Sector: Mostly vegetables (cabbage, carrot, green pepper, potato), coffee (small volumes, no own export capacity)
Investment: Procure washing facility, improve seedling production through protected agriculture, acquire refrigerated transport vehicle
Total estimated capital expenditure: USD 250k
Investment type: Seven year subordinated loan, two year grace period
Amount invested by Kampani: 215.000 USD
Co-investor: Not applicable
In portfolio since: April 2020
Deal sourced by: Rikolto (formerly known as Vredeseilanden/VECO)
Cooperativa de Servicios Múltiples Padre Odorico De Andrea R.L. (COOSEMPODA) is a multiple services cooperative established in 1995 in El Mojón, Jinotega – Nicaragua, originally solely as a credit and saving cooperative. Its current membership includes 114 active producers, with women representing 10% of this cohort.
Their primary produce market is selling cabbage to mainstream retailers. In 2014, they partnered with Walmart. COOSEMPODA now produces 80% of the country’s cabbage sold in supermarkets, about one truck load per day. Currently, other produce is sold by the farmers directly to intermediaries as the coop does not have the washing facilities to clean other vegetables to commercial market standards. As a result, margins for their vegetable production remain small and most of the cooperative’s present income comes from the sales of products needed for farming, predominately agrochemicals and seeds.
In 2019, four cooperatives, including COOSEMPODA, legally constituted the Union de Cooperativas de Hortalizas del Norte (UCHON). The objective of the UCHON is to improve and expand the supply to the domestic markets of healthy, quality vegetables. The charter requires the cooperatives to comply with Good Agricultural Practices (GAP) as well as Good Manufacturing Practices (GMP).
The connection between Kampani and COOSEMPODA was established by Rikolto, which has been working with the cooperative since 2016 through their Sustainable Landscapes project and has supported the coop’s commercialization structure. Kampani completed the transaction in April 2020.
With help of Kampani’s investment, COOSEMPODA is looking to meet the GAP and GMP demands while simultaneously increasing productivity, overall crop diversity and the range of produce they can sell directly to supermarkets. In order to achieve this they are seeking to upgrade their current processing plant to improve washing capacity and meet hygiene requirements. Additionally, they want to expand their seedling production capacity and develop protection structures that would allow them to increase production of sensitive crops such as tomatoes and green pepper. Finally, they plan to purchase a refrigerated truck to streamline transport of their produce directly to supermarkets.
COOSEMPODA has a sound and pragmatic investment programme, the management capacity to carry it through, a stable membership base, and a proven track record. Furthermore, they have strong partnerships and a demand for its product that exceeds their production – specifically, opportunities to expand the partnerships with Walmart, Subway and Pizza Hut.
Thanks in part to several donations received in 2005, alongside responsible management of accounts, their balance sheet and liquidity levels are healthy.
The social impact
Nicaraguans suffer under a political regime that provides minimal public sector services and social support. The nation’s economy is also constrained by the strict sanctions placed upon them by the US in 2018. This makes domestic markets even more crucial for the farming community. Improved production capabilities and capacities stand to significantly benefit not only the member farmers but their larger community.
The deal potential of four of Kampani’s six deals currently in portfolio have been identified by one of Kampani’s NGO shareholders. This deal, our seventh, would be the first deal where the work of Kampani is truly grafted on the work of an NGO. It is in large part thanks to the support of Rikolto that COOSMEPODA became investment ready. COOSEMPODA needed to address the “missing middle” – lack of access to financing was threatening to hurt its growth.
As is our practice, we also stipulated some ambitious social targets. For instance, COOSEMPODA has committed to increasing its membership by around 50%. In partnership with Rikolto and through the newly formed UCHON, COOSEMPODA will continue its GAP efforts and promote environmental health. COOSEMPODA has additionally agreed to place at least one woman on the Board of Directors and increase total female and youth participation to 15%.