Building Trails in the Cloud Forest

For those of you out there who are keeping score at home, my last blog post was about how schools were closed for more than a month because of a teachers’ strike. So, I basically spent the entire post explaining (okay, call it complaining) why I haven’t been able to do part of the work I wanted to in my town because of things that were way out of my hands. (And hopefully those roaring political storms have calmed for a bit and I can soon restart work at the school). But I found it unfair that I didn’t talk at all about the work that I have been doing in the past couple months: so here it is, four brief overviews of solid projects that have been happening around here:
1. Database system at the coffee co-operative

2. Total trail system make-over in the cloud forest

3. Construction finished on community center

4. New project: improve health center

1. Database system at coffee co-operative

In February I teamed up with a fellow business volunteer, Carrie Purdue, UVA grad and good friend, to design a new database system for my coffee co-operative (see picture of us on a hike in a national park outside of Teguz). The administration was looking for a way to digitalize their receipts, to get up-to-date inventory reports, and to be able to track the production and credit trends of coffee farmers who sell to the co-operative over time. So Carrie shared some of her extensive Excel know-how and we sat down and put together a new program that, I’d like to think, is very simple and intuitive to use but that will hopefully be a helpful tool for decision-making.

Up to this point, we’ve been finishing up this coffee harvest using both the old, inflexible and stale database, and the new one, as they’ve been getting used to the new processes. The dream is that this new system will make it easier to manage the co-op in general, using information and technology to be more successful.

2. Total trail system make-over in the cloud forest

Alicia, the PCV who’s working with me on developing ecotourism, got one of her former co-workers in the Seattle park service to come down to Honduras for a month to help us work on our trails. His name is Jack and he’s got years of expertise designing and maintaining trails in the Seattle area.

We held a trail building workshop for fellow PCVs and for their counterparts, as well as members of our communities, a couple weekends ago. About 25 people showed up, which for us, felt like a great turnout. In the training, Jack talked about the three main components of trail building: the grade (or slope/inclination) of paths, water drainage, and the “tread” (or path). Many of the current trails in my town are used by workers and by pack animals getting to and from coffee farms and are basically straight up the sides of hills. That’s not ideal for tourists, however, because it’s a lot more tiring to walk, and when it rains, the paths basically become muddy creeks.

So during the weekend-long training and since then, we’ve been building “switchbacks,” which are zig-zag paths that wind up the side of hills to avoid the steep straight-up paths, and “water bars,” which are rudimentary drain canals perpendicular to the trails. We also have been working on taking out roots and widening the path wherever possible. In the picture here, one team is working on installing a rock-step bridge across the river (which only has water in it during the rainy season). It has been frustrating work sometimes, logistically speaking, but it’s a lot of fun being out in the woods. We saw a coral snake and have heard quetzals and howler monkeys. I think the trails will end up great and hopefully will be a boon for our marketing efforts.

3. Community Center

One of the first things that I did in my site last summer was meet with the Patronato, the local town council, every week. It was a good way to meet the leaders in my town and to see what sort of initiatives were big. Well, instead of big development initiatives like business training or children’s nutrition programs etc, they had prioritized the construction of a community center. The idea was to have a place to hold town meetings, weddings, wakes, political events and, of course, dances. This is the perfect example of balancing the community’s desires with our own ideas and plans as volunteers: although I didn’t think it was priority number one, they asked me to help out, so I said yes. We made a work plan, vetted a foreman and wrote the budget to be presented to the municipality.

Anyway, the good news is that construction was finished in February and they held the inauguration dance for Valentine’s Day. I admit that there was a certain sense of accomplishment upon seeing it finished, though a new building doesn't necessarily mean "development." I will post pictures one of these days. Also, I think helping community members on this project gave me a leg up in terms of their trusting me in the future. Now with my foot in the door, hopefully, it will be easier to work on new project (see number 4 below).

4. Health Center

To finish up, I’ve been meeting with a group of people in my town who wanted to "do a project." Alicia is building a library in her town, using one of the PC grants available to volunteers, so people in my town wanted "something" too. So we met for a couple hours a week for a month and a half in order to analyze the needs/problems of the community and then brainstorm possible solutions. What ranked as the highest need for the community according to my committee was working on the Health Center. Although it wasn't my first choice of projects, the cool thing about service in the PC is that we can respond directly to the desires of our communities. Thus, we are going to be looking at physical expansions, new equipment and getting a doctor. Although this doesn’t specifically have to do with my business project, it may be a good side project.

