Partnerships for Fairtrade coffee supply: What works?

Woman coffee farmer in Nicaragua

Woman coffee farmer in Nicaragua. Copyright: Cafenica/Ariel Flores. Via Flikr/Twin and Twin Trading Images.

Fairtrade coffee is big business. In the UK people drank 2 billion cups of Fairtrade coffee in 2012 and over a quarter of all roast and ground coffee sold was Fairtrade-certified.

In addition to assuring coffee aficionados of a high quality and ethically sourced brew, Fairtrade for coffee has a development agenda: Coffee buyers, cooperatives, and smallholder producers work together with NGOs and development agencies; this partnership tries to ensure that coffee farmers earn a just livelihood from their work of producing the world’s most widely traded agricultural commodity. Attention to higher quality by buyers has led to a robust spread and growth of Fairtrade since the early 1990s.

Fairtrade business relations seek win-win outcomes: access to high quality coffee beans for buyers in major coffee markets in the US and Europe, and better markets for small farmers in coffee-producing countries of the Global South.

However, achieving such win-win outcomes is rarely quick or simple. It often takes considerable effort from all involved.

With a new article in the journal Food Chain, Jason Donovan of the World Agroforestry Centre (ICRAF), and Nigel Poole of the School of Oriental and African Studies, London, offer some important insights into Fairtrade coffee chains, cooperative management, sustainability, and farmers’ needs and decision-making processes.

The paper is based on the results of extensive data collection on the workings of a 500-member union of coffee cooperatives, Soppexcca, and its relationships with small coffee farmers in Jinotega, Nicaragua, as well as with international buyers of high-quality Fairtrade-certified coffee. The researchers collected quantitative and qualitative data on Soppexcca’s governance structures, administrative capacity and financial performance. They also interviewed farmers and the coffee buyers’ representative.

The insights garnered from this study appear as neither black nor white, but rather, in shades of grey. The complexity of building supply relationships with cooperatives and small producers stands out. As well potential fault lines in this Fairtrade partnership that if left unaddressed, could threaten sustainability.

For instance:

1. Good and inclusive governance of a cooperative brings resilience, but more time and dedication to building capacities is needed.

In Soppexcca’s case, a professional manager built relations of trust and mutual respect with partners, assured the quality of coffee delivered, and complied with the cooperative’s contractual terms with coffee buyers; this was key to the co-op’s success. However, some survey respondents felt that members’ participation in the co-op needed to be improved, in order to reduce an over-reliance on the manager for the system’s functioning.

Interestingly though, it appeared that neither the buyers nor the NGO staff were ready to initiate dialogue on this issue with Soppexcca, important as it was for the cooperative’s future growth and development. Perhaps the partners thought suggesting changes might risk the good relationships already built? Or they balked at ‘fixing something that was not broken’?

2. Farmers need technical assistance, including on-site training in production practices. There is scope for greater impact and efficiency.

Modern farming, particularly of export commodities like coffee, is a knowledge-intensive affair. Farmers need skills in many facets of plantation management, such as pruning, picking, soil fertility, pests and diseases.

Soppexcca had the important role of training farmers in modern coffee production and processing techniques. However, 57 out of 129 (around 44%) of the households surveyed between 2007 and 2008 reported being ‘dissatisfied’ or ‘highly dissatisfied’ with the provision of technical assistance.

One farmer said:

“We were visited once in 2008, but the extensionist didn’t provide technical advice; he arrived to inform us of a meeting at the cooperative.”

Evidently, for sustainability, continuous farmer training should be an integral part of the Fairtrade modus operandi.

3. Short-term and affordable credit improves fertilizer purchase and productivity, but few are able to afford inputs.

Coffee mines the soil of nutrients, which need to be replaced with organic or inorganic fertilizers for sustained productivity. As such, timely access to quality fertilizers critical in coffee production.

Soppexcca cooperatives offered farmers both annual and multi-year credit facilities, which were well appreciated. However, cash-strapped producers of non-organic coffee struggled to meet the relatively high costs of mineral fertilizer. In some cases, annual credit was used for household needs, rather than to intensify coffee production.

Coffee agroforestry in Nicaragua. Photo by Jenny Ordoñez/ICRAF

Coffee agroforestry in Nicaragua. Photo by Jenny Ordoñez/ICRAF

In particular, the poorest households (which tended to depend heavily on off-farm income) were the least able to benefit from participation in the coffee value chain. Households generally faced major trade-offs in directing their scarce assets (including money and labour) to coffee production.

4. Sales to Fairtrade buyers can make important contributions to incomes, but farmers often ‘side-sell’ their first-grade coffee to others.

Soppexcca provided access to markets for first-quality coffee. The survey found, however, that farmers diverted some of this top-grade coffee to buyers other than the cooperative. For instance, between 2008 and 2009 organically-certified households sold only around 73% of their coffee production to Soppexcca, while households producing conventional coffee sold just 57%.

Among the reasons given for ‘side-selling’ were a competing local buyer who provided the farmers— similar to Soppexcca—with technical assistance, credit, and a ready market. Other reasons were household emergencies, financial indebtedness, and stringent quality requirements by Soppexcca.

Some farmer quotes:

 “Our production was low. Had we delivered the coffee to Soppexcca, we would not have received any income because of our existing debt with Soppexcca.”

“The final payment is very late, and we need to pay coffee pickers; also, it has happened that our coffee has been too humid to pass inspection by Soppexcca.’

In their analysis, Donovan and Poole say building sustainable supply chains of high-quality, Fairtrade coffee needs a concerted effort to move towards greater coordination and collaboration among stakeholders. This is not a simple task, they concede, but it is essential:

“Deeper discussions and mutual learning could make the difference between resilience and vulnerability for cooperatives like Soppexcca and the farmers they support. A culture of collaboration and dialogue will also encourage the innovation, risk-taking, and the shared learning needed to build supply capacity, and achieve it quicker and with fewer resources.” they state.

With Fairtrade now in its third decade, the findings and analyses in the new article make a valuable reference for planning for the future sustainability of the model.

Download the article:    

Jason Donovan and Nigel Poole (2014) Partnerships in Fairtrade coffee: a close-up look at how buyers and NGOs build supply capacity in Nicaragua. Food Chain Volume 4, Number 1, pp. 34-48.

Related stories:

Household assets, higher-value markets, and the tackling of rural poverty: Study reveals important link

Livelihood and business assets matter in pro-poor value chain development

 

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Daisy Ouya

Daisy Ouya

Daisy Ouya is a science writer and communications specialist with the World Agroforestry Centre (ICRAF). Over the past 15 years she has been packaging and disseminating scientific knowledge in the fields of entomology, agriculture, health, HIV/AIDS research, and marine science. Daisy is a Board-certified Editor in the Life Sciences (bels.org) and has a Masters’ degree in chemistry from the University of Connecticut, USA. Her BSc is from the University of Nairobi in her native Kenya. She has worked as a journal editor, science writer, publisher, and communications strategist with various organizations. She joined ICRAF in July 2012. Twitter: @daisyouya

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