Wednesday March 9 2016

Reviving coops in Ankole region

Martin Bambeiha, the manager, Ankole Coffee

Martin Bambeiha, the manager, Ankole Coffee Processors Ltd shows parchment coffee being dried at their factroy premises. Coffee should not be laid on bare ground but on raised tables like these. PHOTOS BY STEPHEN OTAGE 

By Stephen Otage

When Asians established the coffee industry in Ankole region in the 1950s, the natives’ knowledge was limited to growing and selling it to the Asian merchants who kept the deal in the international market a secret to themselves.

According to Martin Bambeiha the manager Ankole Coffee Processors Limited, the processing plant which currently houses them in Ibanda District, originally belonged to Banyankole Kweternana Cooperative Union and it used to be one of its primary processing cooperative in the area.

When the Union developed problems in 1999, the Ankole Coffee Processors Limited decided to acquire the plant. As one of the companies trading in coffee then, it had suffered the distortions in the black market that was ruled by middlemen who disorganised the coffee price and quality and had brought the trade to its knees.

He recalls that in the 1950s, Ankole was famous for Arabica coffee production and was dominated by Asians who were hounded out of the country on Idi Amin’s orders when he took over power. He says the order, dealt coffee production in the area a big blow because the Asians abandoned the trade without grooming Ugandans to take over the business.

As much as the Banyankole Kweterana Cooperative Union tried running the show between 1972 and 2000, the middle men who manned the coffee black market disorganised coffee trade, distorted market prices to the extent that they bought anything that resembled coffee beans without understanding the impact of bad quality coffee on Ugandan coffee. This raised concerns among the farmers in the area on what was happening in the market.

After acquiring the property in 2000, they decided to register a company dealing in coffee export. This was to ensure that it dealt in good quality coffee and had the capacity to raise the quantities required which meant that they had to deal directly with the farmers and the initiative kicked off with 3,000 farmers in Ibanda District in 2003.
They were lucky that upon acquiring the facility, they found that the Asians had left behind their administrative structures which enabled them to re-instate and resume processing both the wet coffee cherries and the sun dried coffee.

One of the immediate challenges they encountered with the farmers was the poor quality coffee trees that had overgrown and had not been tended to thereby producing low and poor quality yields. They mobilised farmers and told them what they wanted and how they wanted to achieve it after which they embarked on rehabilitating the farmers’ gardens.
In order to achieve their target, they partnered with the Uganda Coffee Development Authority who provided the farmers with free coffee seedlings in order to achieve its national mandate to ensure that the country meets its national quota of coffee exports to the international market. In 2003, they started registering results when they started processing both wet coffee cherries and the sundried coffee seeds.
In 2004/2005, they extended the same approach to Kamwenge and Kiruhura districts and when they reached Mbarara and Buhweju districts, the need to deal directly with farmers became apparent because all the areas suffered the same challenges: poor quality coffee trees and gardens which needed rehabilitation. In 2004, Uganda Coffee Development Authority gave out 20,000 free Arabica Coffee seedlings to farmers to plant and in 2005 it added them 50,000 seedlings of Robusta coffee. They are lucky that the area has two seasons for both varieties.

In 2006, Ibanda and Kiruhura farmers got another 100,000 coffee seedlings while Kamwenge and Mbarara districts got 50,000 seedlings. He says, today, the farmers have the confidence to produce coffee because they know its price on the international market, and they know that there is an unmet target of seven million bags which government has to meet on the international market against the current three million which Uganda is exporting.

“Our target is to work with 20, 000 farmers by 2018 with a production capacity of each tree producing a kilo of Arabica coffee and 6 kilograms Robusta coffee per tree by 2018,” he says.
He attributes the success of the re-establishment of coffee growing in the area to the Cooperative model of production based on the Parish level where between 100 to 500 farmers in a Parish form a registered Co-operative which should have branches.
He explains that in the Cooperative Movement, a cooperative union is a government structure comprising of several villages ranging between 10 and 20.
Previously, they had primary cooperative societies which were centers where farmers collected their coffee straight either from the garden as raw cherries or sun dried seeds. The collected coffee would be taken to a Union branch where it would be processed into clean coffee after which the Union branch would forward the processed coffee to Uganda Coffee Marketing Board which would grade and export it as processed coffee from Uganda.

In 1993 when the economy was liberalised, everyone was allowed to engage in the coffee business allow other processors to come into play and the monopoly of the cooperative no longer existed and the cooperative structures collapsed.
Through the cooperative model, when the Ankole Coffee Processors embarked on work, they started by mobilising farmers into groups of between 15-20 members. They also created coffee collecting centres, where farmers sold their coffee as well as store it in bulk for easy transportation to the processing plant.
This was because when they transport it individually, it becomes expensive for the farmer.

