Sidama Coffee Farmers Cooperative Union SCFCU Ltd' At Glance

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SidamaCoffee Farmers Cooperative Union(SCFCU
Ltd.) At Glance
By Ashenafi Argaw

• November 2006, Hong Kong

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Facts about Ethiopian Coffee

• Ethiopia home of Coffee Arabica
• Total production 3 - 4.6 million bags per year
  on 400,000 ha
• Four production systems
• Forest
• Semi-forest
• Garden
• Plantation

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Forest Production System

• It is found in south and south-western Ethiopia.
• The center of the birth place of coffee.
• It is self-sown and grown under the full coverage
  of natural forest trees.
• Forest coffee accounts for about 10 per cent of
  Ethiopia's total coffee production

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Semi-forest Coffee

• Found in the south and south-western parts of the
  country.
• Coffee trees are found in scattered and selected
  forests.
• Accounts about 35 of the total production

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Garden Production System

• Garden coffee is grown in the vicinity of
  farmer's residences
• Mainly found in the southern and eastern parts of
  the country.
• It accounts about 50 of the total production.

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Plantation Coffee

• Grown on plantations owned by privates and
  government
• It accounts about 5 of the total production

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Facts about Ethiopian Coffee

• 95 of Ethiopian coffee produced by smallholders
• The third largest producer in Africa
• The tenth largest producer in the world.
• The third largest coffee drinking nation from
  coffee producing countries.
• 15th coffee drinking nation in the world.

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Top 20 Coffee Producing Countriesestimates in
million bags/60kg, October 2002 September 2004
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Global Top 20 Coffee Consuming Nations in
million bags/60kg green bean equivalent
(estimates 2004)
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Ethiopian Coffee Map
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Facts about Ethiopian Coffee

• Coffee accounts for over 55 of export revenues
• Coffee contributes over 25 of GNP
• more than 25 of the total population of the
  country depend on coffee
• The recent slump in world coffee prices has led
  to great social and economic hardiship
• The farm gate price of red cherry is now just 43
  its level in 1990s

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The structure of the coffee marketing system

• Participants involved in coffee marketing in
  Ethiopia
• 1. Producers smallholders and plantations
• 2. Collectors (sebsabi)
• 3. Wholesalers (Suppliers or Akrabi)
• 4. Private Exporters
• - only allowed to buy coffee from the
  auction market
• - over 180 licensed exporters
• - 72 active exporters
• 5. Coffee marketing cooperatives

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The Coffee Marketing Chain
Farmer
Plantation
Dry cherry
Red cherry
Private collectors
Dry and red cherry
Coops
Private suppliers
Private suppliers
Coops
Washing/ hulling
Washing
Washing
Hulling
Auction
CLU
CLU
Private Exporters
SCFCU
Plantation owners
Export
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Cooperatives in Ethiopia

• Cooperative is an autonomous association of
  persons united voluntarily to meet their common
  economic, social and cultural needs and
  aspirations through a jointly owned and
  democratically controlled enterprise.
• Coops are member oriented corporations

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Cooperative Contd

• Coops are based on the values of self help, self
  responsibility, democracy, equality, equity and
  solidarity.
• Cooperatives are both social and economic
  institutions whose main goal is to bring
  empowerment and development to their members.

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Cooperatives contd

• Coops play vital role in all areas of social and
  economic development
• Coops are vital in increasing agricultural
  production and productivity
• - Ethiopia more than 60 coffee
  produced by members

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Cooperatives contd

• Agricultural marketing through providing market
  information and enhancing the bargaining power
  of the farmers.
• Creation of job opportunities in the rural areas
• - Ethiopian coops created more than
  30,000 jobs

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SCFCU Ltd BACKGROUND

• Founded in July 2001
• Comprised of 45 primary coops residing in
  SNNPR/Sidama Zone
• Benefits more than 86,000 smallholders
• Specialty coffee production Sidamo
• Cultivated area under coffee 72 hectares
• Average annual production 35 tones

