Oromia Coffee Farmers Co-operatives Union

Ethiopia and coffee's story

Ethiopia is the historical birthplace of coffee. Even  if a consensus has not yet been reached in the minds of historians on the exact location of its origin, two regions appear at the top of the list: the region of Harar, located in Eastern Ethiopia and the Yemen region. In Ethiopia, a large number of coffee plantations are located in the South-West forests of the country where various species of coffee plants grow in the wild.

Coffee, a staple of the Ethiopian economy

Today, more than 1,2 million Ethiopian coffee producers produce approximately 220 000 tons of coffee per year, which makes coffee production the most important driver of country’s economy. At the same time, this means that 25% of the population is dependent on coffee sales. Ethiopia’s balance of trade rests in the sale of its agricultural products, with coffee sales representing over half of incoming foreign currencies. This dependence situation creates a heightened insecurity and very delicate situation as, “nearly 15 million Ethiopians are indirectly affected by the price of coffee on the world market.” The negative consequences of this strong dependence appeared during the last world-wide coffee crisis in 1998-1999, when the price of coffee fell of 70%. It took a very long time for this emergency situation to pass and Ethiopians were still feeling the repercussions long after the price of coffee rose again to normal levels. The government, which relies on coffee exportation for about 50% of its inputs, was not able to support the small producers during this crisis. The challenges were multiple; striking brutally it had the power to dismantle the country’s economy and place social development at a stand still. What was once the source of Ethiopian pride quickly changed and became the cause of their problems; small producers were forced to sell their coffee at a loss, several gave up this farming coffee and as result poverty continued to rise.

Workers Manage Themselves

During this same period, 34 coffee co-operatives joined forces in order to work together on coffee growing; their power in numbers helped them to establish direct relations with the purchasers and foreign importers. In June 1999, Oromia Coffee Farmers Co-operatives Union (OCFCU) gathers a total of 22.500 members. OCFCU aims to facilitate the export of coffee produced by their members. With this intention, the co-operative set up as a mother organization responsible for managing the processes, the marketing and the commercialization of their coffee. In order to guarantee to its members a larger autonomy and rights over their production, the co-operative asked the government to act as an exporter for its members, providing a permit to  avoiding the central biddings, to aid in decreasing instability and assist in providing financial security for all small producers.

State support is beneficial for Oromia

The Ethiopian government grants the exception to Oromia. The coffee co-operative is then exonerated from the bidding system. This exemption enables them to sell their products with an identification of its origin directly on the external market. This new trading position creates numerous positive outcomes for the coffee industry in Ethiopia. The producer members were enabled to sell their coffee on the conventional market at a price higher than before, which can add up to triple the price and moreover, they tripled the price for Fair Trade Certified products.

When coffee holds tow certifications...

In addition to obtaining its first Fair Trade Certification from the FairTrade Labelling Organization International (FLO) in 2002 (today, 28 of the 129 co-operatives belonging to OCFCU are Fair Trade Certified), the farmers benefit from additional profits resulting from Organic Certification. Lastly, the efforts employed to improve their environment, the quality of their products and the higher price on the market are two testaments to Oromia’s success.
However, the supervision of so many employees and the management of such a large production can still cause a certain number of limitations and difficulties.

Impact of Fair Trade

In 2005, the co-operative received a Fair Trade premium of 1, 41$ per pound sold. This amount included approximately 15 cents for the premium granted with organic certification and 5 additional cents for the premium reserved for the investment in community development projects.

70% of the profits drawn from the sales of Fair Trade coffee are redistributed between the cooperatives. Each cooperative divides the amount between its members, according to pre-established criteria and guidelines. Generally, 30% of the grand total is invested into training and various social development projects.

Food safety

The members are less dependent on the national and international market for its food security by incorporating fruit and vegetable plants within crops the coffee plants. Facilitating crop diversity and the ability of farmers to produce their own food.

Other projects

Some co-operatives associated with Oramia used the Fair Trade premiums to construct a system to treat ill and diseased plants, a warehouse for storage and to purchase 50 machines to wash their coffee beans. Several programs to improve quality have also been put into place. As well, Oromia invests in the promotion of their coffee in order to extend its sales to new markets.

The benefits of the Fair Trade Premium:

• the construction of 5 primary schools and 14 additional classrooms;

• the construction of 4 private health clinics, the purchase of medical equipment and ensuring the supply of drinking water; 

• to offer care to farmers, their families and the community;

• the purchase of a grinding machine to reduce the costs associated with the grinding of coffee beans;

• the purchase of 2 coffee washing stations, which have increased the quality of the products;

• to developed a common fund for the repair of de-pulping machines;

• to cover the expenses related to coffee transport.

External sources

• www.oromiacoffeeunion.org/index.html
• www.greendevelopment.nl/progreso/ocfcu/
• www.alternativegrounds.com/show.php?ID=611:17:48
• www.equalexchange.co.uk/producers/oromia.asp
• www.transfairusa.org/pdfs/profiles/Oromia-Ethiopia.PDF
• Youtube : www.youtube.com/watch?v=E8r4Fut8cvM