STiR coffee and tea magazine

28 STiR coffee and tea | 2025 Quarter 3 Autumn (Sep/Oct/Nov) Algrano CFO, Florian Schaffner, is the head of data and one of the architects behind the company's new prepayment system. Photo credit: Algrano Algrano started as a third-party platform connecting coffee producers with buyers, which led to shipping and logistics management before branching out to financing. Photo credit: Algrano Schaffner noted, "Most of the time, the roasters only pay when the coffee is already warehoused and released. But on the other side, the producer needs to pay for everything way be- fore that." Algrano attempts to balance this by offering roaster financing too — delaying payment while still ensuring the pro- ducer or exporter is paid free on board (FOB). These imbalances also shape bargaining dynamics. While pro- ducers are often forced to accept prices dictated by market vola- tility, importers can hedge their risks using financial instruments. Bridging this gap requires more than better prices — it calls for financial innovation and risk-sharing mechanisms that empower producers to act as partners, not exclusively as price takers. Rebuilding Trust Through Data What makes Algrano's approach distinct is its use of relational data. Contracts, delivery punctuality, and producer-roaster re- lationships become proxies for credit scores. It doesn't rely on paperwork and site visits; it leverages what it knows from years of transactions. Patiño describes the difference: "You know how much the loan is going to cost, how much you are going to borrow, and when it will be disbursed. It is a transparent system," he said. The transparency and speed are game changers in the coffee industry. The use of real-time performance indicators also reduces ad- ministrative burden and increases agility. In regions where rural internet access is limited and bureaucratic hurdles abound, data- driven underwriting offers a practical and scalable alternative to traditional credit evaluation. Toward a Financially Resilient Coffee Trade What Algrano is building is not just a tool, but a financial buffer. Its community of producers, small exporters, and roasters acts like a decentralized organization where information, risk, and capital circulate more evenly. Schaffner remarked, "At some point, every platform be- comes a finance company. You move coffee in one direction and cash in the other." The next frontier? Long-term invest- ment, insurance, and inventory financing. But for now, even the simple ability to offer a $5,000 prepayment without bureaucracy is revolutionary. The broader question is how to bring more actors into this model. Financial inclusion in coffee shouldn't be limited to the tech-savvy or already well-connected. If platforms like Algrano can develop entry points for small cooperatives or community banks, it could multiply its impact and help formalize what has long operated in the shadows of informal finance. While platforms like Algrano innovate from the ground up, some traditional financial institutions are adapting too. In Co- lombia, Davivienda Bank introduced the Credit Card Agropecu- aria Cafetera, a specialized product designed for coffee and agro producers. It offers revolving credit lines for working capital tied to the agricultural calendar, helping growers cover input costs or labor during preharvest months. Though more accessible than classic loans, it still relies on formal documentation and credit checks, criteria that many smallholders struggle to meet. Its emergence, however, signals a growing recognition by mainstream banks that liquidity at origin is not a luxury, but a necessity. The Climate-Finance Nexus Climate change is exacerbating financial volatility in the coffee industry. As rainfall patterns shift and pests move into new al- titudes, producers need capital not just to harvest but to adapt. Without access to timely financing, adaptation measures such as planting rust-resistant varieties, on-time integrated pest and dis- ease management, or investing in irrigation might be out of reach. In Algrano's 2023 Impact Report, 59% of surveyed produc- ers cited climate-related events as major factors impacting their yields. Yet only a minority had access to any form of climate risk insurance. Financing, then, becomes both a buffer and a prerequisite for resilience.

• Cover