Coffee Farmers Face Absurd Interest Rates

Coffee Farmers Face Absurd Interest Rates

July 12, 2021

Here's What 70% Interest Rates Look like at Home

Imagine having an extra $17,000 dollars in your pocket. What would you do with it? 

Now imagine having to pay an extra $17,000 in interest on a 70% interest loan required to buy something as simple as an iPhone. Coffee farmers face those kinds of interest rates every day and it keeps them shackled in cycles of debt. At Road coffee we are breaking this cycle for coffee farmers through our micro-loan program.

The Micro-loan Program

At Road Coffee, we have created a micro-loan program that is freeing coffee farmers from predatory lending. Micro-loans are small amounts of money that are lent to help finance a project or business at a given interest rate. Predatory Lending is a practise where lenders impose unfair, deceptive or abusive loan terms on the borrowers. Coffee farmers often have to pay interest of up to 70% on loans– which is absurd.

What Does 70% Interest Look Like?

To bring this into perspective, let’s take a look at what it would look like if you had to get a loan that had an interest of 70%. In Canada, a new iPhone 12 Pro outright costs $1400. If this was something you needed but could not afford you would have to get a loan.

Imagine you received a loan to buy an iPhone with similar terms to those given to coffee farmers– we’ll use a loan that compounds annually, over a five-year term, with an interest rate of 70%. 

With this coffee farmer loan, your iPhone 12 Pro would cost $19,878.00 at the end of the five-years.

Can you imagine paying $19,878.00 for your iPhone after five years, versus the $1400 upfront? When coffee farmers seek business loans for the equipment, fertilizer, and staff they need to grow their business and produce coffee, that’s the challenge they face.

This is why we, at Road Coffee, started our micro-loan program. We take the 0 off of the 70% and offer 7% interest on micro-loans. Imagine the difference that makes for coffee farmers!

If you were to get a loan for the iPhone 12 Pro at a 7% interest rate instead of the 70% interest rate, you would only be paying $1,963.57 after five-years. 

That is a difference of $17,914.43. With $17,914.43 you could buy a brand new 2020 Honda Fit.

What about housing? $17,914.43 is enough for a 5% down payment on a $350,000 house– or more than enough to rent a two-bedroom apartment in Saskatoon for one year

What does that look like for you?

Through our micro-loan program, you have the opportunity to unshackle these coffee farmers. With your support, we will be able to impact 25 more farmers and their families. This will allow them to not only grow their businesses but educate their children and benefit their communities.

 We love coffee, but for each of us at Road it’s about more than a cup of coffee. We are taking important steps towards coffee farmers’ independence and freedom.

How cool would it be to have a hand in ending predatory lending for coffee farmers? You can partner with us by:

  1. Investing $25, $50, $100, or whatever you can afford into our microloan program, it will make a huge difference in the quality of life for coffee farmers. 
  1. Subscribing to a monthly Road Coffee subscription to have their high-quality coffee beans delivered to your door. Not sure how much coffee you go through each month? Try our simple coffee calculator to find the perfect subscription for you.

Author Natasha Layton