Vol. 4 | Issue 2 | Jan – June 2016

Uganda Coffee 24/7 NUCAFE:

PIONEERING CREATION OF SHARED VALUE MARKET UNDER PRESSURE:

THE CHALLENGES OF A SLOWING ECONOMY

PREMIUM SHARING REWARDS:

INNOVATING FOR SMALLHOLDER FARMERS UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

Contents IN THIS ISSUE

MINISTRY OF AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES

06| Premium

Sharing Rewards:

Innovating for

smallholder farmers

08| Tackling

Sustainability Challenges Through Youth In Coffee

VISION:

OBJECTIVES

“Sustainable coffee industry with high stakeholder value for social economic transformation”

We will attain our mission through pursuance of the following strategic pillars and objectives:

MISSION:

Pillar 1: Production and Productivity.

“To facilitate increase in quality coffee production, productivity and consumption” OUR CORE VALUES AND PRINCIPLES • Leadership • Integrity • Teamwork • Client focus • Accountability

• To increase coffee production and productivity at farm level. • To increase coffee yield per tree. Pillar 2: Quality and Value Addition. • To improve quality at all stages of the coffee value chain. • To brand Uganda as a Global Centre of Excellence for Robusta Coffee.

• Professionalism

Pillar 3: Market Research and Development. • To improve quality at all To increase coffee sector players’ access to market information. • To improve quality at all To increase volumes of coffee exports to new markets.

Smallholder

Farmer Leading By Example: IMELDA NAKALEMBA MUWONGE

Sustainable

Difference in the Community

18| Investing in

Uganda’s Coffee Sector

20| Pioneering

Creation Of Shared Value

22| A Joint

Marketing

Initiative to promote specialty coffees from East Africa

REGULARS 04| EDITOR’S NOTE 10| MARKET UPDATE MARKET UNDER

PRESSURE: The challenges of a slowing global economy

24| COFFEE EVENTS

Pillar 4: Domestic Consumption. • To improve quality at all To increase domestic coffee consumtion. Pillar 5: Institutional Development. • To improve quality at all To strengthen Organisational Structure and Human Resource capacity. • To improve quality at all To enhance corporate financial sustainability • To improve quality at all To strengthen stakeholder collaborations and partnerships.

UGANDA COFFEE DEVELOPMENT AUTHORITY Coffee House, Plot 35, Jinja Road P.O. Box 7267, Kampala, Uganda | Tel: +256-312-260470, +256-414-233073, Fax:+256-414-232912 Email: [email protected] Website:http://www.ugandacoffee.org UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

12| A Coffee

16| Making a

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Uganda Coffee

24/7 Editor In Chief:

Robert Waggwa Nsibirwa

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A Resurgence of Coffee Producer Organisations

n 1913, four farmers came together and decided to market their crops collectively. They became known as the “Kinakulya Growers”. This launched the start of producer organsiations as a response to the unfavorable terms imposed on farmers by the Asian traders through local middlemen at that time. The growth and structure of these organisations made another leap in the 1920s when farmers in Mengo met to form the Buganda Growers Association to control the domestic and export marketing of member produce. In the 60s, things started to change when the enormous expansion of the producer organizations outstripped the capacity of the Cooperative Department to closely monitor the operations of the movement. The departure of the expatriate personnel due to the Ugandan policies, coupled with the defection of capable leaders and managers into the politics of independence worsened the situation. Increasingly, pressures of economic and political self-interests, to which those in charge succumbed, invaded cooperatives. In 1980s a National Resistance Movement was formed and started a guerrilla war to topple the sitting government. As

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the guerrilla war intensified, these organizations were destabilized. The war was largely fought in the cooperative movement’s strongholds like the Luwero triangle in which the three giant unions of West Mengo, Wamala and East Mengo operated. Banyankole Kweterana and Masaka Cooperative unions were similarly affected. Co-operatives incurred a lot of war losses in the form of people and property like vehicles, clean coffee and animals. Fast forward to 2015, over 13,000 producer organisations (cooperatives) are registered in Uganda. In the coffee sector, we have witnessed organisations like NUCAFE, Kabonera, Nsangi, and Kibinge emerge from coffee traders to exporters achieving sustainability certifications along the way. As we celebrate over 100 years since the first PO was started we reflect on the instrumental role they have played increasing value generated to the smallholder farmer, mobilizing support for farmers and working to ensure a sustainable coffee value chain.

Associate Editors: Godfrey Batte | Ishak Lukenge

Business Manager: Betty Maraka

Contributing Writers Chris Ryan, Ruth Nangonzi Lubega, John E. Schluter, Kenneth Barigye, Victor Lutalo, Richard Tugume, Joseph Nkandu, Rachel Wallace,

Design: Enlight Creative Ltd

Published By: Africa Coffee Academy [email protected] Plot 139, Kira Road, Kamwokya, Kampala - Uganda www.africacoffeeacademy.com

Cover photo:

Crystaline Randazzo Photography, courtesy of Sustainable Harvest Uganda Coffee 24/7 is published and distributed by Africa Coffee Academy, an ISO 9001:2008 certified company.

