Progreso Fund

Progreso Fund was designed for DOEN Foundation and Rabobank Foundation as first financers in 2000 in order to improve the access to pre-harvest and trade finance for small coffee producer organisations in Latin America and Africa and Asia. At that time trade finance was a real limitation for small producer organisations. Because of the nature of these organisations they were being seen by the local banks as not bankable. So the vast majority of credit used in order to be able to produce, buy and export was or coming from buyers willing to pre-finance contracted (limited) or coming from local institutions at a very high interest rate, making it difficult to compete.

Management oversight of the Progreso Fund was contracted out to Avance (www.avance-pmc.nl), a consulting firm lead by the Progreso Fund portfolio manager Angel Mario Martinez Garcia.

Since 2012, the Rabobank Rural Fund (https://www.rabobank.com/en/rabofoundation/rural_fund/index.html) has absorbed the portfolio of the Progreso Fund; there is still collaboration between the Progreso Program and the Rural Fund to make sure that the Access to Finance is available for producer organizations.

Financial description

All organisations require funding to buy the product from their members, otherwise there is a chance that it will end up in the hands of intermediaries. Producer organizations need access to investment capital to cover their long term financing needs, like investments in infrastructure or renovation of plantations. The Progreso Fund made good relationships with (social) lending organizations that are specialized in providing short and long-term credits to producer organizations and that are willing to work with the Progreso members.
Export financing made it possible for the organisations to grow, in terms number of members, volume traded and additional income generated. It also made it possible to export organic certified coffees, thereby contributing to the sustainable management of coffee plantations. From 2000 to 2008 Progreso Fund built up a portfolio of over 25 clients with more than 10M USD equivalent in financing completed and a 0% default rate.
The fund was financed with subordinated loans from DOEN and Rabobank Foundation (valued at 7 million USD in 2009) at 0% interest rate. The export credits were given at 8% per year. The management fee was 2% for the fund management (including program design and coordination of other activities) and 1% for administration. In 2007, additionally decided that besides coffee it also would also finance cacao producers.