A Preliminary Investigation of the Impact of Union Micofinanza on Coffee Producers in La Union, Honduras

Union Microfinanza (UMF) provides microfinance services to local farmers, runs agricultural training programs and community development projects, and purchases locally produced coffee beans for export to the United States. To preliminarily assess the impact of the organization on coffee producing clients, three investigations were carried out. First, a comparison was made between UMF coffee purchasing prices and the market valuation of Honduran coffee on the New York commodity market (C market) to determine whether UMF was in fact offering its farmers higher prices than the industry standard. Next, 6 qualitative interviews were conducted with coffee producers whom had sold coffee to UMF in order to determine changes in their lifestyles or mentalities after selling to the organization. Finally, coffee production levels of veteran clients were compared with those of incoming clients. Results showed that, while UMF prices were not consistently higher than the industry standard, they were much more stable. In addition, interviews showed that UMF had played a role in shifting the emphasis in the coffee market from quantity of coffee sold to the quality of coffee sold, while also impacting aspects of the lives of producers in various ways. It also appears that UMF’s veteran clients may have experienced higher than average growth in coffee production, although the ability to extrapolate this to the overall population of UMF microloan clients was limited by a significant lack of data about other potentially confounding factors, such as the size of loans taken by each producer, reasons for program dropouts, and selection biases.