When Ibu Rahmah tried to organize coffee growers in northern Sumatra, Indonesia, into a cooperative in 2009, she had success getting farmers to join but problems accessing capital. That changed with a U.S.-backed project.
Rahmah’s Ketiara Cooperative grew to 2,000 farms from 37 members after getting a loan from Root Capital, a U.S.-based financial institution. Ketiara’s annual sales increased to $5.5 million from $3.3 million in the first two years after getting Root Capital’s credit in 2014.
“Usually collateral would be needed in asking for a loan,” Rahmah said. “But with Root Capital, we just needed a contract, and then we could access the money without any hassle.”
The financing from Root Capital allowed Ketiara to pay farmers in the interim between harvesting the coffee and selling it on the global market.
With increased revenues and access to credit, Ketiara also has been able to make long-term improvements to the farms.
Under’s Rahmah’s leadership, one cooperative brand, known as Queen Ketiara, is grown entirely by women and is one of its most successful brands.
Coffee farmers across Indonesia face similar challenges getting credit, a situation made worse by market volatility and climate change. Up to half of the world’s suitable land for growing coffee is at risk of being lost due to climate change by 2050.
To address this, the U.S. Agency for International Development in December 2022 announced a new three-year project working with Root Capital and Keurig Dr Pepper, a U.S. beverage company.
The project, Resilient Coffee, will help 14,000 coffee farmers in Indonesia, especially growers in rural regions such as Aceh, East Java and North Sumatra.
The project will:
- Expand farmers’ access to financing.
- Protect ecosystems.
- Improve business management skills.
- Provide more opportunities for women in the coffee business.
Root Capital has already provided $1.3 million in loans to nine state-managed entities to purchase coffee from local farmers. Four coffee cooperatives received business training so far.
Root Capital, Keurig Dr Pepper and USAID have teamed up on public-private partnerships in the past.
USAID Indonesia Mission Director Jeff Cohen said one focus of the Resilient Coffee project is “harnessing farmers’ full potential for growth.”