3 Challenges to Economic Diversification – And Their Solutions

Coffee is often not enough to support a community alone. The price is too low, the market instability too high, and bad weather, pests, and diseases too common. The 25 million smallholder producers (according to Fairtrade) across the world are vulnerable to “thin months” in which they have little food.

One solution can lie in economic diversification – in planting other crops and starting side-businesses. But how does this work in practice? What are the challenges? And when can the community expect to see profit?

I work for the NGO The Coffee Trust in the indigenous Ixil region of Guatemala. Here’s how the Ixil people are doing economic diversification.

SEE ALSO: Want to Solve the Coffee Price Crisis? Stop Looking at Coffee

Coffee producers in the Ixil region. Credit: The Coffee Trust

Women Lead The Way

Communities who already produce multiple products – perhaps rice for subsistence farming, or baskets for daily use – can diversify their incomes by investing time in those other products.

But for communities dependent on a single crop, it’s much harder. New skills have to be mastered, new resources must be gained, and new ways of doing business need to be understood. The Ixil region is poor, isolated by mountains, and indigenous. For many years, its only source of income was coffee. This meant investing in other income streams wasn’t easy.

But women – who, traditionally, have limited economic roles in the Ixil community – have led the way.

There are three main economic diversification programs in Ixil: microcredit, hen raising, and honey farming. Women run the first two of these programs with great success. There are also other, smaller, initiatives, such as weaving.

Women create weavings to be sold locally or exported. Credit: The Coffee Trust

A Microcredit Program Supports Other Programs

Almost 2,000 women are involved in the Women’s Micro Credit and Savings Program, Chajulense de Mujeres. These small loans can be used to start other programs for economic diversification – such as businesses selling food and other items, textiles, and agriculture (gardens, beans, corn, coffee, etc.). The women repay their loans within 12 months, and make sure to save 10% of the money.

The biggest challenges have been administrative. The program has grown rapidly, creating new demands. The women now have a consultant guiding them through this, and the program is completely self-sustaining.

The Microcredit Program: Women meet to make loan repayments and discuss business strategy. Credit: The Coffee Trust

Hens Provide Food & Income

Only 35% of Ixil families consume protein regularly. As such, hens provide one of the best opportunities for nutrition and economic diversification in the region.

But there are challenges: the hygiene conditions are very poor, with an environment too contaminated for chickens to have a good survival rate. The women in this program are working to improve conditions and have started using vaccines. They are raising the hens organically, and are improving their use of EMs to do so. And the project is starting to see success.

The three main goals are for hens to produce enough eggs for each member of the family to eat them, for hens to produce enough extra eggs to sell, and to hatch more hens.

They are beginning to generate enough eggs for family members to eat one per week. Enough eggs should be produced in the coming years to bring in additional income for families, with the sale of hens following after that.

Credit: My Chicken Coop

Waiting to Profit From Honey

In the honey program, farmers take out small loans to build apiaries and learn proper hive building, maintenance techniques, and beekeeping skills. The honey is then processed in Guatemala and exported for sale.  

The biggest challenge is that the average production per hive is low, at only 26 pounds. While the project is self-sustaining, beekeepers are still waiting to see profit. This should come with time.

Coffee farmers meet to discuss the honey production program. Credit: The Coffee Trust

Economic Diversification Outside Ixil

What works in Ixil may not work elsewhere. The best methods of economic diversification will depend on the community’s resources, knowledge, and needs. It should also be led by the community.

Economic diversification is a long-term project. There will be challenges to any new crop or business. But it can also provide a desperately needed additional income.

We don’t want coffee farmers to give up coffee. But we want them to have incomes even when coffee leaf rust (la roya) hits or there are freak weather conditions. We want the thin months to disappear.

A coffee community that is able to feed itself will be able to produce a better and more prosperous coffee crop. This is because because they won’t be struggling to eat, send their children to schools, or take care of their own healthcare.

Article written by J. Fishbein of  The Coffee Trust. Feature photo: Nathan James Johnston Program. Credit: The Coffee Trust.

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