Uganda

Luwero coffee improvement project

''Better quality, more efficiency, certification and direct market access for small-scale coffee producers in Luwero''

Introduction

The first project of the DE Foundation took place in Luwero. In partnership with Ibero (a coffee exporting company, part of the Neumann Kaffee Gruppe), EDE Consulting and Plan (a charity), the DE Foundation initiated the project ''Strengthening food security for children and families living in poverty in Luwero''. With the involvement of Plan, the project approach was broadened to go beyond coffee. It also included support for producer groups on topics such as maternal health care, food security and diversity, education and diversification of income. After the initial phase from 1999 to 2003, it was decided to add another phase in which more attention would be paid to organisational development.

Small-scale farmers, particularly in Uganda, produce and sell such low volumes of coffee that individually they have very little influence on how their coffee is traded. Addressing the matter of small volumes is crucial for improvement to happen in places such as Luwero. One of the reasons is that with low volumes, larger trader, often based far away in the capital city of Kampala, are not interested to go into the field to buy coffee. After all, sending a truck into the field for day with 2 staff on it and and picking up a few hundred kilos of coffee from 20 or 30 individuals is not going to be cost-effective. In the absence of competition from larger traders, the village-based traders have a captured supply and can afford to offer low prices or charge high interest rates if they buy coffee in advance of the harvest.

Addressing the issue of low volumes was done in 2 ways:

1. Improving productivity (how to grow more coffee from the same piece of land?)
2. Form so-called farmer-owned and managed Depot Committees (DCs) where producers sell their coffee through a group

The second step was crucial as it opened up local markets to competition. With aggregated volumes Depot Committees suddenly became very interesting business partners to various traders. As a result of this prices in some of the areas where the project is active increased by up to 20%.

A third phase is now being initiated. In partnership with Ibero, the EU and the Bill and Melinda Gates Foundation we aim to assist the 24 DCs that were formed in the previous phase to become part of a larger farmer-owned and eventually farmer-managed company called the Uganda Coffee Farmers Alliance (UCFA).

Focus of the project

To enhance coffee production in Luwero through quality improvement, good agricultural practices and as a result, obtain market access for participating producer groups.

Activities

• Forming and training DCs to become better organized and capable of providing more benefits to their members
• Assisting DCs in accessing services such operational credit, training and farming inputs
• Incorporate DCs into the UCFA
• Training farmers in application of Good Agricultural Practices
• Providing materials and tools for compliance with the UTZ Certified code of conduct

Results

A total of 24 DCs are active, selling increasing volumes of coffee to Ibero than before the project's inception and expanding their activities on bulk marketing to other products such as eggs and maize. Participating producers obtain around 20% higher prices than non-participating producers because of better quality coffee, certification and lower transaction costs because of bulking their coffee. Project participants invest more resources in pruning, mulching, rain-water harvesting and re-planting than non-project participants. Project farmers realize on average 30% higher coffee yields per hectare. Training has been carried out for DCs to take a pro-active role in the certification process. Each DC has members trained as chemical experts, first-aiders and internal inspectors.

Most DCs are selling coffee through the UCFA and the first DCs are accessing credit from official financial institutions; a move away from the village loan sharks that they used ot rely on. Attempts are also being made at getting the DCs and the UCFA to access services offered by national extension organisations in Uganda.

Partners

• Hanns R. Neumann Stiftung & EDE Consulting
• Ibero
• European Union
• Bill and Melinda Gates Foundation

Contact information

Stefan Cognigni, management@coffeealliance.org