I must admit that I am highly concerned with sustainability. I.e. we could spend a lot of time and money on fixing the building and getting new equipment, but if the management of the Health Center doesn't improve, it may all be wasted, having little positive impact on the community. For me, the ideal would be to work on fixing the root causes of poor health: lack of education and lack of income generating activities for families. Will continue updating on this…

Ecotourism Project: guides, food and lodging

I´m writing this at 10:30 the night before I go to Santa Barbara and it reminds me of writing papers at the last minute in college. There is no Internet in my town, so I have to write all my emails and blog stuff at home then carry them on a USB to SB because I never have enough time at the Internet café to sit an type them there. Alas, here are a few things I’ve been working on recently in my town:

1. More financial analysis stuff at the coop
2. School has started up again for kids here (and thus for me too)
3. Ecotourism committee

1. Financial analysis at the coop.
On the heels of the meeting I had with the Board of Directors of my coffee cooperative, I’ve been working on ways to help them implement some of the changes I recommended. For example, I think I’ve convinced them to stop the free lunches at meetings. There’s still doing sweetbread and coffee though, heh—we’re all addicts to coffee around here. Also, I’ve been helping Lucas, the administrator, work out a break-even analysis followed up by a projected cash flow, to see how we can actually achieve an expansion in our production. We’ve also been discussing doing some local promotion to coffee farmers who aren’t members of the coop, to match our cash flow projections with ‘coffee-flow’ projections, if you will. As it stands, we aren’t buying as much coffee as we could or as much as we want to. Also, I will finally be giving personal finance trainings to the members of my coop starting in March, with the objective of reducing the amount of cash advances and loans they’re taking out each year. Finally, a team of five Canadians came down and visited the coop from Van Houtte, our buyer. They wanted to meet the members, see the farms, see the factory, and talk business. It turns out that they’ve got their eyes set on buying much, much more. It was fun meeting them and putting faces to the myths of our “Buyers up in the North.” As it turns out, in a twist of irony, Van Houtte was bought out by the American coffee giant, Green Mountain in Vermont back in December… and in case you didn’t know, Montaña Verde, the name of my coop, means ‘Green Mountain.’

2. School begins: thus my work there too
I’ve talked to the principal of the school and it looks like I’ve gotten myself roped into doing after school extracurricular groups with kids. Last year I did a journalism group with 4-6th graders. I’ll be repeating it this year, but with a different bunch of kids. I think we may work on putting together a photo-documentation pamphlet of the community and of the cloud forest to use for the community’s ecotourism project. But I’ll also have a Business club with the 7-9th graders where we will learn business fundamentals, visit various businesses, and, hopefully, they will come with an idea and start their own school business. Also, I will have a Nature Club—I haven’t decided its focus yet, but there’s a lot of material to work with here. Plus, Alicia, the volunteer just down the road from me, is a biologist, so I’m sure she’ll help with ideas if I need them. On top of three clubs, which will keep me busy in the afternoons during the week, I’ll be giving classes to the teachers in English and computation—it’s really just going over exercises they can use directly in their own classrooms to help facilitate their teaching. We shall see if they decide to show up this year. Finally, we had talked about planning monthly school-wide events like painting a world map, poetry or essay competitions, art or science fairs, rocket competitions etc. Working with youth is definitely one of the major goals of my project in the Peace Corps, and I feel that it’s always a worthwhile activity to do in my community, when I’m not at the cooperative.

3. Ecotourism committee makes progress
The ecotourism committee that I help Alicia organize is just now starting up trainings for guides. Our idea is to have a bunch of guides ready to attend tourists, once our marketing efforts have begun seeing results. Guides are crucial not because of their knowledge of trails and local plants and animals, but because they’ll know things to offer to the tourist to do—they’ll be the direct salesmen, pitching horseback riding or cave exploring or visiting a coffee farm. So we will be giving our guides a 10 session course and this next topic I’m in charge of: customer service. How exciting. We’re also working with families to offer food and room and board. The next step is working out pricing and packages and promotional deals and finally more comprehensive marketing. The ultimate dream is to form an NGO out of the committee and hire employees to coordinate things like guides, services, and marketing. But we’ve still got a ways to go.

It’s been cold and rainy for close to a week now. And before that, it was hot and dry and dusty. It can’t make up its mind. I suppose I really can’t complain though, being in the Tropics through winter and all.

Business Recommendations for my Cooperative

Hello Internet readers. I apologize in advance for the potential (ok, definite) dryness of this entry; it contains mainly technical, number-related blabber. Read at your own discretion, as always. Or just read the bold sentences.

This past Friday I invited my cooperative’s Board of Directors to my house for a meeting. The objective was to go over the financial analysis report that I wrote so that 1) they could see how to do a financial analysis for the future and 2) they could actually use the information right now to make certain policy changes. I also had a list of a few recommendations of my own to offer, based on the analysis. I can say that as a PC Business Advisor, meetings like this feel good.

Since the Board is made up exclusively of coop members, on average they have very few years of education and little experience managing/overseeing businesses. Though to their credit, they have received some related training in the past from various NGOs and they naturally have years of agricultural, hands-on know-how.

