BRIEF Description of the Farmer Ownership Model
Background
With the aim of improving the standard of living of the farmers, NUCAFE uses the "farmer ownership model" whereby farmers are encouraged to own their coffee along the various stages of the value chain. At the same time farmers organize themselves to assume as many roles and responsibilities as possible in the coffee value chain in order to increase their incomes from the value added.
The farmer ownership model is a response to a problem with the traditional cooperative model. The traditional cooperative model assumes a role which is very similar to that of a middleman who maximizes profits through offering a low price to the farmer or by selling at the highest price possible. This alienating effect on the farmers kicks in especially when the cooperative grows and when farmers lose control and ownership to the governance and management structures.
According to the "farmer ownership model" the role of the farmer organization such as NUCAFE is different. Rather than buying coffee, NUCAFE focuses on being a process facilitator providing goods and services that empower farmers to upgrade (forward integration) and move up the coffee value chain. Also the roles of the middlemen and processors change. Instead of buying, trader-processors are simply paid processing or milling charges and then the processed product goes back to the farmer who is encouraged to continue adding value by sorting, grading, roasting, exporting directly to roasters, and we have future prospects for branding and moving into joint ventures (share-holding in a business of a final product). This way, farmers and farmer groups and associations are empowered to assume as many functions as possible within the value chain in order to improve their livelihoods sustainably. Of course it all depends on the capacity of the farmer through a strengthened farmer organization (group, association) to assume some or all of these functions with certain degree of skills, knowledge and technology. NUCAFE builds the capacity of farmers and farmer organizations through training, mentoring, and guiding farmers through a process of attitudinal change that is required, especially in the early stages of adopting the model. Furthermore, the farmer ownership model encourages farmers to diversify and integrate other enterprises on their farms to ensure stable incomes during the off-coffee seasons.
Trader processors are not members of NUCAFE but some subscribe to the NUCAFE Farmer ownership model because to some it is viewed as eliminating them from buying coffee. However, through education, some have realized that if their function of buying very raw coffee (unprofitable forms of coffee) or coffee at flowering stage does not change, there would be no coffee in some years to come because farmers' margins steadily continue to shrink to a point that volumes will cease to make economic sense not only to the farmers but also to the trader processors. Therefore, processing (milling) at a fee is seen as a win-win for them and the farmers.
Operationalization
NUCAFE has carried out a comprehensive coffee value chain analysis. This study has further given NUCAFE impetus to know where money is as one follows critically all the links along the coffee value chain. Based on previous work done, NUCAFE has learnt what more can be done not only to just complete the value chain but to ensure that the smallholder farmers who toil and produce coffee get its money's worth from their sweat. This has been possible because of the business orientation; taking the value chain approach while emphasizing farmer ownership over coffee through forward integration (upgrading). In other words, NUCAFE has empowered farmers who were originally trapped in selling flowers, green berries on trees, red cherries, dry cherries (kiboko), parchment (in case of arabica coffee) to upgrade through forward integration to selling fair average quality (F.A.Q) and graded coffee.
NUCAFE has also gone ahead on a small scale to further upgrade to roast and ground coffee. By doing so, there have been tremendous improvement in quality and as such NUCAFE has been able to win the "National Taste of Harvest Quality Competition" organized by East African Fine Coffees Association (EAFCA) and Uganda Coffee Development Authority (UCDA). The competition was presided over with a highly regarded team of cuppers (judges) headed by the Coffee Quality Institute (CQI) of the United States of America Q-Grader/Star cupper and was assisted by UCDA and EAFCA top coffee quality cuppers. Out of five prizes awarded, NUCAFE won four prizes in the rank of the best first and second, then fourth and fifth. The prizes were trophies and certificates. In the coffee business, top quality coffee means highly priced coffee. It further means that for one to profit highly from that kind of coffee, it must be sold in a finished product form. This is partly why NUCAFE continues to build the coffee value chain using the farmer ownership model. Once the farmer is reasonably paid, he/she will be able to reinvest in quality improvement for better returns. Diagram on the next page further illustrates how much more the farmer would be assisted to earn right from coffee flowering through red cherries, green beans to graded coffee beans and then the final product, whether as instant coffee or roast and ground.
