Including Small-Scale Producers in Argentina’s Wine Industry Helping a Cooperative of Smaller Wine Producers Compete with Larger Firms In recent years, Argentina’s wines have gained acclaim and distribution on an international scale. The country’s tourism industry has also benefited, as wine aficionados from around the world have come to visit vineyards and tasting rooms. However, these benefits have reached mostly those producers that are large enough to get the scale needed to satisfy the growing demand of new markets. Now, through an innovative microloan fund, the members of La Riojana, a cooperative of small-scale wine producers, will be able to compete with their larger counterparts by increasing the output of their vineyards and improving the quality of their wines. Modest Origins of a Celebrated International Export The international wine industry has a glamorous image in magazines and elite restaurants. But, as with most agricultural products, a great amount of hard work goes into making fine wines, most of it carried out in rural areas by low-income farmers and laborers. The La Riojana cooperative, based in western Argentina’s Rioja-Chilecito valley, was founded in 1940 and currently has approximately 500 members, most small-scale producers of the grapes and wines for which Argentina is famous. The cooperative’s wines are highly regarded and have earned Fair Trade certification status. To date, however, the individual producers have had very limited access to the financing they need to upgrade and expand their operations.
Connecting Producers to Supply Chains through Working Capital A US$2 million loan from the Inter-American Development Bank, through the Opportunities for the Majority Initiative, will significantly reduce the need for farmers to rely on high-interest credit lines, which are difficult to access and can hinder their ability to grow and expand their business. The fund will allow La Riojana to create a microloan fund, which will help members purchase new equipment, modernize their operations, and increase their production output. As a result, the project will strengthen the competitiveness of these small-scale producers, helping them gain the volume they need to enter regional and global markets. This loan is the first granted to a cooperative by Opportunities for the Majority.
Benefits Spill Over to the Community Increased productivity and revenue at the cooperative will also benefit the surrounding community. La Riojana currently employs 305 workers full time and up to 1,300 during the harvest period. As production expands, more jobs will be created for the low-income residents of this rural region. This project is a clear example of the bottom-up approach that the Opportunities for the Majority initiative is successfully supporting. Through its operations, La Riojana is working to ensure that small farmers will play a role in international supply chains and will have a significant impact on many more nearby families.
For more information about the program, contact: OM-IDB@iadb.org