PARTNERS

THE SOLIDARIDAD NE T WORK 2013 ANNUAL REPOR T

Robert Waggwa Nsibirwa Editor in Chief

UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

Premium

Sharing Rewards: Innovating for smallholder farmers Chris Ryan, Content Director, Sustainable Harvest Coffee Importers

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n 2013, U.S.-based coffeeimporting company Sustainable Harvest launched the Relationship Coffee Institute (RCI), a nonprofit entity supported by Bloomberg Philanthropies committed to improving the livelihoods of rural smallholder women farmers in Rwanda through training and market access. For the past three years, RCI has worked with coffee-producing organizations in the Kayonza and Nyaruguru Districts, particularly the cooperatives Twongere Umusaruro (in Kayonza) and Nyampinga (in Nyaruguru). When the farmers entered the program, most of them were strip-picking their coffee and selling it to intermediaries for a low price. Most of the women had never even tasted coffee before, giving them little understanding of the product they were producing. More than 4,000 women have now enrolled in the RCI training program, which institutes skills including best agricultural practices, coffee cupping and evaluation, and financial literacy. RCI worked to bring the women up the value chain, including helping Twongere Umusaruro and Nyampinga construct a washing station where the women could process their coffee, allowing them to realize much more of the value than simply selling it in cherry form to intermediaries as they were before. RCI also connected the women to international coffee buyers, helping them establish transparent relationships in which they could understand the buyers’ needs and demands, negotiate directly about price, and know exactly where their coffee was going. As RCI implemented the program over the years, its staff began to establish relationships with the

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women farmers and understand their daily lives. In learning about the women, it became clear that there were many tools and other items that could greatly benefit their livelihoods. After much brainstorming between RCI and Sustainable Harvest about how best to supply these tools to the women in a way that would reward their efforts to become better coffee producers, a new, innovative program was developed: Sustainable Harvest Premium Sharing Rewards. RCI piloted Premium Sharing Rewards, which is supported by Bloomberg Philanthropies, with a small group of the Rwandan women in 2015. The program works like this: Farmers accrue “rewards points” by producing high-quality coffee, following good farming practices, and actively participating in their cooperatives. Once they amass these points, they can use them to acquire goods that they have indicated they value, such as mobile phones and solar lights, or farming tools such as pruning shears. These tools and goods, also known as “assets,” are purchased with the help of the roasters buying the women’s coffee, who take a portion of the value-added price they get from roasting or retailing the coffee and return it to the Sustainable Harvest Premium Sharing Rewards program nonprofit fund. The pilot program in Rwanda yielded great results: The women worked hard to produce high-quality coffee and earn points, and they were delighted with the assets. Surveys of the women conducted by RCI staff founded that 94% of the women felt more selfconfident after participating in the program, 92% were likelier to attend trainings, and 83% had instituted better quality control as a result of the trainings. The women also provided insights about the specific ways that the

assets impacted their lives. Take the mobile phones, for example, which provided more than just a tool for communication: 36% of the women said they utilized the torch feature to provide light in the evening, 30% used the phone’s radio feature for news and information, and 26% used it to conduct financial transactions. One of the farmers offered this summary of how she has used the phone she earned through the program: “The phone … saves me money on transportation, gives me cooperative information, lights my home while cooking and eating, and lets students in my family read at night.” With the Premium Sharing Rewards pilot now concluded, RCI is introducing the next phase of the program in Rwanda that will expand it to more women. Among the organizations funding Premium Sharing Rewards through their purchases are Bloomberg Philanthropies, which serves Rwandan coffee in its offices, and two coffee companies that bought the women’s coffee from the 2015 harvest. All parties are very excited for the program to continue moving forward, and RCI is also hoping to introduce Premium Sharing Rewards to other coffee-producing countries in the coming months. This innovative way of rewarding farmers for best practices with assets that improve their livelihoods has shown great promise in its early months, and the hope is that it will be a transformative program that will positively impact the coffee industry on a large scale.

The women worked hard to produce high-quality coffee and earn points, and they were delighted with the assets.

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TACKLING

SUSTAINABILITY

CHALLENGES THROUGH YOUTH IN COFFEE Ruth Nangonzi Lubega, Admininstrator at Nsangi Coffee Farmers Association

Nsangi Coffee Farmers’ Association (NCFA) is a community based Association that was started in 2004. It is located in Nsangi Sub- County, Wakiso District.

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he Association is involved in coffee farming, coffee farmer technical empowerment through trainings and helping them to access markets. The Association also undertakes several other income generating activities like piggery and poultry farming. The Association has 3182 active local community members, 38% of who are Fair Trade certified.

initiatives like a spring well the organization constructed for the community of Bulwanyi village in Wakiso District.

