ACDI/VOCA Learning Event Reviews 50 Years of Learning in Development
The Oromia Coffee Farmers Cooperative Union (OCFCU) in Ethiopia—the birthplace of coffee—is the largest organic coffee exporter in the world. The union collects six types of high-quality, organic Arabica coffee beans, all with distinctive and highly desirable flavor characteristics, from more than 250,000 farmers across the Oromia region.
In only 15 years OCFCU’s exports have grown nearly a hundredfold, with sales of $40 million, making it the largest coffee producer and exporter in Ethiopia. Key to the union’s success has been to link Ethiopia’s smallholder farmers directly to export markets. The prior central auction marketing process did not allow for quality distinctions.
Beginning in 2000, ACDI/VOCA, a nonprofit development organization, aided the young cooperative union under a USAID program, training cooperative members to improve coffee quality and productivity, and working with farmers, processors, exporters and others to strengthen the overall coffee value chain in Ethiopia. Improvements included creating a system of traceability to guarantee coffee quality from farm to cup.
The general manager of OCFCU, Tadesse Meskela, recently reflected on the pivotal capacity building by ACDI/VOCA and others that spurred OCFCU’s growth. As one of the four panelists at a learning event held in conjunction with ACDI/VOCA’s 50th anniversary in June, he discussed his experience as a former aid recipient and recounted OCFCU’s progress. AAB sat down with him after the learning event for his perspective on capitalizing on export markets, effective marketing and next steps in helping the Ethiopian coffee sector to flourish.
AAB: What led to your cooperative union’s success over the past 10 years?
Tadesse Meskela: The key to success is promotion. As soon as Oromia was organized as a cooperative union, the challenge was getting the market.
With support from ACDI/VOCA, we came to San Francisco in 2000 [for a Specialty Coffee Association of America conference] with 146 kilograms of different coffees. Roasters took the coffee for free, cupped it and found that our coffee is the best.
It was eye-opening for us to learn how the coffee industry works in the West. Before that, we didn’t have any experience and did not know how coffee is consumed in the developed world. After coming to San Francisco we identified how people care for the product and what kind of certifications are required. In the first two years Oromia participated in the specialty coffee conferences with support from ACDI/VOCA. Since 2006 we have financed ourselves by renting a booth with fair trade coffee buyers.
The other thing is training—training to all the farmers. When we participated in the specialty coffee conferences we got feedback on the quality of the coffee. Based on this we trained our farmers so that the quality of the bean improves. In the 2012 Coffee of the Year competition, coffee from Oromia was the first out of 250 different coffees.
This is all because of the feedback we got from coffee roasters and the training we gave to our members to improve quality.
What are some of the current challenges for the cooperative?
We do have banks [OCFCU recently created its own bank, a great benefit to its members for much-needed preharvest financing] but still to capture the value chain, cooperatives have to receive all the product from their members, which would be facilitated by access to finance.
The other thing is capacity building. We have to train farmers from year to year. It’s not a one-time job, it has to be continuous. ACDI/VOCA supported us in the beginning. We have done a lot with ACDI/VOCA, but these trainings have to continue. It’s a dynamic process—training, awareness creation for farmers to get organized to come out of poverty—it’s very important. This is has to be accompanied by finance; they have to come together.
What are the techniques you’ve found most successful for training?
The way we communicated to members at the beginning of ACDI/VOCA’s intervention was through bringing in volunteers [ACDI/VOCA’s expert volunteers serve on short-term assignments that complement long-term projects] to talk to the farmers; so that has to be there.
We also use video classes on cooperatives to change the minds of farmers to enable them to come together, because we used to have bad cooperative experiences during the socialist regime, where farmers had no control over the product or pricing. So by the time we started with ACDI/VOCA, we had to educate farmers and show them how to change their lives through cooperatives by capturing the value chain, the comprehensive process of producing, processing and exporting.
You mentioned in ACDI/VOCA’s learning event that cooperatives receive 250 percent more by participating in OCFCU as opposed to selling to middlemen. Can you give an example of what the price difference would be for an individual coffee farmer operating alone?
Especially during the time of the coffee crisis, 2000, when the price was at a three-year low, 4 cents a pound, [by participating in the Oromia Cooperative Union] farmers were getting more than double what they could get on the local market. Even now they are getting more than double because we certify the coffee organic fair trade and trace all of it to the cooperative. So the certification creates an additional price over the quality. We are also given a quality premium from our customers because our coffee is always top of the top. These together give our coffee a higher price and make us able to give back dividends to the unions. So this is how the lives of the farmers change.
And also through the fair trade premiums [an additional payment above the market price that must be spent on social and economic development in the producing communities], we build schools and other infrastructure. We’ve built 14 elementary schools, 10 high schools and more than 100 clean water supply programs. All in all, we have done about 226 different projects from the fair trade premium—success we got by creating quality and sustainability and supplying good quality coffee to our customers.
Our relationships with our coffee roasters and buyers, who started buying coffee from us in 2002, are now family-like. They visit us every year or every two years. We visit them. They give us feedback and based on the feedback, we train farmers. Our relationship is very strong.
What do members do with the extra money?
You can’t say the money the farmers are getting is beyond their expenses, because farmers are living hand to mouth. The price of coffee is going up and down, so with the extra money they get they send their kids to school, they buy good food for their families, they change their houses from thatch to corrugated iron.
What do you think are the current constraints in the Ethiopian coffee sector?
The government needs to support characterizing the different coffees in the country. This has to be given a big emphasis, so that the country—and we—can win in delivering the high premium prices in the international market.
The biggest concern is agronomic. In most of the rural parts in the country the coffee is getting older, and there should be a stronger extension activity around agronomic practices. In the 1980s we had a coffee improvement project funded by the European Union for maybe eight years. That brought a drastic change to the Ethiopian coffee industry, with nurseries to raise coffee trees, training for farmers and stamping the old trees. This really has helped the industry. But since the culmination of the coffee improvement project, these programs are not there. So we have to work harder now.
Watch Tadesse Meskela and others discuss sustainable economic growth in developing countries at ACDI/VOCA’s learning event, “Moving Forward Together” here: http://www.acdivoca.org/site/ID/Video-50-Anniversary-Learning-Event