More than 90 percent of all producers in El Salvador are subsistence farmers with little to no information about end-markets that will pay them a decent price for their products, leaving them susceptible to intermediaries in the value chain, who often pay lower than market prices for their crops. Despite the growing demand for locally grown produce, the agriculture sector currently suffers from insufficient production of fruits and vegetables and low productivity stemming from the lack of access to training, inputs, new markets, working capital, and affordable logistics solutions. As a result, most first quality produce is currently imported as the local production is insufficient to cover the demands.
While some constraints are unique to El Salvador, most are similar in nature to those faced by smallholders globally. Therefore, CGEP saw a unique opportunity to transform the agricultural sector from subsistence to commercial viability to meet the growing domestic demand.
CGEP replicated their supply chain enterprise model and facilitated a $1.05 million investment in Acceso Oferta Local – Productos de El Salvador (AOL-SV) to address these key barriers faced by smallholder farmers. AOL-SV will purchase fruits and vegetables from small-scale farmers at favorable payment terms, provide essential training in good agricultural practices, and ensure farmers have access to quality seeds and fertilizers that will significantly improve the quality and yields of the produce they grow.
With better knowledge, targeted inputs, services and available credit, these farmers can in some cases double their current yields with minimal cost increases. These yield increases, paired with reductions in production costs, will increase their income. In 2016, the enterprise expanded their work to fishers, training them on sustainable aquaculture and fishing practices, introducing new technologies, and purchasing their fish and seafood for sale in local supermarkets. Yields for other crops also stand to improve due to better rotation, allowing farmers to diversify their sources of revenue. As of December 2016, the enterprise has worked with more than 1,200 farmers and their workers directly and generated over $3.1 million in beneficiary income.
Additionally, AOL-SV was awarded as an authorized vendor of Yum! Brands which owns all of the franchise licenses for Wendy’s, Pizza Hut, and KFC. AOL-SV is authorized to supply three different types of lettuce to all the franchise owners of Wendy’s and Pizza Hut owners throughout El Salvador. In addition, as an authorized vendor, AOL-SV can also explore other relationships throughout Central America.