Youth and Community Initiatives

Games and Sports have attracted the youth, who have started the “Coffee Youth Club”. This youth in coffee initiative was pioneered by NCFA and has been replicated in different

The association is deeply rooted in the community, illustrated by several

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Youth are a top priority to this Association and to that effect it has empowered the youth to participate in coffee farming as a business in by training them on good agricultural practices, post handling harvest and market awareness.

associations, cooperatives, and coffee exporters, like Ugacof Ltd, Kawcom, Savanah Commodities Ltd and KDS. The best youth from different groups within the association receive coffee plantlets for producing quality coffee in large volumes. Nsangi Coffee Farmers Association (NCFA) is now leading efforts to establish the National Coffee Youth Club in Uganda. The association has also encouraged the coffee replanting programs within its members, as to overcome the problem of coffee wilt disease which has

destroyed a lot of coffee in the country. In partnership with aBi Trust, Progresso, UCDA, UCTF and other coffee stake holders the association produced high quality and high volumes of coffee in the year 2014- 2015 an indicator that a combination of old and young farmers of the association are committed to the objectives of the association. Future Plans of the Association • Marketing and exporting specialty coffee produced by youth.

• Developing a financial scheme for member farmers to save and borrow funds to support their coffee businesses. • Sensitization of the youth in neighboring countries: Rwanda, Tanzania, Kenya on the Nsangi approach to a sustainable coffee industry in the region. Nsangi Coffee Farmers Association intends to consistently improve its volumes of high quality production of exported coffee and to become a major exporter in Uganda.

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Market under

Pressure The challenges of a slowing global economy John E. Schluter, Director of Cafe Africa, a Swiss based NGO that works on coffee sector development in Africa present market levels probably suit neither producers not roasters, who may well have fixed when prices were well above present levels. Commodities out of fashion in a slowing global economy The further fall in early in January may in part have been be due to coffee

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rom over $110 per barrel 18 months ago to the present level of under $30 per barrel, if there is one thing the crisis in the oil industry can teach us, it is that coffee producers are having to find ways of making themselves resilient through the down-turn if they want to be there in the long-term.

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offee growers have watched with dismay over recent months as the market has found its way to new lows in what has felt like a relentless drive southwards in the coffee market. While there are doubtless plenty of promotions in the supermarkets, there is little evidence so far that the lower prices are being passed on the consumers, not that it would probably make all that much difference, especially in the traditional consuming markets. Demand seems to be fairly price-inelastic, though perhaps consumers trade up in quality when opportunity affords. Indeed the

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prices being carried on the back of a broad decline in raw material prices. There has been a general exodus from commodities. Short-term investors and hedge funds have taken fright at the slowing economic growth in China and other emerging markets, coupled with uncertainties over developments in the Middle East, Europe’s sluggish economic performance (with anxieties over immigration, unemployment and a possible Brexit), and an election year in the U.S. Enough coffee – both longer-term and nearby Hanging over the market, though, has been a supply-demand picture which points to a balanced equation in 2015/16, and a likely surplus in 2016/17. Brazil continues to see good weather and production prospects, Colombia’s revival continues to promise growth in exports, and Vietnam shows little sign of slowing down. Confirming this, shipments in the first few months of the new coffee

year from October have continued apace, with Brazil moving around 3 million bags a month. With exporter commitments at a similar level for the January/March period, there is a question as to whether this level of shipments can be maintained all the way through to the new crop. This latter will be available for shipment from probably July/August onwards, but warehouse stocks must be declining quite rapidly in Brazil. In the meantime Colombia has shipped good volumes in the first 3 months of the coffee year, though Vietnam made a slow start with new crop shipments in October and November. New crop supplies are now coming in from Centrals and many African producers, and the perception in the market is of adequate supply for the current coffee year, and with a large Brazil crop in prospect for 2016/17, barring any weather mishap, a more than adequate supply for the next coffee year.

the futures markets is not without its challenges. The coffee tendered against a long position might be stored in any one of a number of ports, both in Europe and the US, and can result in additional costs for delivery to a plant, and may be of a number of different origins. Currency movements as important as coffee statistics Perhaps the most significant factor which has allowed the market to continue to decline to the current levels has been the strength of the U-S-Dollar against the currencies of the main producing countries. This is well illustrated in the graph below, which shows the New York ICE Futures price in Brazilian Reals, compared to the New York futures market in U.S.Cents per lb..

has reduced the immediate impact of lower prices, though the inflationary pressures in the economy are making themselves felt. It is interesting to note that the Vietnamese Dong has only declined by 4 – 5% in the same period, and there are some small indications that farmers are not comfortable with these lower market levels. The year ahead The coming year promises to be a turbulent one in commodities and currencies, to say nothing of investment markets. The year has started with a sharp sell-off in many stock exchanges, and the uncertainty and fears of the present global economic and political situation are undermining confidence. With such an outlook, a sensible policy for a

But producers have been reluctant to follow the market down

What is striking now is to observe how differentials for almost all origins are either at or well above the level of the futures markets (ICE New York and LIFFE London). But origin is offering on an FOB basis, rather than the in store Europe or US prices reflected by the futures markets. This is reflected when you compare the futures market levels with the ICO Indicator prices. The latter are collected on a daily basis, and reflect the prices of coffee offered and traded in store Europe/US. At the time of writing, the ICO Robusta Indicator stood at $1,580 per ton, compared to the LIFFE price of below $1,400. The Other Milds Indicator (made up largely of Central American Milds) stood at USCents:142.50/lb, and Colombian Milds Indicator at USCents:132.60/ lb, whilst the New York ICE market for the nearby position was at about USCents:115.00/lb. In the coming months, we can expect to see a draw-down of the certified stocks held against both futures markets. For roasters those coffees represent the best value in the market. Taking delivery of stocks against

