Acumen and the U.S. Embassy announced today a $1 million investment in Azahar Coffee from the Investing for Peace Fund. Based in Colombia, Azahar Coffee works with smallholder famers across the country to source specialty green beans for export to international markets, while roasting and distributing coffee in Colombia. This is the second investment for the Investing for Peace Fund, a joint effort between Acumen and the United States Agency for International Development (USAID) to promote private investment in social enterprises to catalyze economic growth in Colombia’s conflict-affected regions.
Founded in 2010, Azahar Coffee has successfully structured a premium coffee supply chain comprised of more than 1,000 smallholder farmers living in rural communities across Colombia, such as Nariño, Cauca, Huila, Tolima and Meta. The company supports farmers to help them improve the quality of their beans and increase their overall productivity. In addition, Azahar purchases the coffee beans at a premium price to ensure farmers make a profit, then exports its single-origin coffee to the United States, Europe and Australia, while also distributing products locally in Colombia.
One of the main reasons smallholder farmers fall into poverty is the volatility of the international coffee market, both in terms of price and the exchange rate. Azahar Coffee buys its coffee at fixed prices, independent of the international market price, thus generating stability in producers’ incomes and promoting a more equitable coffee value chain. The premium prices Azahar offer its coffee farmers double and often triple their net income. The company also contributes a 5 to 10 percent premium that is invested in strengthening farmers’ associations and cooperatives.
Acumen and USAID’s $1 million investment in Azahar Coffee will help strengthen the company’s operations, support its growth strategy in Colombia and internationally, and allow it to increase coffee purchases to benefit smallholder farmers. The company´s commitment to creating a fair yet competitive value chain will also support the work of Colombia’s grassroots organizations, which are critical to creating trust and strengthening the social fabric of post-conflict areas.
“Azahar Coffee’s business model is transformational,” said Virgilio Barco, Acumen’s Latin America Director. “Not only does it positively impact the income of coffee producers but it enhances the competitiveness of the value chain in Colombia. Acumen and USAID are proud to support companies, such as Azahar Coffee, that help connect rural Colombia with international markets. Azahar is an outstanding example of businesses dedicated to improving conditions for rural producers and thus laying the foundations for sustainable and lasting peace.”
The Investing for Peace Fund directs capital and debt investments through Acumen into early-stage companies that demonstrate the capacity to have widespread impact on the country’s marginalized, poor rural populations. The first investment, made in January of 2016, was in Cacao de Colombia, a producer and marketer of premium chocolate and cocoa grains that sources cacao—the raw material for chocolate—from smallholder farmers affected by Colombia’s long history of armed conflict.