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MEXICO - The typical small farmer in Mexico works about 12 acres. He grows enough food for his family and some surplus. But transportation and storage limitations often make it difficult to get that surplus to market. As a result, the farmer can’t sell what he grows, and without the additional income, he can’t buy what he needs. Where can the farmer find extra money? Certainly the local bank would not consider him a good risk, since he doesn’t earn an income that allows him to systematically repay a loan. Perhaps he could borrow from family members — if they’re not in the same desperate situation. Loan sharks are always glad to help and to charge inflated rates. Input suppliers may float a loan, for a while. So the small farmer has had nowhere to turn. But that was before the Fundacion Mexicana para el Desarrollo Rural, A.C. (FMDR) began its micro-credit program for smallholders. Since 1964, FMDR has helped lowincome rural Mexican families improve their lives by providing means to increase agricultural productivity and thereby, income. The concept is to support the farm-family unit in an integrated way that stimulates, motivates and generates incomeproducing activities that may or may not involve farming, in order to encourage diversification and mitigate risk. To accomplish this, FMDR helps create “famienterprises,” or small, familybased businesses, which frequently are launched by micro-credit loans. A Monsanto Fund grant supports FMDR’s micro-credit program, which is many farm families’ only financial alternative. The basis of the program are solidarity groups of 25-30 people, who establish and oversee a small savings fund, and add to it over time. According to the solidarity group model, every member is mutually responsible for the loan. People know and trust one another, and that keeps risk low. Typically, individuals borrow $80 to $650 at five percent monthly interest. The loans are collateral-free and can be used for any purpose, but must be repaid every week over 16-49 weeks. If one borrower defaults, the entire group loses its borrowing privileges until the debt is paid. To date, FMDR has helped establish more than 90 solidarity groups with more than 3,000 members. The vast majority are women, who gain empowerment and financial independence through the program. “Every rural family in Mexico lives in a small village where a lot of products and services are needed,” says Alfredo Espinosa Jimenez, FMDR’s director general. “Micro-credit recipients have used the borrowed funds to start small businesses that provide these products and services to their neighbors, and eventually, to a larger market, in amazingly creative ways.” Operating from patios, windows, carts, stands or stalls, these entrepreneurs sell pottery, chili peppers, poultry, t-shirts, cotton or shoes. Others offer crafts, coffee, goats, corn, wheat, beans or milk. Some sell Avon perfumes and Fuller brushes. Several women grow an insect that produces a desirable, rich red pigment, and some grow the cactus that the insects like to eat. Beyond the loan, FMDR helps assure the business is capacity-building and sustainable, so the loan can be repaid. To that end, FMDR has integrated the famienterprises into cooperatives for value-added processes, more costeffective purchasing and product sales. It also offers classes in technology, marketing and money management. The micro-credit program benefits are twofold, Espinosa says. Since the majority of those who establish a small business are farmer’s wives, the resulting income has a tremendous impact on their families’ well-being. Furthermore, he adds, “it increases the well-being of the community, because these families can now purchase what they need and want at affordable prices and in convenient locations. “So there is, in fact, abundance,” Espinsoa says. |