Imagine the Ugandan small-scale farmers being organized in a complex multilevel structure. At the very beginning of it, there is a farmer: fostering and nourishing his plants, and harvesting the coffee cherries when the time has come. The farmer then processes his crops, individually on his own. As a next step, each farmer sells his processed coffee to an intermediary, who comes to his farm to pick it up. Usually, this intermediary sells the farmer's coffee, together with some bags of neighbour producers, to another middleman. Possibly, one of these middlemen decides to hull the coffee, thereby adding value to it. And in a lot of cases, this intermediary again hands the coffee over to another one. Obviously, each of the farmers pays for the services of the intermediaries, by means of receiving a fairly low price for their coffee.

Results

The farmers now organized themselves into groups, and Mr. Antony Mugoya was pleased to give some first hand insights to the project's progress. He is the Commercial Coordinator for the NKG Coffee Alliance Trust, an organization acting in the network of HRNS. As such, he is the linking pin between 24 farmer groups, encompassing about 15.000 farmers in the Alliance Project. He sees the main aim of his activities in the promotion of the marketing efficiency of the farmer groups. Besides this, he encourages the farmers to opt for a processing that increases the quality of their coffee, and to deliver their product directly to the exporter's premises. To transport and market the coffee, he sensitizes farmers to best business practices like bulk marketing, strict quality control, joint transporting as well as selling at the highest possible level of the supply chain. He links the farmer groups to financial institutions and transport services. Thanks to these measures, the farmers obtain a high quality product that they can sell directly to the export companies, which allows them to significantly improve their profit.

Challenges

"Before the project started, the farmers suffered of low coffee quality and small yields. The farmers were selling unprocessed dried cherries to local intermediaries. Quality and quantity of the coffee could be improved, and we have achieved a value addition by processing dried cherries into fair average quality coffee. But the biggest challenge was to establish direct commercial contact with an exporter. Like Ibero, many exporters have left the countryside and are now buying coffee directly in Kampala. Selling there was a huge opportunity for the farmers, achieving higher prices by bypassing the middlemen and developing the operations of their own organizations. The farmers have joint forces, bulk their coffee now and market it in cooperation. "

Evidently, there were more challenges to tackle, such as the farmers preferring to pay the transporter after receiving payment for their coffee sold to the exporter. Most transporters however like better being paid up front. This was overcome by the Zonal Marketing Committees identifying and negotiating with suitable transporters who would accept the farmers' terms of payment.

Actions Taken

"We organized a series of brainstorming sessions with the farmers, and developed a model of how a farmer-owned marketing agency should best operate. One of the key operational requirements was the need for joint transport", Mugoya emphasizes. "The farmer groups decided to harmonize their marketing programs by determining days when and routes where trucks would collect members' coffee and deliver it to the exporter in Kampala."

According to the Commercial Manager, the Alliance Project assisted in the formation and development of farmer groups, POs and DCs. It offered facilitation in terms of stationery, equipment and training. Additionally, the project coached the farmers in bulk marketing and development of business capacity within their farmer groups, which have been supported in registering as companies. Furthermore, the project team helped the farmer groups to open bank accounts and provided relevant market information.

"Our intention is to continue providing support to farmer groups within the project to progressively build up their marketing efficiency", Mugoya clarifies. "We want to further contribute to improving farmers' incomes by development and empowerment of their groups. We aim at actively participating in setting up a commercially feasible yet professional farmer-owned marketing agency that operates in the interest of its members. We hope to continue creating opportunities for smallholder coffee farmers within the project to process and trade their coffee more competitively. Further to this, we would like to ensure that farmers also access agricultural finance in order to invest in important inputs such as fertilizers. "