Honduran coffee farmers, who have an overall debt of $60 million, will be able to apply for soft loans from the government this October through a newly launched coffee trust fund.
"This fund is the salvation of the Honduran coffee industry. Now we can inject financing into the sector," president Fredy Espinoza of the Honduran coffee producers' association told Reuters.
Honduras is trying to raise its profile as a producer of coffee, but with global coffee prices not meeting production costs, growers say they lack the finance to harvest better quality crops.
It is believed that the plan, approved on Thursday by the Honduran Congress, will generate around $12 million a year, reaching a $100 million target over an eight-year period.
The 100,000 coffee farmers in Honduras have been told to give $4 for every 46-kg bag of coffee they sell to the fund. This will then be used as collateral for loans and to help lift the country's coffee market out of its four-year depression.
The demand for specialist beans is seen by growers in Honduras as a way to improve their market with buyers in the United States and Europe, who pay up to $40 more for luxury coffee.