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US-Africa Forum Guest Blog: Partnering from Crop to Cup - Lutheran World Relief

Gumutindo means "excellent quality" in the Lugisu language of eastern Uganda ― and that's precisely what we were able to achieve by working together.

Gumutindo Coffee Cooperative Enterprise began in 1998 on the slopes of Uganda’s Mount Elgon with only 200 smallholder farmers. Today it is one of the leading coffee exporters in the country according to the Uganda Coffee Development Authority...

Gumutindo is a cooperative that functions as a “secondary society,” meaning its members are other cooperatives who work with farmers to produce coffee. Gumutindo purchases that coffee, processes it and sells it. This way, the farmers who grow the coffee have a stake in a much larger portion of the value chain. And purchaser, processor and producer are incentivized to work together to address value chain challenges.

Gumutindo was selling about three cargo containers of export-quality coffee when it first started working with Lutheran World Relief (LWR) in 2008, which was a good amount of coffee considering the size of the enterprise. But we knew there had to be ways to grow the business and increase Gumutindo’s share of a profitable niche market - organic, fair trade coffee.

After a careful review of the entire coffee value chain, we found that interventions focused on quality and capacity at the farm and farmer organization levels would allow Gumutindo to succeed. Together, we invested in training for farmers, capacity building for farmer and community finance organizations and post-harvest infrastructure, including:

  • governance, financial management, planning and reporting training for board members;
  • financial literacy, farm management and post-harvest handling education for farmers;
  • the establishment of community-based savings and credits institutions to help farmers finance input purchases;
  • equipment for quality control and post-harvest processing

These activities and investments contributed to Gumutindo’s ability to scale-up quickly and achieve aggressive growth targets. At present, Gumutindo has more than 7,000 farmer members organized into 15 cooperatives or primary societies. In the next few months, we anticipate the addition of five more cooperatives and many new members.

And LWR, originally a development partner, has also become a marketing partner. It is working with Equal Exchange in the U.S. to sell a Gumutindo-branded single-source coffee to U.S. Lutherans through the LWR Coffee Project.

What have we learned by working together? A lot. We’ve identified the following list of policy and program recommendations based on our experience:

Scaling-up success:

  • Link small farmers and local cooperatives together into “secondary societies” that can market and sell coffee on a larger scale and integrate more of the value chain.
  • Build trust at the farmer level by establishing transparent and inclusive governance structures throughout all levels.
  • Separate day-to day management functions from board-level support and governance functions.
  • Ensure that financial literacy and business training extend down to the household level.

Recommendations for donors and policymakers:

  • Access to credit remains an unmet need for participants of all sizes and types in many agriculture value chains. Flourishing community-based financial service organizations are one key to improving smallholder access to credit. Focus more attention and resources on agriculture finance generally and, in order to reach farmers, on community-based financial services specifically.
  • Well-managed farmer organizations allow smallholders farmers to securely access financial and business development services as well as larger markets. Invest in capacity building around governance and transparency for these organizations and refrain from interfering in them for political purposes.
  • Robust markets are important but so is farmer ability to analyze opportunity and manage risk. Invest in financial literacy and business training for farmers and promote quality secondary education.

Krista Zimmerman is a Senior Policy Advisor for Lutheran World Relief and Evelyn Nassuna is the LWR Country Cirector for Uganda. Lutheran World Relief works with partners in 35 countries to help people grow food, improve health, strengthen communities, end conflict, build livelihoods and recover from disasters. LWR is an institutional member of the Partnership to Cut Hunger and Poverty in Africa.