Given this situation, I obviously didn’t want to give a meeting that was too technical or complicated that they’d have trouble understanding, because what would be the point? So I decided to also invite my main work partner in the coop, Lucas, to give me a hand with my explanations (see pic). Though also a member himself, Lucas is educated and worked for years as an accountant at a bank in San Pedro Sula, the industrial capital of the country. Currently he’s the coop’s General Administrator and Accountant, a sort of jack of all trades in terms of the coop’s money transactions (not to be confused with the General Manager, who I’ll mention later). Thus, he’s the right guy to help me out with this kind of meeting because he understands both perspectives. Plus, he’s a great guy and a good friend of mine and of all the members.

Our meeting obviously got started a solid two and a half hours late and lasted three hours instead of the planned two. I am a PCV however, and after months of practice I’ve become used to this sort of cultural delay; so, overall I think the meeting was a success and is a step forward for the coop. Here are some notes about the things we talked about. I’d be happy to hear what all you business folks out there have to say:

1. Expand sales:
The company has reported losses for the past two years. Anybody even faintly familiar with how businesses work could tell you that it is thus necessary to expand sales and cut costs in order to turn the losses around (the main solution being to expand sales). The coop is very lucky because our buyer, one of the largest coffee companies in Canada, wants to buy everything that we can produce. Great! What’s the problem then? See number two…

2. Reduce financial restrictions and costs:
The reason we haven’t been able to radically take advantage of this special, amazing deal with our buyer is that we don’t have the sufficient working capital. In fact, we’re taking out loans from a Honduran bank every year just to be in operation. They charge upward of 18% interest and have a limit of only L3 million (about $150,000), which buys only about two truck container’s worth of coffee (and last year we exported 13 containers). This year, since coffee prices are at a 15 year high, we can buy even less coffee with our fixed loan. What’s more is that people are timid to sell their coffee to us as opposed to our competitors because we can’t offer them as many cash advances and loans since we don’t have the cash on hand.
Thus, naturally, priority number one for the coop is to seek out institutions that offer lower interest rates and higher limits in the short-term and prioritize auto-capitalization for the long-term. The idea is that with more sales come greater profits. The Manager needs to be searching for these institutions and filling out the paperwork while the Board of Directors needs to designate a majority of year-end’s profits to a capitalization fund.

3. Personal finance training for members:
In a related vein, I recommended that the Board of Directors initiate a program to teach the coop members basic personal finance strategies. For example, let’s learn how to write a budget, how to begin to save, how to find the discipline not to spend all your cash right away etc etc. As it stands now, almost every member is taking out cash advances and/or loans from the coop every year before the coffee harvest just to be in operation, losing a grand portion of their profits to interest payments (see a theme developing here?). So the idea of personal finance classes is to 1) reduce the liquidity burden of the coop in the short-term and 2) help the coop members make more money in the long-term. We could even offer special incentives to the members who are willing and able to wait for their payments, like a low-interest bonus.
If we can get our members to wait before they get paid for their coffee until after we sell it to Canada (and receive that precious cash transfer), then we could in the end buy more coffee. Thus, the Board of Directors needs to get the rest of the members on board with the program then set the dates and I’ll be there ready to jump into action with beautifully planned charlas.

4. Expand our gross margin:
Gross margin is an accounting term that means the difference between Sales Revenues and Costs of Goods Sold. It is the company’s gross profit before you take out operating, financial, and “other” costs. In other words, it’s the average profit margin (markup) for all the goods/services the company sells. For our coop the gross margin is practically fixed at $10 per 100 pounds of coffee sold because of the yearly contract we sign with our Canadian buyer. The amazing thing about the gross margin is that even small percentage changes can drastically affect bottom-line profits. So, the coop should be looking for ways to both diversify its products/services and its buyers (because such sales hopefully carry lower costs and/or they earn higher differentials).
Last year, for example, we took a first step in this direction: we rented out our large, fancy machines and our exporting license to other coops and to big producers in the off season, earning a new source of revenue when our factory would otherwise have been idle. We also sold a mini-container of specially prepared coffee to a new buyer in Spain for a higher differential. Finally, members expanded production on three of the five passion fruit parcels the coop owns and began selling directly to the big buyer Horti Fruti, Wal Mart’s Central American produce subsidiary. Going into the future, the Board of Directors should be emphasizing these specialty sales as a way to expand the coop’s gross margins.