Background
With the aim of improving the standard of living of the farmers, NUCAFE uses the "farmer ownership model" whereby farmers are encouraged to own their coffee along the various stages of the value chain. At the same time farmers organize themselves to assume as many roles and responsibilities as possible in the coffee value chain in order to increase their incomes from the value added.
The farmer ownership model is a response to a problem with the traditional cooperative model. The traditional cooperative model assumes a role which is very similar to that of a middleman who maximizes profits through offering a low price to the farmer or by selling at the highest price possible. This alienating effect on the farmers kicks in especially when the cooperative grows and when farmers lose control and ownership to the governance and management structures.
According to the "farmer ownership model" the role of the farmer organization such as NUCAFE is different. Rather than buying coffee, NUCAFE focuses on being a process facilitator providing goods and services that empower farmers to upgrade (forward integration) and move up the coffee value chain. Also the roles of the middlemen and processors change. Instead of buying, trader-processors are simply paid processing or milling charges and then the processed product goes back to the farmer who is encouraged to continue adding value by sorting, grading, roasting, exporting directly to roasters, and we have future prospects for branding and moving into joint ventures (share-holding in a business of a final product). This way, farmers and farmer groups and associations are empowered to assume as many functions as possible within the value chain in order to improve their livelihoods sustainably. Of course it all depends on the capacity of the farmer through a strengthened farmer organization (group, association) to assume some or all of these functions with certain degree of skills, knowledge and technology. NUCAFE builds the capacity of farmers and farmer organizations through training, mentoring, and guiding farmers through a process of attitudinal change that is required, especially in the early stages of adopting the model. Furthermore, the farmer ownership model encourages farmers to diversify and integrate other enterprises on their farms to ensure stable incomes during the off-coffee seasons.
Trader processors are not members of NUCAFE but some subscribe to the NUCAFE Farmer ownership model because to some it is viewed as eliminating them from buying coffee. However, through education, some have realized that if their function of buying very raw coffee (unprofitable forms of coffee) or coffee at flowering stage does not change, there would be no coffee in some years to come because farmers' margins steadily continue to shrink to a point that volumes will cease to make economic sense not only to the farmers but also to the trader processors. Therefore, processing (milling) at a fee is seen as a win-win for them and the farmers.
Operationalization
NUCAFE has carried out a comprehensive coffee value chain analysis. This study has further given NUCAFE impetus to know where money is as one follows critically all the links along the coffee value chain. Based on previous work done, NUCAFE has learnt what more can be done not only to just complete the value chain but to ensure that the smallholder farmers who toil and produce coffee get its money's worth from their sweat. This has been possible because of the business orientation; taking the value chain approach while emphasizing farmer ownership over coffee through forward integration (upgrading). In other words, NUCAFE has empowered farmers who were originally trapped in selling flowers, green berries on trees, red cherries, dry cherries (kiboko), parchment (in case of arabica coffee) to upgrade through forward integration to selling fair average quality (F.A.Q) and graded coffee.
NUCAFE has also gone ahead on a small scale to further upgrade to roast and ground coffee. By doing so, there have been tremendous improvement in quality and as such NUCAFE has been able to win the "National Taste of Harvest Quality Competition" organized by East African Fine Coffees Association (EAFCA) and Uganda Coffee Development Authority (UCDA). The competition was presided over with a highly regarded team of cuppers (judges) headed by the Coffee Quality Institute (CQI) of the United States of America Q-Grader/Star cupper and was assisted by UCDA and EAFCA top coffee quality cuppers. Out of five prizes awarded, NUCAFE won four prizes in the rank of the best first and second, then fourth and fifth. The prizes were trophies and certificates. In the coffee business, top quality coffee means highly priced coffee. It further means that for one to profit highly from that kind of coffee, it must be sold in a finished product form. This is partly why NUCAFE continues to build the coffee value chain using the farmer ownership model. Once the farmer is reasonably paid, he/she will be able to reinvest in quality improvement for better returns. Diagram on the next page further illustrates how much more the farmer would be assisted to earn right from coffee flowering through red cherries, green beans to graded coffee beans and then the final product, whether as instant coffee or roast and ground.
