Gumutindo Coffee Co-operative Enterprises Ltd, Uganda

About the co-operative

Location: Mount Elgon, Mbale district, south-east Uganda
Producer type: Second Grade Co-operative Society
Members: Six village co-operatives: Busamaga (422 farmers), Bumayoga (428), Buginyanya (690), Nasufwa (553), Konokoyi (745), Peace Kawomera (576)
Total farmer members: 3,034
Total Area: 842 hectares
Average Farm size: 0.5 to 2 hectares, with 0.2 hectares under coffee
Product: Washed arabica coffee
Fairtrade certified:
2004 
Organic certified: All co-operatives except Konokoyi whose members are in conversion Fairtrade sales: Between 83% and 100% of production - estimated 36 tonnes for 2006/07

Background


Gumutindo, which means “excellent quality” in the local Lugisu language, began in 1998 as a joint project between Bugisu Co-operative Union (BCU), a union of 250 primary or village co-operative societies, and Twin Trading, a UK alternative trading organisation that sources Fairtrade coffee for partners such as Cafédirect. The project initially comprised four primary cooperative society members from BCU. Its long-term aim is to enable members to provide a reliable supply of the highest quality coffee in order to command better prices. A knock-on effect will be to improve the reputation of Ugandan arabica coffee on the world market which has been damaged as a result of liberalisation of the coffee sector.

Because BCU had Fairtrade certification, farmers in the Gumutindo project were able to export their organic and conventional coffee to the Fairtrade market. BCU, however, was faced with a growing number of economic problems and collapsed in 2003. The participating cooperative societies decided to establish their own secondary level organisation to market coffee independently to Fairtrade and organic markets and formed Gumutindo Coffee Cooperative Enterprise Limited (GCCE) in July 2003. The original shareholder co-op members, Busamaga, Buginyanya, Bumayoga and Nasufwa, were later joined by Konokoyi and Peace Kawomera.

Gumutindo was registered as a secondary level cooperative organisation in October 2003 and was Fairtrade certified in 2004. Gumutindo holds the Fairtrade certificate and organic licence and is a licensed exporter. It has set up the Gumutindo Management Agency (GMA) to take over day-to-day running of the company from the board and provide organic conversion and marketing services. This ensures transparent business practices in which none of the six co-op members has undue influence over strategy and decision making processes.

Members of Gumutindo attend quality improvement seminars and practice traditional cultivation and processing methods to ensure the highest quality crop. These include good pruning, picking and drying techniques, the use of organic fertilisers and terracing to prevent soil erosion and water run-off.

Gumutindo exported its first organic coffee in 2002. Five of the co-ops are now certified organic by Eco-cert, while Konokoyi is due to receive organic certification in 2008.


Gumutindo Coffee Co-Operative


The coffee farms of Gumutindo members are located in the Mbale district of eastern Uganda on the lower slopes of Mount Elgon, Uganda's highest mountain which reaches 4,321 metres (14,200 feet) at its peak, and about 90km from the border with Kenya.

The rich, fertile volcanic soil and subtropical climate are ideal for growing high quality arabica coffee. Farmers cultivate small farms, known as shambas, of 0.5 to 2 hectares (1.2 to 5 acres) at between 2,000 and 3,5001 metres above sea level. Coffee is grown on 0.2 hectares on average and is inter-cropped with staples such as cassava, beans, bananas, sweet potato and avocado grown for home consumption. Inter-cropping improves soil fertility, helps prevent soil erosion and provides shade to the coffee trees.

At harvest time, farmers pick the ripe red cherries from the coffee trees then carry out primary wet processing on the farm. The cherries are soaked in water then fed through a hand-cranked pulping machine that removes the beans from the outer pulp which is added to the farmer’s compost heap to ferment before being used as fertiliser for the coffee bushes.

Now covered in a sticky mucus layer, the beans are laid out on racks to dry in the sun. The resulting parchment coffee, so called because of its dry, paper-like protective covering, is then taken to the co-op’s coffee store before being delivered by truck to the Gumutindo warehouse for processing and storage.

Because Gumutindo receives pre-finance from Fairtrade buyers it can pay farmers a first payment on delivery followed by a second payment at the end of the season. The coffee is delivered by truck in bulk to the Gumutindo central store where secondary processing is organised –grading and hand-sorting followed by milling at a local private mill to remove the parchment layer – then the green coffee is packed in 60 kg bags and stored in the warehouse ready to be trucked to the port of Mombasa in Kenya for export. Export documentation and invoicing are carried out by Union Export Services (UNEX), an export company owned by co-operative unions.

Gumutindo acquired its own office space and warehouse facilities in 2006, a major asset for the organisation. The development was funded by a loan from Shared Interest, a UK co-operative lending society that provides finance for fair trade projects.

[ 1 ] 6,500 – 11,500 feet

Impact of Fairtrade


The aim of Fairtrade is to improve the weak economic position of coffee communities by contributing to the improvement of household incomes and village infrastructure.

