THE BLOG
11/05/2014 10:42 am ET Updated Dec 06, 2017

Fighting Poverty: A Team Sport

By Catherine Gill, Senior Vice President of Investor Relations & Operations, Root Capital

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Did you know that nearly one billion people have risen out of extreme poverty in the last 20 years? Contrary to how it might feel, we are making progress in what many thought to be an intractable war against poverty. One of our best tactics has been investment in agriculture. In fact, the World Bank estimates that economic growth in the agricultural sector is twice as effective at reducing poverty as growth in other sectors of the economy.

After decades of underinvestment, people are waking up to just how powerful agriculture is at promoting peace and growing prosperity. With a changing climate and increasing global population, investing in the farm families who grow our food is not just a boost to their livelihoods and dreams, but a critical hedge for all of us.

Root Capital knows this firsthand. Over the past 15 years, we've loaned over $700 million to more than 500 small and growing agricultural businesses that aggregate the products of nearly a million smallholder farmers across Africa and Latin America.

Investing in these enterprises has an exponential impact. Each time an enterprise receives credit from Root Capital, an average of 1,000 smallholder farmers are able to access markets that pay premium prices. That means farmers can build more sustainable livelihoods, and that their families and communities are better provided for. It means that precious natural resources are better managed so that water and soil are conserved and healthier products reach the marketplace. And it means that communities facing devastating challenges -- natural disasters or conflict -- are more resilient.

The majority of our clients are able to grow their businesses by 20 percent each year. Almost a third of our clients achieve growth rates of 50 percent or more. This year alone, we've helped improve livelihoods for more than 375,000 farmers and their two million family members.

But through all this work, one thing has always been obvious: no one can fight poverty alone. Growing rural prosperity is not only hard work, it requires collaboration. Solving deep-seated issues and accelerating slow-changing financial, political and cultural dynamics demands an ecosystem of actors -- from impact investors to commodity traders to policy makers to technical assistance providers.

Nothing has underscored this better than the current crisis in Latin America's coffee lands. In 2013, an insidious coffee fungus known as coffee leaf rust or la roya exposed the longstanding vulnerability of smallholder coffee farmers. It was all too clear that siloed solutions -- one NGO intervention here, another policy intervention there -- would not be sufficient to meet the challenge at hand. Indeed, the coffee leaf rust crisis represented a critical opportunity for the international development community and the coffee industry to embrace a collaborative, holistic, interdisciplinary approach.

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Our response to the roya crisis, the Coffee Farmer Resilience Initiative, has been molded in exactly that spirit. The initiative combines long-term lending, short-term lending, financial training, agronomic assistance, and income diversification strategies to build resilience for coffee farmers on the front lines of the roya epidemic. It brings together diverse players including Cooperative Coffees, the DOEN Foundation, Equal Exchange, Keurig Green Mountain, Open Road Alliance, the Multilateral Investment Fund of the Inter-American Development Bank, the Progreso Foundation, the Skoll Foundation, Starbucks, USAID and more than 50 smallholder farmer associations in a joint response. It's our attempt at a comprehensive solution that addresses the vulnerabilities of coffee farmers, helps them respond to the roadblocks they're facing and creates a blueprint for collaboration to address future challenges in coffee production and other value chains as they arise.

As we create these plans, tools, and models for others to utilize, we will leverage the more than 15 years of experience and knowledge we have at Root Capital. Most importantly, we will join forces with others in our pursuit of lasting change.

Investing in agriculture has a massive impact. Are you ready to help grow rural prosperity?

Between October 27 and December 5, Root Capital is participating in the Skoll Social Entrepreneurs Challenge on CrowdRise.