All posts by Mark Lester

CEO, Winds of Peace

Drinking coffee as an act for peace

Drinking coffee as an act for peace in times of polarization

Nicaragua is once again extremely polarized. It is enough to compare different posts on our nica-update to see diametrically opposed views of the ongoing crisis. We post them not to imply that each perspective is equally true, but rather to recognize that important segments of the population hold contradictory views of what is happening and its underlying causes. Even more important are its implications for the future governability of Nicaragua –for any government to be sustainable, it will need to find a way to incorporate the interests of those holding the opposing viewpoint, no matter how “mistaken” they may be judged to be. We certainly learned this lesson at the end of the “contra war” in the early 1990s.

To contribute to the development of this understanding of the conflict, our close ally in Nicaragua, Augsburg University´s Center for Global Education and Experience, has developed an online course that delves into those two perspectives. The Crisis in Nicaragua: U.S. Destabilization or a Democratic Movement?

For our part, given that our major focus for the last few years has been accompanying Nicaraguan cooperatives, we have redoubled our efforts to support their economic and social enterprises in spite of the risks in these times of crisis, because we see them as potential oases of peace. Cooperatives generally have members of different political and religious perspectives who come together to achieve economic and social benefits for their members. By nature, they have to negotiate the accomplishment of common goals with members from different viewpoints.

Furthermore, the history of Nicaragua is full of examples where political violence starting in urban areas ends up claiming many more rural lives, as both sides recruit peasants by offering to meet their historic demands when they come to power. But consistently, after the conflicts end, while a few might end up benefitting, the effective political power of the peasantry remains largely unchanged, in spite of the many promises.

We see our contribution in this context to be helping cooperatives be successful economic and social enterprises in these difficult times. Because when successful, they contribute to the sustainability and stability of their territories, and thus lessen the attractiveness of purveyors of violence.

The problem is that because of increased country risk, credit to the countryside from both banks and microcredit organizations has largely dried up. No access to credit severely cripples the ability of cooperatives to play this role in their communities.

Since 1997, WPF has lent $3.7 million dollars directly to cooperatives and grassroots rural organizations, and has lent another $7.5 million to national microcredit institutions founded to support the rural sector. Even though these numbers show we are a small overall player, we intentionally set out to lend to groups that had never before managed a loan, precisely to help them establish a credit history, and thus open up other sources of credit to them. As a result, a number of cooperatives, and one now very large rural microcredit organization, have “graduated” to the point where they have “outgrown” the amounts we can provide, and now receive much larger amounts from a variety of lenders.

But as a small, private foundation (i.e. one that does not receive donations from the public), we cannot survive very long if those loans are not repaid. Correspondingly we have an overall loan loss rate of only 3.59% in this same period.

Even in this time of crisis, WPF has made loans to grassroots cooperatives worth just under $168,000 in this 2018-19 coffee cycle. But the risks only increase with this next coffee cycle, as economists point out Nicaragua now faces macroeconomic instability. Economic actors continue to send dollars outside the country, and international reserves continue falling. Specifically, this raises the specter that even though we make loans to grassroots coffee cooperatives, and they are able to export their coffee, once the payment for their coffee enters the country, the government may not allow those dollars to leave, thus making payment impossible.

The only way around this problem is to “triangulate” the loans, i.e. include the international buyers in the loan contract, where the buyers, once they have received the coffee, agree to transfer the amount of the loan and interest directly to WPF´s account in the US, sending the remainder to the account of the cooperative. That way the cooperative does not lose access to an international lender for not being able to make a transfer of dollars to the US.

We have already used this mechanism with a number of cooperatives. But given the new risks, we realize it has to be required for all our loans. The problem is in this last coffee cycle the number of contracts between cooperatives and international buyers actually dropped precipitously, while the number of contracts with “local buyers” increased to a similar degree. This strategy would not work with local buyers, because their payment to us would still have to overcome the hurdle of sending dollars outside the country during a possible ban.

