling need to make an extra effort to pay back their loans.”
In addition to the call center, which was complemented by two dedicated WhatsApp groups for coffee and livestock farmers, Nitlapan trainers established a network of 25 demonstration farms, which implemented climate-friendly solutions such as the use of solar driers for coffee production, electric fences for paddock rotation in livestock and the planting of fruit trees to diversify farm income, provide shade to livestock, and capture carbon. The company also supported 11 rural micro entrepreneurs to establish their own retail stores, facilitating access to inputs and advice for farmers in more remote areas. And a project-supported paperless data capture system, Agro Mobile, allowed agronomists to easily access and update client technical data and other relevant information, so that they could make more accurate on-farm diagnoses.
As part of the project, FDL and Nitlapan also produced a series of 44 podcasts focused on climate-smart agriculture, ranging from the prevention of coffee leaf rust to best practices for managing lactating cows. The podcasts series, called “Produccion Verde,” was streamed more than 7,000 times, with some episodes featured on national radio. And because COVID-19 interrupted in-person trainings, farmers were increasingly willing to use these alternative methods, regularly calling or messaging the agronomists or receiving training videos and other tips via WhatsApp.
“Our clients face challenges every day and so they require channels that respond to their needs and concerns,” FDL’s Garcia said. “There’s a lot of knowledge out there — and we need to keep investing in new technologies to make it accessible to the farmers who need it.”
Indeed, for Otilio Sánchez Molina, a coffee and citrus farmer, knowledge has transformed his once-struggling homestead. After listening to a podcast on how to improve coffee quality and with hands-on support from an agronomist, he decided to introduce a solar drier, which allows him to properly dry his coffee beans, even during the height of rainy season. The result is that Molina receives payment for 100 percent of the volume of dry coffee delivered to the collection center — whereas previously, offtakers deducted 14% of the volume for his delivery of wet coffee. Molina can also better navigate the unpredictability of extreme weather — which helped convince him that climate-smart agriculture and higher income can go hand in hand. “I have better quality and higher yields than ever before because of Nitlapan’s recommendations,” he said.
The advisory project, which closed in June 2022, reached 4,000 farmer clients — 80 percent of whom reported a better quality of life than at baseline, before the training began. FDL and Nitlapan plan to continue supporting clients using the lower-cost methods developed through its partnership with IFC and GAFSP. In a final survey with over 500 farmer clients, more than half confirmed their willingness to receive technical assistance through these alternate methods—a significant finding that may encourage adoption of lower-cost training options for remote farming communities in other countries and contexts. Focus groups with farmers also confirmed that they valued FDL’s combined financing and training package, which distinguished the company from other local microfinance institutions.
“Farmer have no control over the weather: they know that there’s nothing they can do to avoid drought,” Nitlapan’s Guerrero said. “But they can be more resilient and that’s something we will continue working towards.”
Published in February 2023