Managing the microloans

While Unión MicroFinanza now offers various programs, including training and community development, the organization began with a microloan program for small-scale farmers. Overseeing this program in La Unión is José Martir Alvarado. Martir has been working with microloans for UMF for five years, and has been leading the program for four. 

Martir leads a microloan meeting in the village of Nueva Paz.

Twice a year, Martir prepares for microloan distribution by putting a price on dozens of products, receiving hundreds of farmer microloan applications, entering the information into our databases, and managing the microloan distribution.

Besides tracking the amount of fertilizer and agricultural tools each farmer receives in the form of a microloan, Martir holds microloan group meetings in the villages where interest and capital is paid on loans. Each microloan group meets every 15 days; a member of UMF leads the meetings not only to collect interest, but also to hear about how the farmers and their harvests are doing. After meetings, Martir spends time in the office entering all the payment information for each farmer in a computer to keep track of each loan’s interest and capital.

But, apart from working on the finances and numbers, Martir builds confidence and relationships with farmers during the microloan meetings. During discussions at meetings, Martir learns how farmers’ families and farms have been since he last saw them, and he offers advice or resources. 

Martir also leads the engineering designs for our community development projects. He uses whatever resources or tools are available to make any needed improvements for anything from community projects to the UMF beneficio to our office. If Martir is presented with a challenge, he immediately takes on the challenge and begins to work on it, often not stopping until he has found a solution. Martir, who was born and grew up in La Unión, cultivates fruit trees and owns a small coffee farm. He and his wife have four children, three of whom attend the bilingual school in town. He hopes that his youngest son, who is now in the public kindergarten, will also be able to learn English at the same school as his siblings.

Your support to Unión MicroFinanza helps support our employees (like Martir!) and their families. With a sustainable income, they are able to invest in their children’s education, their homes and their family farms. A monthly donation helps our organization provide this sustainable income – sign up to become a monthly donor on our website! Thank you!

Contribute to the well-being of UMF employees

Gilberto Barrientos works with coffee farmer Francis Castillo on a field plan.

Bienestar: the concept in Spanish of generally being in a good state financially, emotionally, and physically. Well-being.

Over the past five years, we have been working in La Unión, Lempira, Honduras, to help farmers, their families, and the communities in which they live, achieve economic stability and well-being (bienestar, in Spanish). At Unión MicroFinanza, we want our employees to achieve the same stability and well-being!

For this reason, we are excited to announce our Bienestar Recurring Donor Drive, which will be running through the month of September!

What does the Bienestar Donor Drive support?

This donor campaign supports our employees through salaries and health insurance, office rent and materials, and motorcycle transportation to community villages. These costs are all fundamental to the functioning of our organization; without this funding, we cannot continue all of our programs, grow the organization, or maintain stability and efficiency. In order to cover these costs, we need to raise a minimum of $4,000 per month.

Including partners like you in our organization ensures the continued growth of our training, microloan and community development programs. Here are our key overall fundraising priorities:

• Current employee salaries -- $3,010 ($430 per employee) per month
• Motorcycle maintenance and transportation -- $170 per month
• Office (rent, Internet, and maintenance) -- $250 per month
• Staff health insurance -- $875 per month

How you can support us:

Become a monthly donation partner! We value all contributions, but it is through monthly donations that we achieve financial stability and are free to focus on the communities of La Unión. Below are some donation suggestions:

• $25 per month – Contribute to our rent for office space in La Unión
• $50 per month – Support one month of motorcycle transport to villages
• $100 per month – Support a week salary for a UMF employee

Visit our website to become a monthly donation partner. To stay updated on news from UMF, find us on Facebook and sign up for our monthly newsletter. Thank you! You make our work in Honduras possible!

Summer in La Unión, sharing knowledge and experiences

If La Unión had a tourism industry, its high season would be June. Many visitors, new and returning, come to town as their school year ends, but they aren’t coming as tourists. Sure, the tropical green mountains and open views of the valleys are impossible to miss on the drive into town. But most of these visitors are coming to meet new friends (and possibly visit old ones), and continue building partnerships between their respective communities. And for three interns, these relationships will be formed over their 10 weeks in Honduras.

As with previous summers, Unión MicroFinanza hosts interns for the summer months to assist with and learn about community partnership projects (watch the blog to read about new projects!) and the microloan, training and coffee programs. These interns also provide the organization with valuable research on topics varying from coffee leaf rust to markets and savings.

Besides this, summer interns live in the town and spend time with the people who live here. They will take these experiences and new perspectives with them as they return to their universities and friends in the States. This year, four interns are joining UMF, with one arriving later in the summer. Aidan Baldwin, Andreas Vailakis, and Marcus Warner have different areas of study and interests, which allows them to work on a variety of projects with the organization.

Aidan comes from the University of Notre Dame, where he is studying finance and entrepreneurship. Along with the other interns, he is helping organize and carry out distribution of June microloans. Aidan has already noted that some of the needs and resources in these communities differ from those he has visited in other developing countries. He’ll be hearing more about market access for small farmers in La Unión, and more about Aldea Coffee, which sells La Unión coffee in the U.S. Besides this, Aidan hopes to improve his Spanish, aided by the Honduran UMF staff.