The collection center is composed of lead farmers, village agents and contact farmers. These are the administrative structures for training the group members.
A lead farmer trains the farmers while the village agent is the one who leads the groups. The contact farmer supervises all the farmers to ensure that all the needs of the groups are met.
All these structures started in 2005. The USAID funded Agricultural Productivity Enhancement Programme (APEP) assisted them with mobilising and training the farmers. Between 2006, to 2009 the Livelihoods and Enterprises for Agricultural Development (LEAD) put the farmers into groups and zones and assisted them with the training of the farmers in good agricultural practices.
They bought tarpaulins for the farmers to dry the coffee as opposed to previously when they did it on bare ground.
He recalls that because of poor agronomic practices, there had reached a time when farmers needed ladders to harvest their coffee and today, Uganda Commodity Production and Marketing Activity program of Feed the Future Uganda Project another USAID project, is now linking farmers to markets, agro-input dealers and micro finance institutions at village level. Now they have 2,000 registered farmers with certificates to show that they have finished external inspections.
The certification means that the farmers meet all the requirements when they handle chemicals and this qualifies for premium coffee prices in the international market. There next move is acquiring a grading machine so that they can start grading their beans before being exported.

From garden to factory

Hannington Bwambale a member of Bukonzo Organic Farming Coffee Cooperative Union in Kinoni village in Kitoro Sub county Kasese District says the Primary Cooperative Union with a membership of 120 members has the primary role of receiving coffee cherries from farmers where a kilogram of cherries is bought at Shs.800.
When the cherries are delivered, the farmers have a collective responsibility of doing the primary processing of the coffee which includes, washing it, floating the cherries to select light cherries from the heavy ones, fermenting it and eventually pulping it so as to get the Parchment coffee bean which is now the semi processed coffee bean which is sometimes exported in that state.
He recalls that the culture of collective cleaning of the coffee started after the farmers had been mobilised and taught the benefits of processing coffee. The benefits include the premium price which the quality of coffee attracts at the international market when it is eventually sold off as well as the other economic activities which support the farmers as they wait for the coffee to mature. These include animal rearing, bee keeping and fruit growing.
Matiya Bwambale, the washing station supervisor attached to Bukonzo Cooperative Society, explains that their role as the supervisors of the farmers, is to ensure that the coffee is coming from the same the source so as to maintain its quality before it is delivered to Bukonzo Cooperative Society where a second payment is made to farmers after deductions of what was used to pre-finance the whole coffee production process like money used to buy lunch, pay guard allowances and buying airtime.
He explains that Shs. 800 which is paid to the farmer for the cherries, is payment for the cherries but when the farmers process the cherries into parchment coffee which is sold to the Cooperative society, it is bought at Shs. 6,000 a kilogram because it requires six kilograms of cherries to produce one kiloram of parchment coffee. When the parchment coffee is delivered to the primary cooperative society, here the society links up with the exporting company which will now be able to monitor the international market price of coffee

Accessing the international markets

According to Kabugho Josinda the Manager Bukonzo Organic Farmer’s cooperative union, coffee trade is good international trade provided you know the business dynamics because Uganda is not the only coffee producer.
She says countries like Brazil and Ethiopia are large coffee producers around the world and international coffee prices depend on the economic situations in these two countries. She says for example when there are disasters in the two countries that is when the international coffee prices go up because there will be scarcity of coffee in the market because the farmers in those countries are not able to supply the international market.
She explains that ordinarily, they have buyers from UK, USA and Europe where they send three containers of un processed coffee bean. Their main buyers are Twin Trading in UK, Crop to Cup in USA and Phillip Shelter in UK where they currently send between 190,000 to 200,000 kilograms of coffee bean.
She says the biggest challenge they face is the inability to grade their coffee because they may fail to get the quantities of the different grades which would be able to attract high prices but they are happy to deal with organisations like Feed the Future Uganda under the Uganda Commodity Marketing Activity program which has exposed them to some of the ideas they did not have before.

She cites an example of the Uganda Development Corporation which agreed to give them a loan of Shs. One billion towards improvement of their operation because much as initially they got a loan of Shs500m from Rabo Bank for buying coffee from farmers, they still had challenges such as drying of coffee during the wet season and training farmers on good agronomic practices. However with their intervention, they have realised an improvement in the welfare of the coffee farmers because they are now able to monitor the international coffee prices locally and they know at what price their coffee will be sold internationally.

Once the coffee is sold, the price difference between that at which they sold to the Cooperative Society and the International price is what is called the premium price and that difference is sent back to the farmers as a group. They use the money for the social development of their areas and most times the money is about Shs.42 million depending on the way the farmers delivered the coffee to the cooperative.