Red line= NYK ICE price in U.S.Cents/lb & Black line = NYK ICE price in Brazilian Reals For the Brazilian farmer, the price of his coffee in Reals has held up well, despite the New York decline, because of the devaluation of his local currency. The result has been a continuing pressure of shipments out of Brazil. In the short term, it may seem profitable selling the coffee for the grower, but further out, the inflationary pressure from the currency decline will push up his production costs and start to hit his bottom line. The Real has depreciated in the past 12 months by 55-60% against the dollar. The Colombian Peso has likewise declined by nearly 35-40%. The Uganda Shilling has also dropped by about 20% in the past year, which

producer would probably be to focus on containing costs, as far as possible, and on quality in search of niche markets and some premium prices. It seems we have not escaped from the long-term cycle of coffee prices which reflects the over and under-production. If demand growth predictions are to be believed, investing now in coffee production could yield good returns in the coming 3 – 5 years. But it is a brave person who will do that, even if he has access to the resources he would need to do so.

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tion of framers to participate actively in internal savings and lending through savings and lending associations (SLA), and enhancing marketing through market linkages, access to finance and capacity enhancement. A year ago Imelda was selected by her community members as a volunteer Village Enterprise Agent (VEA) alongside other 69 VEAs from other villages to form a community agricultural extension structure. Their major role is to work with farmers directly and support them to put in place systems that will enable them engage in farming as a business and marketing structures. The VEAs provide timely information on prices, changes in the commodity delivery mechanisms and bulking support. In addition they use the mobile phones to provide agricultural advisory services to farmer groups. Farmers have profiles saved to a database that VEAs can pull up to recall what issues each is facing, and records of their interactions with the farmers can be kept and updated. These case management tools help extension workers to more effectively manage their relationships and tailor their visits to the farmer’s needs. The phone’s function as a data collection tool also helps project management monitor whether its targets are being met, and where resources are being used effectively and efficiently.

A COFFEE SMALLHOLDER FARMER LEADING BY EXAMPLE IMELDA NAKALEMBA MUWONGE Kenneth Barigye, Country Director, Lutheran World Relief Uganda

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iving in Rakai district, an area 200 kms from Uganda’s capital city, is a challenge – a challenge because the only gainful employment alternative is subsistence farming yet you lack access to finance to improve your farming and lack markets. Living in this community as a woman is an extra challenge – extra because you have no access to land, which land you would use to acquire high interest loans from commercial banks and you also have no access to modern farming information. Living in this community as a widow is even harder – harder because on top of the gender based disadvantages, you are faced with the challenge of taking care of your family alone and protecting the assets your husband left for you and the children. It even gets more difficult if the children you are left with are 11 (eleven)!

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espite all this, there are hard working women who are not only taking care of their families but have volunteered to help their fellow women take care of their families – and prosper as farmers. And this change has been facilitated by access to knowledge and social capital from their farming groups. Such a woman is 64 year old Muwonge Imelda Nakalembe staying in Kitanga village, Kitanga Parish, Kabonera subcounty located in Masaka district. Imelda was left with 11 children (4 boys and 7 girls) 9 years ago. A nurse by profession, Imelda realized she could not take care of her 11 children with her nurse’s salary and decided to resign and start farming. Despite her enormous dedication, her livelihood and livelihoods of other smallholder farmers like her remain insecure. This is largely due to their failure to engage into meaningful agribusiness and enabling their products access lucrative markets. Although Imelda managed to take care of her children and see them through school, it was tough and it involved 12 hours of work in a day on her coffee, maize, cassava and banana farms. Using traditional methods of farming, she would get 8 bags of coffee from an acre of land, and 600 kgs of maize from an acre. This

was before she joined the SENTE project implemented by Community Enterprise for Development Organization (CEDO) with funding from the Lutheran World Relief. LWR has been working in Uganda since 1985 to address the root causes of poverty and increase food security. LWR’s approach focuses on small-scale farmers, helping them to increase their productivity and income, and addressing changing climate conditions by investing in climate smart agriculture techniques. SENTE project, where Imelda gets support, focuses on capacity building of farmer organizations so that they can in turn provide services to the members. Emphasis is placed on increasing the demand for the services including, extension services, marketing and saving/financial services. This is achieved through the establishment of an effective extension structure using a village enterprise agents’ structure, mobiliza-

