Nicaragua: Big Buyer Helps Small Growers

This document presents one of the four case studies on constraints to rural and agricultural finance, sponsored jointly by USAID's Microenterprise Development and Agriculture offices.

It focuses on the commercial relationships between Hortifruti, a Costa Rican buyer/distributor of horticultural products, and small producers in Nicaragua.The document finds that:

• The relationship between Hortifruti and its growers is beneficial to both sides;
• The growers enjoy a guaranteed purchase of their goods, allowing them to plan ahead and greatly reducing their vulnerability to market changes and external market shocks;
• Hortifruti has increased the growers' skills and knowledge by transferring technology and information;
• Hortifruti relationship has reduced growers' needs for credit.

The document concludes that:

• The growers need to invest in assets such as irrigation and greenhouse equipment;
• Buyers like Hortifruti cannot be expected to provide this type of financing;
• In the absence of a reliable supply of investment capital, few farmers will be able to make the leap to more advanced production methods;
• Mission assistance would be best targeted at ensuring supplies of investment capital to small growers, helping them to engage in market relationships and build their own sustainable sources of technical and financial assistance.