5. Limit Admin salaries, remunerations:
I took a bold stance on this one. In Latin business culture, generally speaking, there is relatively wide “power distance,” meaning that there’s a fairly rigid hierarchy in the workplace. Japan and Korea would be on the wide-distance extreme while the US is on the close-distance extreme. My coop tilts towards Japan in that the General Manager of the coop is sort of held on a respectful pedestal. He can (and does) order a factory worker to bring him coffee and almost all the coop members use the formal Usted with him. To top it all off, he comes from a wealthy family, so there’s all that social hierarchy stuff too, which comes into play with the humble coffee producers that make up the Board. All this being said, the Manager gets paid a high salary, drives a company car with all gasoline paid, and gets his entire cell phone bill paid. Not to mention, Honduras has radical workers’ benefit laws that tack on an additional 25% to his salary, just like that. Plus, the coop has sent him to Europe twice on “networking” trips.
So, although it is important to retain an educated and qualified General Manager with a vision towards the future and motivation to get the company there, the coop has had losses for two straight years. There’s got to be a balance. In my recommendation to the Board, I suggested that they negotiate some limits on his benefits, seeking a monthly maximum on what the coop will reimburse for gas and phone bills. I also mentioned a bonus system that will be paid out only if the company is profitable or if it meets certain benchmark increases in sales. And, all of this must be spelled out and signed in a contract, be it long-term or yearly. This will be the most difficult recommendation for the Board to follow because it will be culturally awkward for them to negotiate it; but it’s their job to do so, in my opinion.

6. Cut discretional costs:
Although the real difference between profits and losses will have to come mostly from expanding sales and reducing high financial costs, the English expression that says that “every penny counts” matters too. The coop spends a good deal of money that it probably shouldn’t on buying lunches for every member for every General Assembly meeting, which is 56 members at least once, sometimes twice a month. Plus, there’s a whole expense category for “Customer Service” that has steadily grown over the past three years, which is basically code for picking up the tab for visitors, mostly from outside agencies like IHCAFE and Care, organizations that should be paying for their own damn food in the first place. And the coop pays quite a bit of money on travel allowances for people running errands for the company, which basically means ‘here, eat lunch and dinner on the coop’s dime’ all while the Manager is riding around in the company car, living in Santa Barbara, where most errands are done.
I guess I get kind of worked up about these discretional expenses when I think about the losses the coop has racked up. Anyway, I recommended that the Board put an end to all this, despite the cultural consequences (it’s considered rude not to “invite” someone to food). But I stand firm in my North American hardness: the mission of this cooperative is not to give free food to members; it’s to pay fair prices to farmers and make profits that will be invested in community projects. Maybe, I suggested, the Board of Directors could offer to partially reinstall these expenses if the company achieves profitability, as a sort of incentive or bonus to those involved.

There you have it: six recommendations that will put the company on the road to “in the black.” I shall stop ranting … now.

My Journalism Group

Hola mis compas (literally that means hi, my compatriots). The good news is that Im still living the life here. I am feeling more and more comfortable and at home in my site and have been staying pretty busy too, both of which are muy bien. Here's what I got going on:

1. Journalism group
2. Community survey
3. Coffee coop

1. Journalism group

18 kids and 1 gringo. This week I started a journalism group with eighteen fourth to sixth graders at the local school. A guy about my age is helping lead the class with me. I am using the guide of former PCVs mixed with some of my own ideas to structure the group. We will be meeting once a week for the next 16 weeks! By the end of our time together, the kids will have learned about journalism in general, about newspapers in specific, computers, interviewing techniques, how to use a camera, grammar and spelling, forming opinions, editing and layout etc. etc. And, the final physical product will be their own newspaper about stuff going on in the community. Our first meeting was a lot of fun, thanks to some standard "dinámicas" (or interactive icebreakers/games) that were inserted into the agenda-- it seems that the kids are interested in what we will be doing-- it also seems that theyre highly interested in the new gringo in town-- I read on their excited faces, "what are gringos like??!!" I will be a good experience for me...

2. Community Survey

I am doing a community survey about the health, environmental, and economic conditions affecting people in my town. Ive been going with one member of the Patronato (the local town council) once or twice a week to the different neighborhoods of San Luis, going door to door introducing myself and my project, then asking them my 25 knock-out questions. Doing a survey had always been in the back of my mind, but the PCV who lives up the road from me, Karen, suggested that I actually do it- so I am. It's helpful because I'm getting out into the community and getting to know new people, but it will also, hopefully, give me some direction about the needs of my town-- maybe to give me an idea or two about projects I can start working on.

3. Coffee Coop

We are trying to finish up the bookkeeping for the past operating cycle and it is a bit of a headache. Maybe soon we will know if we made a profit or not, heh. We canceled our general assembly meeting yesterday because of Honduras' last World Cup game, heh. I guess it makes sense.

I just realized that Im saying "we" instead of "they." Heh. I guess that's a good sign, right?


Everything else is dandy here really. Last week I went hiking into the cloud forest for the first time. It was a killer hike (for me at least, not at all for the Protected Areas Management volunteers whose job it is to be expert woodspeople), but we made it. The forest is really something else-- huge, ancient trees etc. We got to see two tucans. I'll post pictures of the trip one of these days. I am living in one of the best sites in Honduras, hands down.