Imelda knows what to do if her group members are to follow her advice “if you want to influence change in communities you have to lead by example, to convince others to adopt modern farming methods I had to be convinced first, that is why I started changing to these practices on my own maize and coffee farms” Imelda explained when the LWR visited her farm. In just one year, Imelda proudly shows off her coffee plants and with a grin says “just one year ago my miserable coffee crops were yielding just 1kg of coffee, now I have to support the coffee tree with a pole – I get around 8kg per tree!” This success has encouraged other women in her group of Bumu Kitanga Womens’ Group, made up of 6 sub-groups with 25 people each making a total of 150 members, to adopt these practices. She boasts of increase in farm income

and productivity through better agronomic practices such as soil fertility management, weed control and use of improved seed which she has been exposed to by the Field Extension Workers who provide the VEAs with field technical support. She has started harvesting 20 bags of coffee from only one acre of land from which she previously used to harvest only 8 bags of coffee representing a 250% increase. The last maize harvest was 339kgs compared to the previous 150kgs from an eighth of an acre representing a 226% improvement. Imelda attributes this to the trainings on input use by the Field Extension Workers. “I applied NPK fertilizer on my coffee farm and I have also learnt how to use my income generating enterprises to support each other” says Imelda adding that “the cow dung is used as manure in the crop fields while the maize stalks mulch the gardens and the money from milk sales is used to purchase pesticides and herbicides”. Imelda, alongside her group members now use the social capital acquired from the group to advise each other on farming as a business, nutrition for their children and protect themselves in a community that is highly patriarchal.

About Lutheran World Relief in Uganda LWR supports farmers in Gumutindo Coffee Cooperative Enterprise in the districts of Kapchorwa, Mbale and Sironko; NAMUBUKA Area Cooperative Enterprise in Bugiri, Namutumba and Kalilo; MBUGO Area Cooperative Enterprise in Gomba, Butambala, Mpigi; West Buganda Coffee Farmers Union, South West Producers Cooperative Union and Community Enterprise Development Organisation (CEDO) in the districts of Kalungu, Bukomansimbi, Masaka, Sembabule, Lwengo, Lyantonde and Rakai. Contact: Kenneth Barigye, Country Director, Plot 23 Bazarabusa Drive, Bugolobi, [email protected], www. lwr.org

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Making a Sustainable Difference in the Community UG Coffee 24/7 sat down with the general Manager of Kibinge Coffee Farmers Association, David Lukwata to find out more about the Fair Trade -certified association. Victor Lutalo, Africa Coffee Academy

Kibinge sub-county is a region in central Uganda that has long been famous for excellent Robusta coffee. Due to economic pressures and political unrest, the quality and volumes of the coffee had plummeted by 1995. That is when 4 dedicated coffee farmers decided to mobilize their fellow farmers to bring the tradition of high quality Robusta coffee back to the hills of Kibinge and formed a farmers’ association that would later become Kibinge Coffee Farmers’ Co-operative Society. Tell us a bit about your organization Since our inception in 1995, Kibinge Coffee has undergone numerous changes but the focus has remained on providing the finest Robusta coffee while empowering our farmers to improve their livelihoods. This pursuit led Kibinge to become a registered Cooperative in 2009 and become Fairtrade certified in 2011. In 2014, Kibinge was honored to be awarded as the Fairtrade Small Producer of the Year for Africa by Fairtrade international. What do you think makes Kibinge different? Kibinge has a unique model whereby the co-operative through its savings and credit unit together with the agro-input outlet facilitate the provision of financial services and farm inputs to its members. Whereas coffee business is the entry point for membership, the different business components mentioned above together with processing and extension services were established with the view to serve the members in all possible dimensions and hence enable them realize sustainable development. The organization is well known as a model co-operative society in Uganda for its consistent innovations and creativity of its working force and management team.

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You seem to run a very structured organisation… The co-operative that employs 18 full time staff has a total membership is 2025 farmers is divided into 48 farmer groups at village level. The farmer groups are led by lead farmers known as promoters and group leaders. How would you describe your relationship with the community? Kibinge Coffee has remained true to our mission of improving the lives of our farmers and community. Recent community projects including extending power to a local health center, building latrines for one of our community schools, working to improve the quality of the roads in our district and building shallow wells to provide fresh water to our community and many others have increased the visibility of the organization. At the end of each year, a portion of the profits made go straight back to our farmers to reward them for their hard work and success in form of second payment and incentives. What should we expect in the future? Kibinge Coffee is excited for the future as we continue to grow while providing the best Ugandan Robusta coffee and empowering our farmers including the youth and women. If you would like more information, feel free to contact us at [email protected] or visit www. kibingecoffee.com. We would love to hear from you!

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Investing in Uganda’s Coffee Sector Richard Tugume, Loan Portfolio Manager, Root Capital

After a decade of growth, a cooperative shows why reliable access to finance is critical for continued success

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lobal coffee consumption is on the rise. The International Coffee Organization estimates that demand will increase by 25 percent over the next five years as more people around the world turn to coffee. This rising consumption has and continues to offer tremendous opportunities to Uganda’s smallholder coffee producers and their communities. Over the past decade, I’ve witnessed the meaningful economic opportunities that come with the cultivation and sale of coffee in my role as a portfolio manager for Root Capital, a specialized agricultural lender that provides capital, training and market linkages to producer organizations and related enterprises. Since 2005, Root Capital has lent over $200 million throughout Africa, including more than $80 million to clients in East Africa’s coffee sector. And I have seen how access to finance is a crucial ingredient in the sector’s growth.

