Quarterly Progress Report: July - September 2021

This quarter, 11 agri-SGBs in Peru were reached with advisory services. Three new advisory clients completed diagnostics and work plans, while eight received services focused on financial planning and governance. Root Capital advisors have especially helped clients to monitor financial plans during the coffee and cocoa harvest season, which was underway during the reporting period, emphasizing COVID-19 implications on logistics, finances, expenses, and the market. In addition, a governance advisory pilot was implemented to help strengthen leadership management processes, risk analysis, and decision making. Political uncertainty persists after the June presidential election, as the country continues to struggle to stem COVID-19 infections and has the highest mortality of any country in the world as a percentage of its population. Working with agri-SGBs via advisory services, Root Capital has found that a condition influencing commercial dynamics is the high cost of coffee in the country, which is requiring a greater volume of capital for collection and requires agri-SGBs to be extremely cost-efficient to avoid losses at the end of the harvest season. However, this is having a beneficial effect for producers, as they are achieving higher prices and incomes from the sale of their coffee. Through its BMA services, Root Capital continues to work with clients to address these types of issues as a result of COVID-19 and adapt business plans and operations as needed. During the next quarter, the advisory team will focus on monitoring harvest plans, supporting clients to make possible adjustments in their financial and commercial strategies, and strengthening initiatives around greater medium-to-long term analysis based on adaptations as a result of COVID-19 and market volatility. In Central America, Root Capital's Advisory team continued to incorporate a gender lens across critical advisory services, including Internal Credit Systems and Financial Literacy. Two new BMA advisors were hired and will primarily support the coordination of financial advisory services throughout the region. Substantial progress was made with the completion of pending diagnostics and the preparation of work plans in each country. In order to follow up on established work plans and be able to conduct field visits with clients, Root Capital has been closely monitoring the COVID-19 and health situation of each country. Biosafety protocols that have been developed for workshops and in-person advisory engagements have been shared with all Root Capital advisors, and they have shared these protocols with all advisory clients in order to carry out in-person training. However, approximately 70% of advisory services continue to be conducted remotely. For all of its clients, minimizing the risk of COVID-19 has been a constant priority and has affected the dynamics of business operations. In some cases, part-time or remote work has been implemented, however, most activities must occur in the field (i.e., collectors, key technical assistance, transporters, among others) and in collection and processing centers. This reflects the coordination and management of a high number of people, which has been a challenge without significantly impacting production and processing. However, its clients have kept their operations active, implemented biosecurity measures, and are managing towards successful results for the 2020-2021 harvest. Of course, there is great uncertainty due to the evolving nature of the pandemic, which could continue to negatively impact production and sales volumes like it did during the previous harvest. In Honduras, advisory services this period focused on accounting, financial analysis and planning, and internal controls for four agri-SGBs. Of the four clients that were reached, one client was new while the other three have been consistently receiving services throughout the project. Root Capital's services are in extremely high demand among its clients, which is contributing to a higher level of coordination, preparation, and knowledge-building among its Advisory team to be able to effectively respond to the requests and needs of its clients. For financial analysis, trainings primarily focused on cost structure and equilibrium points. For internal controls, advisors have provided sessions on leadership and business ethics, tax reform, and procedures and regulations for internal credit systems. In Nicaragua, advisory services this period focused on strategic planning, internal credit systems, accounting, governance, and financial literacy for three agri-SGBs. During the reporting period, Root Capital's gender and financial advisors worked with one client to conduct a gender inclusion diagnostic to review the business' gender inclusion capacity and its policies and practices in order to detect barriers and opportunities to improve the participation and development of their women employees. Resilience Grants (RGs) have been a key component of Root Capital's COVID-19 Response Strategy and reflects how Root Capital has proactively and flexibly responded to this emergency and uncertain new reality. During the reporting period, an additional cooperative received approval for a Resilience Grant, and will focus on preventing the spread of COVID-19 by putting together biosafety kits consisting of antibacterial hand gel, face coverings, and liquid soap for its employees. The planned total of 20 agri-SGBs have now all received approval for KDP-supported COVID-19 RGs across Peru, Colombia, Honduras