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Background Contd

• Production system garden
• Infrastructure
• Coffee pulperies 92
• Coffee hulleries 2
• Warehouse 133
• Vehicles 59
• Members coops have been in a coffee business for
  more than 28 years

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SCFCU - Why is it Established

• To increase farmers' share of FOB price
• To take advantage of economies of scale
• To stabilize local market
• To open international markets
• To stay at competitive edge of coffee market
• To protect coops/farmers from illegal actors of
  domestic market
• To maximize the efficiency of member coops
• To promote and reward quality coffee production

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Major Duties

• Assist in developing producer/buyer linkages
• Directly export members coffee
• Provision of warehouse service
• Promotion of high quality coffee production and
  processing
• Training and education
• Provision of saving and credit services

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What has been Achieved

• Increased farmers share of FOB price
• Coffee export share of cooperatives increased. 0
  before 2001 to 4.5 in 2005
• Washed coffee export share increased from 0
  before 2001 to 18 in 2005
• Enabled primary coops to stay at coffee marketing
• Increased technical and management efficiency of
  member coops

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What has been Achieved (contd)

• Contributed towards improving the quality of
  Ethiopian coffee
• Contributed towards promoting Ethiopian coffee in
  Europe, US and Asia
• Increased bargaining power of producers
• Contributed towards improving socio-economic
  condition of farming community

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Coffee sales by Market Segments (2005/06)
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Sidamo Coffee Export Share of SCFCU
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Dividend Payment by the Union in Years
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Certification

• Organic Certification 24 Primary Coop. Certified
  by BCS OKO-GARANTIE GMBH, GERMANY
• Fair Trade 18 coops inscribed in FLO, Germany
• UTZ Kapeh 7 coops are certified by UTZ Kapeh
  foundation, The Netherlands
• Café Practice 13 coops by Starbucks Coffee
  Company, USA

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Farm Gate Export Price of Sidamo Coffee for
Fair Trade Non Fair Trade Farmer
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The situation of non-fair trade Farmer

• The price slump in the world coffee market in
  1998 had a drastic effect on the lives of many
  farmers.
• Farmers forced to sell assets such as cattle
• Farmers are forced to cut down essential
  expenses, including food
• Farmer are uprooting coffee and shifting to
  other crop
• Kids are dying with some curable diseases like
  malaria.

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Quote from Non-Fair Trade Farmer

• I depend on coffee for all clothing, food, to
  pay taxes and medical expenses. Our lives depend
  on coffee . . . Ten year ago I was producing
  seven sacks of red cherry, and this was enough to
  buy clothes, medicines and services. But now,
  even if I sell four times as much, it is
  impossible to cover all my expenses. . . Three of
  the children cant go to school now because I
  cant afford the uniform . . . We have stopped
  buying teff and edible oil. We are eating just
  mainly corn.

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Impact of Fair Trade

• Better flow of cash income from coffee
• Sustainable coffee farming
• Sustainable Production of good quality of coffee
• Better bargaining power
• Access to credit
• Long term trade relationship

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Impact of fair-trade

• better school enrolment ratio
• Better employment opportunities
• Protected environment
• Better health condition
• Better housing
• Improved infrastructure
• Better life condition

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Ethiopian Coffee Ceremony

• Its Unique and have an important role in
  Ethiopian hospitality
• The host washes the coffee beans
• Roast them grinds them with a pestle mortar
• The brewed coffee is served in tiny china cups
  with lot of sugar or salt
• Traditionally, the guest must accept at least
  three cups the 3rd in particular considered to
  bestow a blessing
• It would be done at least three times a day

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• Trade is the most powerful tool that links the
  lives of people on our planet, affecting
  economies either positively or negatively. The
  massive slump in the coffee price brought a sharp
  increase in poverty and hunger. But now, bit by
  bit, Fair trade has made a tangible differences
  in many farmers lives. Children has gained
  access to medical care and education where before
  these services were nonexistent. Much needed
  infrastructure has been built, and progress
  against poverty has been achieved. An increased
  market share for Fair Trade would have a
  measurable impact on the peace and stability of
  our country.

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END