Photo courtsey of Root Capital

One of the most powerful examples of this can be found in Bushenyi District in southwestern Uganda. It is here where the Ankole Coffee Producers Cooperative Union (ACPCU) has gone from exporting one container in 2008 to exporting more than one hundred containers, just seven years later. Based in Ishaka, the Fair Trade and organic-certified cooperative union was established in 2006 with an initial membership of 3,800 farmers and 10 primary cooperative societies. Early on, ACPCU sold its coffee at below-market prices to local buyers largely because it lacked direct access to financing. To meet its working capital needs, ACPCU looked to financial institutions. The cooperative needed a competitively priced loan with flexible collateral requirements and a repayment schedule tailored to their seasonal cash flows. When ACPCU first approached Root Capital, the cooperative had a threeperson staff and an entirely manual accounting system. Root Capital’s lending team was concerned about the cooperative’s unpredictable cash flow and its ability to manage a loan. Rather than walk away from the need, we spent five days on-site with the staff, training them on how to reconcile accounts, how to

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value and manage inventory, and how to create and maintain reliable financial statements. Soon after, we approved a loan of $113,000, which financed its first direct exports and generated $450,000 in revenue for the business. A year later, ACPCU had repaid the loan, hired a qualified financial accountant, purchased computers and taken out a new loan. “The loan that Root Capital extended to us marked the turning point of ACPCU,” said John Nuwagaba, general manager of the cooperative. That same year, based on this credit history, a foundation gave the cooperative a capacity-building grant of 250,000 Euro and another offered an interest-free loan. Over the next few years, ACPCU access credit from additional lenders and grew its operations, constructed a new office block and established a dry milling plant. Beginning in 2012, Root Capital partnered with ACPCU again, providing annual working capital loans secured against future purchase agreements. Today, the cooperative has expanded to include 25 primary societies serving more than 9,000 producers. It exports high-quality Robusta coffee to leading specialty coffee traders, including Cafedirect and Twin Trading in the United Kingdom. Sales have grown more than five-fold since their first loan with Root Capital. These days, roasters and retailers are benefiting from large inflows of capital, but those at the opposite end of the supply chain—the roughly 25 million farmers whose livelihoods depend on growing coffee—remain largely shut out from the formal banking system. Recent analysis by the Initiative for Smallholder Finance suggests that there is at least $75 million in unmet demand for financing among smallholder coffee farmers in Uganda. From my vantage point, there are a lot more organizations like ACPCU out there: small and medium-sized businesses that, if given the right financial tools and training, could thrive and harvest more value from the world’s growing thirst for coffee.

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PIONEERING CREATION OF SHARED VALUE National Union of Coffee Agribusinesses and Farm Enterprises Joseph Nkandu, Executive Director, NUCAFE

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n wake of the collapse of the cooperative movement in Uganda in the early 1990s following the liberalization of the economy1, the Uganda Coffee Farmers Association was founded in 1995. Unfortunately the business wound up in 1998. However in 1999, it resurrected with committed and foresighted management that rebranded it to the National Union of Coffee Agribusinesses and Farm Enterprises limited (NUCAFE) in 2003. NUCAFE has grown and evolved as a vibrant social entrepreneurial farmer organization. From humble beginnings, with a very focused and dedicated team, NUCAFE has grown its membership to over 180 rural community farmer associations and cooperatives. These represent over 200,000 farming households and more than 1,000,000 farmers from all coffee growing regions in Uganda. Again realizing that the primary goal of business is to address the needs of people, NUCAFE felt it necessary to start the journey of creating shared value in the coffee value chain so that business of coffee becomes a solution towards poverty. Therefore, NUCAFE has relentlessly been working as a social entrepreneurial organization to ensure that profit in the name of a dollar is not the only goal for the business but rather part of a big value proposition of the business. It came out to demonstrate that the new school is about shared value where farmers and those involved in trade are winners. To 1

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get this along the way, NUCAFE has been empowering farmers to become effective and efficient partners using the Farmer Ownership Model to assume more roles and responsibilities as masters of their own destiny, consumer satisfaction and societal transformation. NUCAFE has registered significant landmarks as a champion in creating shared value as its core business model value proposition; offering exceptionally high quality coffee, enabling its buyers to widen their customer segments with customized and differentiated coffees and contributing to creating an enabling policy environment for all coffee actors. To realize the much needed shared value, NUCAFE made several investments along the entire coffee value chain right from the establishment of community coffee nurseries across the country, secondary processing, roasting and coffee shop.

Establishment of the Centre for Agribusiness and Farmer Entrepreneurship Enhancement (CAFÉ) In face of an estimated between 64% and 70%2 Youth unemployment in Uganda, NUCAFE with the support of aBi trust, Trade Mark East Africa challenge fund (TRAC) and CURAD established the first phase of NUCAFE’s Centre for Agribusiness and Farmer Entrepreneurship Enhancement (CAFÉ), to respond largely three development problems of farmers’ access to value adding services, poverty and the high unemployment levels especially among the youth in Uganda. In this CAFÉ, one finds the state of the art 2

Magelah and Ntambirweki, 2014. Youth Unemployment and Job Creation in Uganda: Opportunities and Challenges. Advocates Coalition for Development and Environment Info sheet No.26.2014

brand new end to end coffee grading, roasting, grinding, blending and packaging equipment. The CAFÉ above is enabling farmers to continue owning a more valuable form of coffee that enables the farming families make reasonable income as a result of selling value added coffee yet at the same time buyers getting high quality coffee which in the end leads to a win win situation and a sustainable value chain. By selling graded coffee, farmers have increased their income per kg of dry cherries or parchment by at least 30%. Many farmers have bought household assets which they had never thought about. I would like to quote one farmer. “There is now a great change in my home; I have not only face lifted my house but also bought a car,” Mr. Philip Luyombo Muluya, a coffee farmer in Kabonera Coffee Farmers’ Association acknowledged. Similar stories are found in over 100 member associations and cooperatives of NUCAFE.