Andreas is studying for his master’s degree in social enterprise from American University, concentrating on international development in Latin America and monitoring and evaluation. In addition to working on a monitoring and evaluation plan for UMF programs, Andreas is interested in learning more about the savings strategies of households in La Unión, including investing in and selling non-perishable goods. During his internship, Andreas is staying with a farmer in UMF’s coffee training program. In living with them, he has noticed that women in La Unión have just as much work to do as the men: “Although Martha, the mother, is nearly the same age as me, she feels like my Honduran mom. I’m impressed by how hard she works and how much she does in the day. She is typically the first one to wake up in the family and the last one to bed, and I almost never see her taking a break.”

Marcus Warner studies civil and environmental engineering at the University of Illinois in Urbana-Champaign, focusing on hydrology and energy-water-environment sustainability. His knowledge will be valuable for the two water-focused community partnership projects that UMF is currently involved with. Marcus is excited to learn from UMF employees Gilberto, Martir, and Pedro, who creatively approach engineering challenges based on experience rather than formal training. “Perhaps the most valuable thing that this internship will leave me with is motivation. In all of my classes before this summer, the problems that needed solving seemed abstract, even if they were based on a real-world engineering project. However, working with villages through similar problems this summer has given me a powerful frame of reference for future schoolwork.”

Meeting farmers, hearing their stories

By Kerry Huang

A lot can happen in a month. A business can be started. A house can be built. A farm can be planted. Or a life can be changed.

Only five weeks ago, I was in my comfortable room back home in Rochester with no clue of what I was getting myself into. After all, I have been to Central America before; how different could it be this time? What I didn’t realize was that living in a place for an extended period of time is completely different from vacationing there for a week. Since my first blog, I got to see and learn a lot more about life in La Unión. This post touches on two different aspects about my observations and opinions, both centered on farmers I have met in Honduras while in the office.

Kerry talks with farmers receiving their microloans.

Specifically, I have been busy working on microloans and on my research project. Here, microloans are distributed to farmers in the form of fertilizers. Farmers from aldeas (villages) around La Unión come to pick up their orders and receive any other information they need for their next monthly meeting. In preparing for microloans, we needed to set up a distribution sheet for all the farmers and go over what types of fertilizers they requested. Lead by Martir, Gilberto and Pedro, we reviewed every client’s loan application and determined how much each farmer qualified for and how much they would receive for their microloan. These numbers take into account the farmer’s attendance at bimonthly meetings and repayment records from past microloans.

Every client who came into the office had a story. The farmer that made the deepest impression on me was a man who walked in with crutches. At first, I thought his foot had nails in it that came through his socks, but that didn’t seem plausible. I glanced back. It did. On March 6^th of this year, he had been chopping wood with an ax and accidentally chopped right through his foot. The nails were surgically implanted to hold his foot together until the wound healed. He is hoping to get the nails taken out in September but will need another checkup just in case.

In the aldeas, surgeries and emergency medical care aren’t available for many miles. The nearest hospitals are 2-3 hours away by bus, and for more serious cases, residents need to travel to San Pedro, about 5 hours away by bus. This farmer’s accident would have cost him not only medical bills, but also the income lost from not being able to work on his farm. Moreover, like much of Central America, his farm suffered from roya, or coffee leaf rust disease, which would have further impacted his harvest income. I can only imagine the hardships he endured (and still is enduring) to support his family. Despite the situation, his strength resonated. This has been a recurring theme with all residents of La Unión: resilience. They find a way to come back.

I was likewise impacted by another example of strength and resilience. It regards a common story shared by only a handful of voices: the voices of women. In the week and a half of microloans, I was excited to see a few women farmers walk in to buy fertilizer. In La Unión, women typically stay at home to cook (it may take hours to prepare one meal) and take care of their children (many households have three or more children). The male of the household is usually in charge of working on the farm or other business. In one of my conversations with Hondurans from La Unión, I mentioned that some fathers in the U.S. stay at home to take care of the children and do household work while the mother supports the family with her job. They simply laughed and thought I was joking. Although women in Honduras have many duties, they are usually not the main income-generator of the household. That is why I was very excited to witness five women, out of 143 clients, walk into the office for their microloans. Although only five physically came into the office, we have a total of 24 women microloan clients—17% of our total clients. (For those who didn’t come into the office, either their husbands picked up the fertilizer, or the village organized one or two representatives with trucks to pick up everyone’s fertilizer.) I recall learning that one of the women farmers represents La Cuesta as a village leader. And, in the town of La Unión, another woman simultaneously raises her three daughters, manages her coffee farms, and owns a coffee processing facility. I was impressed by the strength and independence these women show in their leadership roles.

By interacting with these and other farmers during these past few weeks, I have witnessed their unceasing ability to overcome obstacles. Whether faced with economic or social obstacles, they adopt a mentality of not succumbing to defeat—this is not for themselves, but for their family and their children. In every interview and every meeting with the farmers I have had, I see their faces light up as they mention their children, their cousins, and their parents. Through my conversations, I'm continuing to see how the people of La Unión work to support the ones they love. 

