Shared Ownership for sustainable coffee business

1
Shared Ownership for sustainable coffee business

• By
• Joseph Nkandu,
• Executive Director
• NUCAFE
• P.O.BOX 34967, Kampala Uganda
• Email nucafe_at_ugandacoffee.org
• October 5, 2006 at Brussels, Belgium

2
NUCAFE and its Efforts

• Association of coffee farmers in Uganda with
  current membership of over100,000 coffee farm
  families
• Vision Coffee farmers profitably own their
  coffee along the value chain for
  Sustainable Production.
• 600 farmer groups registered in 2005
• 21 farmer groups about to get registered
• 104 coffee farmer associations by 2005
• 3 associations due for legal registration
• Individual Farmers selling 2kg of kiboko at
  0.30 in 2004
• Organized Farmers marketed each kg of F.A.Q at
  1.00 in 2005 realizing a 200 income increase
• Members grow both arabica and robusta
• NUCAFE Ownership model

3
The Sustainable coffee Initiatives

• Fairtrade,
• Organic,
• Utz kapeh
• 4Cs
• and others
• These present both opportunities and challenges
  to farmers and consumers

4
Opportunities-NUCAFE Uganda Experience

• May establish farmer group - roaster relationship
• Smallholder Farmers get organized
• Market chain shortening
• Credit and technical support
• Collective effort for certification
• Traceability enhancement if directly from farmers
  organizations
• True representation of the product if directly
  from farmers
• Quality and food safety enhancement if directly
  from farmers
• Promotion of Social values and Environmental
  conservation
• Can be used in advocacy work in comparison with
  conventional markets during crisis e.g. Oxfam
  2001/2002
• Better Prices
• Farmers able to obtain new skills and knowledge

5
Challenges NUCAFE Uganda experience
Fair-trade Minimum Price and Premium information (US-Cents/lb F.O.B port of origin) Fair-trade Minimum Price and Premium information (US-Cents/lb F.O.B port of origin) Fair-trade Minimum Price and Premium information (US-Cents/lb F.O.B port of origin) Fair-trade Minimum Price and Premium information (US-Cents/lb F.O.B port of origin)
Fair-trade Minimum Price Fair-trade Minimum Price Fair-trade Premium
conventional Organic Conventional Organic
Type of Coffee Central America, Mexico, Africa, Asia Central America, Mexico, Africa, Asia All regions
Washed Arabica 121 136 5
 Non-washed Arabica 115 130 5
Washed Robusta 105 120 5
Non-washed Robusta 101 116 5

• Lack of shared ownership over the initiatives by
  small farmers Top down.
• Prices overtaken by the events
• Semi-washed or pulped natural coffee is regarded
  as washed coffee.
• Source FLO Germany

6
Challenges - Continue

• Require already well organized farmers
• No value addition by smallholder farmers not
  sustainable
• Compliance and Certification costs e.g. Kibinge
• Creates captured market and dominance by traders
• Not lived to original principles-Multinationals
  taking over
• Fair-trade Market share for Uganda is only 1
• Divisionism among farmers due to quota system
• Multiplicity of similar labels
• Adulteration and misrepresentation
• What is the Impact of all these labels to the
  small scale farmer?
• Proof of having orders before certification
• Even with certified farmer organizations,
  exporting is by intermediaries
• No consumption of fair-trade coffee in developing
  countries
• Duplication of standards
• Impact and cost effectiveness of FLO Liaison
  Officers?

7
Situation analysis and lessons learnt

• Consultative processes with smallholder farmers
• The fair-trade market is growing
• Fair-trade is a good advocacy tool
• Strong Farmer organization is key towards
  compliance and certification
• A lot more still required beyond fair-trade for
  improving standards of living of small scale
  farmers
• There are shortfalls which need redress original
  principles

8
Summary Conclusions

• Fair-trade is very good at its advocacy role even
  for conventional coffees
• Minimum prices and premiums are good for a small
  section of traders and farmers
• Market share is too small to cause impact
• Sustainable coffees do not address the wider
  picture for improved standards of living of
  farmers
• Abuse and Misrepresentation of product label
• Multinationals are taking over- Original
  principles of fair-trade are compromised
• Multiplicity of labels makes completely
  unaffordable by farmers
• Farmer ownership in sustainable coffees still
  limited
• Then, are these coffees really sustainable?

9
Way forward

• Revisit the original principles of fair-trade
• Smallholder Farmer mobilization and organization
  empowerment are important
• Consolidate the competitive edge of fair-trade
  advocacy role
• Deliberate move by labeling organizations to
  actively involve smallholder farmers in decision
  making processes having shared ownership
• Market research and promotion beyond fair-trade
  is most fundamental to rural development
• Cost-Benefit analysis of labels
• Identify critical points of convergence and
  divergence of labels and harmonize
• External support is needed for compliance and
  certification

10
Finally

• With Shared Ownership, we all win
• Thank you