Yet our research has shown that these local buyers are actually exporting all the coffee they buy. Given the uncertainty, it appears that previous direct international buyers are working through these intermediaries to source their coffee. This means that in this time of crisis, cooperatives are getting even less value for their coffee, as these intermediaries take a chunk of the money that previously went directly to them. Just when cooperatives need to be supported to promote local stability, they are even more hobbled by the new buying methodology.

WPF for some time now has been working with a team that accompanies some 50 cooperatives. Even before the crisis our team had been working with the cooperatives on issues of internal organizational effectiveness, equity, transparency, and effective member participation.

Now as a contribution to peace, we are willing to continue lending to these cooperatives, in spite of the risks. We want to form an alliance with coffee and cacao buyers interested in making a concrete and real contribution to peace in the countryside by buying directly from grassroots producer cooperatives. This is particularly important for this next coffee cycle.

We would not expect buyers to buy anything less than quality coffee, and the cooperatives we work with, in addition to providing the normal samples required by buyers, could also provide them with abundant information about their members, as many of them have done internal surveys, and even facilitated their member families developing their own “Family Investment Plans”.

Such an alliance would provide quality coffee to buyers, and would provide important income to coffee producers, thus enabling them to be oases for peace in their territory. In this sense, drinking coffee coming from such an alliance would effectively be an act for peace in Nicaragua.

Buyers and roasters interested in contributing to peace in this way in Nicaragua can contact us at marklest@gmail.com. We would also appreciate support from any readers in helping us make contacts with coffee buyers and roasters.

 

 

 

Message of Appreciation

On March 1 Steve Sheppard retired as CEO of the Winds of Peace Foundation, but will remain as President of the Board.  Words are inadequate for expressing my deep appreciation for Steve´s leadership in these 13 years, and how grateful I am that he is continuing on as President of the Board.

He has significantly moved the Foundation forward on the path that Harold charted. For that I think Harold would feel very proud – and to tell you the truth, lucky – that a person like Steve took up what Harold had started and moved it ahead under very challenging circumstances.

Harold was very much a “hands on” kind of person, and so was very involved in the direction of the foundation. A lot of the places we work today Harold himself visited on one of his many trips – from Jalapa, near the border with Honduras, all the way to Waslala, just into the Northern Autonomous Atlantic Region, and many places in between. The focus on small scale farmers, the lending we are doing, the focus on women and education all come from Harold and Louise.

But Harold had a lot of irons in the fire at the same time. Yes, he was getting older, but that was not so much a factor until near the very end. Well into his 80s he was still traveling here, involved in making the thrift shop financially self-sustaining, working on similar issues with the Children´s Home in Mexico and income generating initiatives with the Quixote Center. He was on Foldcraft´s Board. He was supporting a group called ISLA that was doing health work in Nicaragua. I am sure there were more, but these are only the things I remember hearing him talk about during my occasional trips to Kenyon for meetings.

But when Harold asked Steve to be the CEO, there was no temporary hesitation in the progress of the foundation, waiting for the new CEO to get up to speed. Steve´s experience as Director of Foldcraft, and involvement in the ESOP movement, meant he immediately perceived the organizational challenges the cooperatives were facing. With insight accrued from the Foldcraft experience, he was able to add completely new elements of analysis and tools to the work.

Steve has always been very conscious of the differences between the realities Foldcraft faced in the US context, and the realities small farmers face in Nicaragua. His blog posts provide an eloquent record of his reflections on this topic. His way of communicating about these “new” concepts and tools is a unique combination of a patience born of that reflection, and a profound respect for the cumulative experiences of the cooperatives and the WPF team. The result is a message that is able to take root in the soil in which it is planted, understandable to men and women peasants in rural Nicaragua, some who cannot read and write, and others with some university training. But all of whom nod in understanding.

But as important as the concepts are – and in spite of a language barrier- Steve communicates a real interest in each person, respect for their work, and confidence and enthusiasm in their ability to be a force for change in their cooperatives and communities. This more important message is one that cannot effectively be expressed by words, and therefore has never needed any translation.

That same message Steve communicates to us the team in Nicaragua. It is a message that motivates, imbues hope. Perfect remedy for trying times. Thanks, Steve, these are big shoes to fill (and I am glad you are not going anywhere).

Mark