Ownership Model was nominated among the Top 20 innovations that support smallholder farmers; (ii) the Alliance for a Green Revolution in Africa (AGRA) awarded NUCAFE with the Africa Farmer Organization of the Year Award (FOYA) in the Income Diversity category in 2013 (iii) the Executive Director of NUCAFE, Joseph Nkandu elected as an Ashoka Fellow for the significant social entrepreneurial impact he has made via the innovation of the farmer ownership model that has led to creation of shared value in Uganda’s coffee industry.

Continue to collaborate with Government to fast track the enactment of the coffee subsector law that will enhance further Uganda coffee competitiveness, Continue contributing to professionalizing farmer organizations in the Uganda coffee subsector in Uganda, Upscaling the social entrepreneurial approach aimed at creating businesses and jobs for youth. Contact Joseph Nkandu, Executive Director, [email protected]

The farmer owned coffee shop; Omukago opened. NUCAFE has also in 2015 established a coffee shop to enable Ugandans access good coffee which for long time has always been accessible by the well to do. This has a direct impact on quality improvement as it does for increased farming household incomes.

Brand development

NUCAFE’s future plans will include among others;

Again in an effort to increase shared value, NUCAFE has developed two brands; NUCAFE and Omukago. The excitement and appreciation is so high not only among customers but also farmers as suppliers involved already in this specific value chain.

Deepening the creation of shared value by strengthening succession planning among coffee farming families and companies which will help in nurturing a new generation of farmers and a new generation of coffee companies.

Created Shared value has, therefore, won NUCAFE several national, regional and international awards from organizations such as (i) the EU’s Technical Center for Agriculture and Rural Cooperation (CTA) where the Farmer

Strengthening value chain services such as strong community based nurseries, farmer organizations, processing and grading services, roasting and increasing domestic coffee consumption,

Okello et al. (2013): The Cooperative movement and the challenge of Development. A Search for alternative wealth creation and Citizen Vitality Approaches in Uganda

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A Joint Marketing Initiative to promote specialty coffees from East Africa Rachel Wallace, Twin Trading

T

he JMI (Joint Marketing Initiative) is a collective of smallholder coffee cooperatives in East Africa and Twin, the development through trade specialists. The JMI venture brings together farmers from across the highlands and lakes of central, eastern and southern Africa – from Mount Elgon to Mount Kilimanjaro; from the Rwenzori Mountains to the highlands of eastern Congo and northern Malawi; and from Lake Kivu to Lake Victoria. In 2007, a Twin survey revealed an untapped global appetite for African certified Fairtrade and organic smallholder specialty coffees. At the time, the only wellknown origin was Ethiopia and it was supplying nine tenths of the existing market. This represented an exciting opportunity for producers who today make up the JMI network.

All photos courtsey of Twin

With support from UK charity, Comic Relief, the JMI began as a pilot to trial the concept and model with Twin’s existing partners. Gumutindo’s farmers were already producing exceptional quality Fairtrade Organic Arabica on Mount Elgon in Eastern Uganda. Fifty per cent of their board members are women – a groundbreaking dynamic in African business. Gumutindo had all the criteria to supply the specialty coffee market, they just needed to engage buyers in what they were doing. In the beautiful Misuku Hills of Malawi, Mzuzu’s farmers have led the way

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UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

in sustainable production, improving quality and yields; whilst in DR Congo, against the backdrop of the shimmering waters of Lake Kivu, and in the face of decades of war and isolation, smallholder coffee farmers have been at the forefront of reviving the Eastern Congo coffee sector and bringing its fabulous coffees back into the market. Today The JMI is a truly producerdriven venture. Through the JMI network, producers see the benefits of working together and offering year round supply of high quality certified coffees to specialty buyers, making them stronger together than working in isolation. The JMI is proudly spearheading a revival in Africa’s reputation for producing some of the finest quality coffees in the world, with smallholder farmers at the heart of the movement. Producer organisations in the JMI are: Bukonzo Joint Cooperative Union, Bukonzo Organic Farmers Cooperative Union, Gumutindo Coffee Cooperative Enterprise and Ankole Coffee Producers Cooperative Union in Uganda; Muungano, Furaha and Kawa Maber Coffee Cooperatives in DR Congo; Mzuzu Coffee Planters Cooperative Union in Malawi; and Kopakama in Rwanda. Building capacity of the Producer Organisations to manage their business and