A survey was recently carried out on 10 villages, two randomly selected from each primary society except Konokoyi. Between them, the villages had two health centres, three primary schools and one secondary school. The survey focussed on 90 randomly selected households and found that:

  • Coffee is the main source of cash for 91% of farmers
  • Each village had between one and four protected water sources but no piped water
  • Only three villages had electricity but few households were connected
  • 79%of houses were made of mud and wattle walls with iron sheet roofing. Of the others, 13% had brick walls with iron sheet roofs and 7% had mud and wattle walls with grass roofs
  • 23% of households own a bicycle - the other 77% have no form of transport

69% of households own a radio.

Fairtrade price & remium


Fairtrade buyers pay premium prices for the high quality coffee produced by Gumutindo. The co-op receives a stable, guaranteed price of at least $1.25 per pound, plus a 10 cents premium (from 1 June 2008). This gives farmers a sustainable return on their coffee and protects them from sharp fluctuations in their incomes. As market prices for Ugandan arabica coffee have been under $0.80 for the last six years, this has allowed Gumutindo to pay higher prices to farmers while meeting operational costs and also building up the organisation’s assets in terms of capital reserves and infrastructure.

Higher prices from Fairtrade sales have supported conversion to organic certified coffee in the form of training and certification costs. As well as promoting more sustainable farming methods, this has expanded market options and allowed farmers to earn additional premiums for their coffee. Without Fairtrade, these farmers would have never been able to afford to go organic.

Gumutindo recently opened the organisation’s first cupping lab, where farmers can roast their own coffee beans. This is very empowering as many farmers had never tasted their own coffee before. So thanks to Fairtrade, the cupping lab enables farmers to check the quality of their coffee and be sure they are providing buyers with exactly what they want.

Each co-operative receives separate premium payments. They go into a fund and members decide jointly how to invest the money. To date, projects include:
  • Building and renovating coffee warehouses and other co-op premises
  • Contributions to community projects – building a secondary school; extending a clinic; protecting natural water sources; constructing and repairing feeder roads
  • Providing working capital to reduce the need for expensive loans

"The money from the Fairtrade Premium last year helped me to pay for my daughter's school fees which are very expensive. I tell my children and neighbours to spend time producing good quality coffee. Since the other farmers have seen us receive the Fairtrade premium, they have tried to emulate what we are doing and the quality is getting better."

Mr Difasi Namisi, Gumutindo farmer.

Long-term trading partnerships


Fairtrade standards require buyers to commit to long-term trading relationships with their suppliers. Gumutindo now has six Fairtrade buyers and two of them – Cafédirect and Equal Exchange – have been buying from Gumutindo for seven years and German company EZA3Welt for six. The additional income from these continued sales has allowed Gumutindo to plan, invest and grow as an enterprise.

Fairtrade sales have grown fourteen-fold from 27 tonnes in 1999 to 370 tonnes in 2006, when they represented 83% of total exports. TWIN and other Fairtrade partners also contribute to the organic conversion fund which currently finances two field officers to work on the organic project. Gumutindo employs a further eight field officers to work with new members to get them up to the required standard.

 

Organisational strengthening & support


The farmers themselves took the decision to instigate the original Gumutindo quality improvement initiative. The fruits of this are apparent now as the farmers have come together to produce a coffee of the highest quality in the form of Cafédirect Mount Elgon Gourmet Organic Coffee Beans.

Fairtrade enables women to become empowered at Gumutindo. Each primary society nominates two members to the GCCE Board, one of which must be a woman. Conversely, the coffee itself appeals to women consumers who, marketing research shows, are the main purchasers of Cafédirect’s quality organic freeze dried coffee, made with Gumutindo beans.

Fairtrade enables the growers to become entrepreneurs, by taking the future into their own hands. Their success is not seen by them as individual success, but success that can be experienced by the whole community. Members of Gumutindo therefore receive extra payments when selling to the Fairtrade market and the higher quality coffee they now produce has the potential to command higher prices on the conventional market.

There are around 90,000 coffee growers on Mount Elgon but the co-ops that used to purchase their coffee and provide other services have not survived liberalisation of the sector. These farmers carry their coffee to village trading posts where traders arrive to purchase their coffee, usually at a low price because the traders’ priority is quantity rather than quality. Many of these farmers have seen the benefits of producing high quality coffee and are keen to join Gumutindo. Gumutindo hopes that market demand will continue to grow so that all coffee growers on the mountain will eventually become involved and benefit from Fairtrade.


Coffee In Uganda


Agriculture is the most important sector of Uganda's economy and directly or indirectly employs 80% of the population. Agriculture and agribusiness account for 95% of total export revenue. Coffee is by far the most important export crop, accounting for around 50% of all export commodities. Annual production of around 180,000 tonnes earns revenues of around $350m each year.

Village-based co-operatives were established by farmers as a means of avoiding exploitation by middlemen and private coffee traders. From the late 1940s they developed strategic control over the supply and export of coffee in Uganda. The chaotic political and economic situation during the Idi Amin dictatorship of the 1970s led to a collapse in coffee marketing and consequent weakening of co-operative structures. Production recovered post-Amin, but the liberalisation of coffee export marketing, begun in the early 1990s, caused the collapse of most of the co-operative unions. They lacked the business structures and market knowledge necessary to survive in the new competitive environment that brought many private traders into the market, all scrambling to purchase and export coffee. As a result, both the quality and price of Ugandan coffee has been driven down in the stampede for quantity. 

 Fairtrade Foundation 2007
                                                                                                                                                                                    

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