Karagwe District Co-operative Union Ltd (KDCU)

Coffee Co-operative, Tanzania


'Because KDCU has long-term relationships with Fairtrade partners our businesses is more secure for the future. We hope to expand our business with Fairtrade to increase our income and other benefits.'

Anna Michael Mlay, coffee farmer and Personnel & Administration Manager, KDCU Ltd 


Introduction



Rainwater collection tanks © KDCU Ltd
Karagwe District Co-operative Union Ltd (KDCU) is an organisation of small-scale coffee growers in the Kagera region in the northwest corner of Tanzania, about 200 miles south of the equator. The region has a population of around 408,000 and shares borders with Uganda to the north, Rwanda and Burundi to the west, and Lake Victoria to the east. The KDCU head office is in Kayanga, about 100 miles west of Bukoba, the regional capital.

Background


KDCU Ltd is a union of village-level co-operatives (known as rural primary societies) registered under the Tanzania Government Co-operative Societies Act. It was formed in 1990 when coffee farmers from Karagwe region broke away from Kagera Co-operative Union (KCU) to form their own union. They decided that KCU, which is based in Bukoba, was geographically too far away for them to be able to adequately represent their interests at board meetings, and that forming a new union would bring services closer to the farmers, cut costs and improve production through increased motivation. Membership of KDCU has grown from 50 to 76 primary societies with 17,838 individual members.  

Farmers in Karagwe district own small plots of land, with an average farm size of just 0.8 hectares. Coffee is the main cash crop, grown alongside small quantities of food crops including matoke (green bananas), cassava, beans, yams, maize and vegetables. Some also keep a few livestock such as cattle, pigs and chickens.  

The main concerns for KDCU members are access to clean water, healthcare, and education for their children. While the community has contributed significantly to the construction of primary and secondary schools, there still aren’t sufficient secondary school places to accommodate all the children who want to attend. By increasing Fairtrade sales, KDCU will have the opportunity to invest the additional premium money in addressing these ongoing problems.  

KDCU & Fairtrade


KDCU has been Fairtrade certified since 1995. For sales to Fairtrade buyers KDCU is paid at least the Fairtrade Minimum Price of 101 cents/lb for robusta coffee, or the world price if higher. There is an additional Fairtrade Premium of 20 cents/lb for farmers to invest in farm and business improvements or in projects that benefit the wider community such as healthcare, education, and infrastructure such as the construction of coffee warehouses. 

In the 2009/10 season, 552,000kg of coffee were sold to Fairtrade buyers – around 19% of total sales by volume and 38% of sales by value. But Fairtrade sales are fairly stable, therefore in years when production is high these figures can fall as low as 4.5% and 7% respectively. UK Fairtrade buyers include Cafédirect, Sainsbury’s, ASDA, NISA, and food service companies such as The Fairground. 

The premium is distributed among the union and primary societies in accordance with a quota approved at the KDCU Annual General Meeting (AGM). Committees made up of board members are responsible for managing and monitoring projects funded by the premium. 

Fairtrade Premium Projects


Examples of recent projects funded with the Fairtrade Premium includes:

KDCU projects:
  • Construction of classroom and ongoing annual donation to Nyaishozi Secondary School
  • Kibimba pine tree project (30 acres of reforestation and sustainable production of timber for building materials)
  • Purchase and distribution of coffee seedlings to members
  • Ongoing capacity building workshops e.g. to plan, fund and set up a Quality Management System
  • Construction of three 2,000 litre rainwater collection tanks – indestructible ferro-cement tanks to collect rainwater from Kamahungu Factory roof
  • Workshops on Fairtrade principles for primary society members
  • Staff training on accounting software package.


Primary society projects:

  • Construction, extention or renovation of coffee warehouses (Ruhita/Maguge, Kyerwa, Karukwanzi, Nyakahanga, Kigarama, Omukishanda, Kiruruma, Ndama, Igurwa, Rwambaiza, Rutunguru)
  • Renovation of office and warehouse (Runyaga)
  • Renovation of warehouse toilets (Ruhita/Maguge)
  • Donation to Karagwe teacher training college
  • Construction of well and part-funding of toilet block for primary school (Kakuraijo)
  • Construction of modern slaugherhouse (Nyaruka).

 

KDCU Structure & Production


Structure
Each primary society is a separate legal entity with its own by-laws, owned and managed democratically by their members, who are also shareholders. A board of directors is elected every three years by members at the AGM. KDCU is the umbrella body for the primary societies for which it provides a range of services such as purchasing, transporting, processing and marketing members’ coffee. KDCU has put in place a strategy to:

  • support the primary societies in strengthening their internal organisation
  • strengthen the coffee processing capacity of KDCU
  • strengthen the communication framework within KDCU
  • organise the distribution of inputs to coffee farmers 
  • enhance the efficient purchase of coffee from members.


Each primary society elects three representatives to the AGM, the main decision-making body for KDCU, while a seven-member board of directors oversees the activities of the organisation. The general manager and his team are responsible for the day-to-day running of the co-operative which comprises export, marketing, accounts, factory, organic, administration and internal audit departments and employs 27 staff.  

Production
Around 95% of KDCU members’ production is robusta coffee, used in the manufacture of instant and freeze-dried coffee; the remainder is arabica coffee, used in blends of roast and ground coffee. At harvest time, farmers pick the ripe cherries and lay them out on plastic sheeting on the ground for drying, a process which takes around 14 days. The dried cherries are packed in 70kg bags for delivery to the primary society which purchases them using a cash advance from KDCU. Poor roads and lack of transport means that farmers have to tie a maximum of two bags to a bicycle and push them to the primary society, a distance of 10 to 20km for most farmers.

The accumulated coffee is then transported by rented truck to the main warehouse where it is stored before being delivered for curing (processing) to Kamahungu Factory, which is owned and operated by KDCU. At the height of the harvest season, 540 workers are employed in the dry coffee curing process in which the coffee beans are cleaned, hulled, polished, graded and packed. The processed coffee, known as green coffee, is then transferred to Kemondo warehouse, ready to be sold at Moshi auction or transported to the dock for export. 

Annual production volumes vary widely between 3,000 and 9,000 tonnes of green coffee. This cyclical trend is attributed to a combination of unpredictable rainfall patterns and the level of resources invested by farmers in terms of time and agricultural inputs. Around 95% of production is sold for export, the remainder sold to the local market. An organic certification programme was implemented in January 2010 to access higher value markets and increase members’ incomes. Eight primary societies are now in conversion to organic production and receiving training from field officers employed by KDCU.


‘For KDCU coffee farmers, we see Fairtrade as the best tool to reduce poverty in our community.’

Anna Michael Mlay, coffee farmer and Personnel & Administration Manager, KDCU Ltd. 


Fairtrade Foundation January 2011

Look for the FAIRTRADE Mark on products. It’s your guarantee that disavantaged farmers and workers in the developing world are getting a better deal.