the resulting increase in returns Twin believes that strong producer organisations can deliver economic development, social justice and environmental sustainability to smallholder farmers. Twin takes a holistic approach to development that aims to strengthen producer organisations across the board so that they are able to operate independently and sustainably manage and grow their businesses. Twin’s approach to development is based on work around the following six pillars: gender justice; sustainable agriculture; business management; governance; quality and processing; and market access. So the JMI forms a key part of Twin’s approach. The JMI marketing team engage buyers in all elements of the approach, focussing on a high level of visibility and involvement to form rewarding relationships across the supply chain; with coffee farmers and roasters gaining a good understanding of the requirements and commitment needed to produce the best quality coffees, including the need for greater gender justice and support across the other pillars. Contact The JMI producers and Twin will be at the AFCA Exhibition, and Twin is co-organising the Gender & Coffee Summit on 2nd February 2016. Visit jmicoffee. org and twin.org.uk

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Global Coffee Events

MARCH •

The Amsterdam Coffee Festival celebrates Amsterdam’s local coffee and artisan food scene.

1 - 3 March Russian Coffee & Tea Industry Event The Sokolniki Exhibition and Convention Centre, Moscow, Russia



APRIL •

Russian Coffee Tea Industry Event (RUCTIE) is Russia’s international conference and exhibition for the industrial production chain from bean and leaf to cup. •

•

The World Coffee Conference is a premier global coffee event which attracts decision-makers and representatives from government, industry, academia and civil society.

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17 - 19 March Melbourne International Coffee Expo Melbourne Showgrounds, Melbourne, Australia The Melbourne International Coffee Expo (MICE) is the largest dedicated coffee show in the Southern Hemisphere.

•

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18 - 20 March Amsterdam Coffee Festival Westergasfabriek, Amsterdam, The Netherlands

UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

THIRD PARTY QUALITY MANAGEMENT ACA provides bulk coffee shipment inspection, certification and quality-control laboratory testing. ACA coffee bean cargo testing and inspection help ensure bulk coffee bean buyers receive the correct quantity and quality of coffee beans ordered.

14 - 17 April The SCAA Event Georgia World Congress Center, Atlanta, United States

PROFFESIONAL COURSES

In 2016, the SCAA Event will host the US Brewers Cup Championship, US Roaster Championship and US Barista Championship.



MAY •

25 - 29 May World of Coffee & Tea IMPACT Exhibition and Convention Center, Bangkok, Thailand World of Coffee & Tea, a professional coffee and tea trade fair, is poised to be one of Asia’s leading sourcing, trading and knowledge platforms for the coffee and tea industry. 

DEVELOPMENT

•Coffee Agronomy •Barista Course •Coffee Trading and Entrepreneurship •Coffee Sustainability •Coffee Quality Management •Coffee Price Risk Management •SPS Management •Selling Skills

The Specialty Coffee Association of America (SCAA) will host its 28th expo in Atlanta.

11 - 13 March Coffee Fest New York Javits Center, New York, New York The show’s aim is to help attendees build and refine their specialty coffee businesses. It couples a relevant educational program with a friendly, informative, and enjoyable trade show floor to create a show that serves as a touchstone for many in the specialty coffee industry.

7 - 10 April The London Coffee Festival Old Truman Brewery, London, United Kingdom The London Coffee Festival promises to be a highlight event for coffee lovers and those working in the industry.

6 - 11 March 4th World Coffee Conference and 116th Session of the International Coffee Council United Nations Conference Centre, Addis Ababa, Ethiopia

•

DELIVERING A TOTAL COFFEE EXPERIENCE TO THE COFFEE VALUE CHAIN IN AFRICA THROUGH EDUCATING, TRAINING AND OFFERING PROFESSIONAL SERVICES IN EVERY ASPECT OF THE COFFEE VALUE CHAIN.

KAAWA ON WHEELS Big Events. Small Events. All Events. We Bring the Specialty Coffee Café to you. You love great coffee. Your guests love great coffee. You’re in luck—we love serving great espressos, cappuccinos, lattés, and not just hot, but iced or frozen with luscious chocolate and Italian syrups at a location of your choosing.

Other services include: • Coffee Business Consulting • Coffee Farm Visits • Research in Origins

Africa Coffee Academy has partnered with and continues to work with: World Bank • USAID, Uganda • Swedish Chambers • TATA Coffee • 4C Association, Bonn Germany • AFCA • Africa Tea & Coffee, Mombasa Kenya • CTCS UK • Star café Ltd • Savannah Commodities • Supremo Coffee • Ankole Coffee Producers Cooperative union• KDS Coffee, Ltd • National Union of Coffee Agribusinesses and Farm Enterprises • Progreso • Hivos • Solidaridad • ITC

CONTACT ACA ON Plot 139 Kira Road, Kamwokya, Kampala | P. O. Box 4925 Kampala, Uganda | +256 (0) 414 690 523 | [email protected] | www.africacoffeeacademy.com UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

BARISTAS Announcing the launch of the Africa Barista Network TO REGISTER email: [email protected] tel: +256715 516 328 +256705 367 005 THE SOLIDARIDAD NE T WORK 2013 ANNUAL REPOR T

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UGANDA COFFEE 24/7 | Vol. 4 | Issue 2 | January - June 2016

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