Reflecting on microloan season

By Sakina Shibuya

Sakina oversees the warehouse as
farmers come to pick up their fertilizer.

Last Friday marked the official ending of this year’s first round of microloans, which lasted for about two weeks. During this time, we distribute the agricultural input microloans to farmers in our program. In this post, I would like to share what, in my humble opinion as an intern, I find fascinating about UMF’s microfinance operation.

But, before I get into details, I would like to quickly explain what microfinance as a concept means in general, for some who may not be familiar with the term.

Microfinance generally refers to various financial services provided to a client population which is traditionally not served by conventional financial institutions. It includes anything from savings accounts to micro-insurance. Some may recall the 2006 Nobel Peace Prize winner, Mohammed Yunus. He is the founder of Grameen Bank in Bangladesh, which is internationally famous its ultra small loans for small businesses, mostly owned by females. How ‘micro’ are Grameen Bank’s loans? It may be as small as a couple hundred US dollars.

Within the realm of microfinance, UMF provides microloans that are quite different from those of Grameen Bank. And I, as a graduate student who studies microfinance, am absolutely intrigued by UMF’s loans (I hope you are too, after this blog post.) So, let me be a bit arrogant and teacher-like for just a little, and explain why that is the case.

One may wonder how UMF implements loans and delivers cash to each farmer in a town where roads are unpaved, and water and electricity stop frequently. (La Unión doesn't have a bank branch – the closest branch is about an hour and half away by car.) It is quite risky for a bank to store loan funds in cash at its office. Additionally, having no bank in town indicates that farmers themselves are not going to be able to withdraw cash easily from their accounts (if they have any). Hence, conventional loan implementation through fund transfer between bank accounts doesn't make sense in the context of La Unión.

Given these obstacles, UMF implements loans by distributing fertilizers, rather than by allocating cash to farmers. Lending through the distribution of fertilizer has several implications. Firstly, it means that UMF can replace risk of keeping cash with one of storing fertilizer in a secure warehouse. Obviously, the latter has much lower risk.

Secondly, by distributing a specific commodity (fertilizer), UMF can restrict the use of loans. While cash can be used for purposes other than agricultural, fertilizer can only be applied to soil. Though it may be sold to attain cash, fertilizer is far less flexible than cash. Using fertilizer helps UMF reduce the necessity of fund tracing after loan implementation.

Brilliant, isnt’ it?

I very much enjoyed being part of UMF’s microloan operation. My responsibility during microloan time was to be in charge of the fertilizer storage and inventory control. It was my job to assure the right type and quantity of fertilizer that remained in physical inventory at the end of each business day.

Although my Spanish ability is limited, I thoroughly enjoyed interacting with our coffee producers. One day, two producers from the same village came to pick up their fertilizer, but their truck broke down as soon as they parked it in front of the storage. A moment later, I was pushing the truck with them in order to kick-start it so it could go get fixed. After seeing the car leave, I went back to the office. Then, the daughters of one of the producers brought me a bottle of orange juice and crackers. It was their thank-you present for pushing their truck.

My Spanish is horrible, and I honestly doubted that my wimpy push was much help for them. But they shared with me a small part of their daily experience, and let me be part of their group just for a moment. The orange juice, crackers, and the smile they gave me were indescribable. Maybe I’m being too sentimental. But this has been my favorite moment in La Unión so far.  

Adonil's corn mill, one year later

Interviews by Gilberto Barrientos and Pedro Hernández

Adonil and Gilberto

Jose Adonil Tejada came to La Unión on Friday to pick up his microloan of fertilizer for his coffee farm. Last year, Adonil received a loan from UMF to purchase a corn mill to grind corn into flour for his family and the community of La Ceibita, where he lives. In the year since he was able to buy this mill, he has paid off the loan and has secured a small but steady income for his family from the mill.

Besides receiving money from other families using the mill, Adonil’s family saves money by being able to use their own mill instead of paying to use another. Currently, they have an average of four people from the community coming to use the mill each day. The price Adonil charges others to use the mill depends on how much corn they bring, but he said the average is about 3 lempiras per person. This means the family earns about 12 lempiras per day from the mill.

Twelve lempiras is about $0.60, which doesn’t seem like much. However, many families in the La Unión region live on less than $2 per day. To receive an extra income of 360 lempiras (about $18) per month is no small thing, especially if a member of the family needs medical care, new clothes or school supplies. In addition to this income, Adonil’s family saves about 90 lempiras per month by having their own corn mill, making their total income/savings 450 lempiras (about $22.50) per month.

Adonil has not had to spend anything on the mill for repairs because he and his family perform simple maintenance to care for it. They make sure water does not fall into the motor, and they clean the mill immediately after grinding corn. They also clean the band of the motor and use resin on it to keep it on track.

Adonil said that he and his family are very happy with the mill, and that it has been a good investment for them. He likes that it is easy to operate for him, his wife or his daughter. At UMF, we hope to continue offering access to microloans for processing equipment, through which farmers may support their families, as well as provide a service for their communities.