How Might We Improve Access to Pre-financing for Cooperatives and Coffee Washing Stations?

May 18, 2016 - AGLC Team

Backgrounder 5: How might we improve access to pre-financing for cooperatives and coffee washing stations? May 2016

KEY ISSUES

1. Many cooperatives and cooperative-owned coffee washing stations face management challenges. At the same time, Rwandan banks are cautious in making agricultural investments. Because of these factors, many cooperatives do not receive pre-financing.
2. Since cooperatives often do not have the pre-financing required to pay farmers upfront, many farmers revert to selling to either middlemen or private coffee washing stations.
3. Cooperatives can provide farmers with benefits not provided by private companies. For example, they can pay dividends / premiums to reward the production of high quality coffee, and can provide inputs. However, the lack of prefinancing and thus the lack of upfront payments reduces the benefits of cooperative membership.

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