Report Back from FERRO Cooperative in Sidama, Ethiopia

In November our friend and colleague Erin Schneider visited our partners in the FERRO Cooperative in Ethiopia’s Sidama Department. She was kind enough to document her experiences and insights for us. Below is a summary of her time at FERRO:

The SNNPR (Southern Nations, Nationalities and Peoples Region) has fifty-two coffee cooperatives, that cover twelve district woredas (township-sized regions), representing 92,964 farmer members, of which 87,925 are male and 5,093 are female. These include both conventional and organic/fair trade certified coffee co-ops who sell to private market and for export. Among these is the larger SCFCU (Sidama Coffee Farmers Union) and within that the primary cooperative FERRO. SCFCU and FERRO have been partners with Just Coffee for five years now.

Most farms are between 0.5 – 2 hectares (1 hectare is ~ 2 acres) with land that is co-owned by men and women, although the amount of land a farmer might own is allocated and regulated by the government.There are five different certifications for coffee in each zone of the SNNPR (and country-wide) including Utz, FLO Fair Trade, Organic (both European and U.S. Standards), Rainforest Alliance. Most primary cooperatives have 2-3 different types of certification for their coffee.

There are 291 suppliers that sell to the Ethiopia Commodity Exchange Commission. In each woreda, coffee growers take coffee to the local market center where fresh harvest weights (red coffee ‘cherries’) are recorded and reported to regional office in Awassa and these harvest numbers are summarized and reported to Ministry of Agriculture in Addis Ababa. Sometimes the local marketing center is a co-op.

Growers report harvest to the local market center, coffee is then brought to processing (washing, de-pulping) stations. Processing and supplier stations deliver to the specific zone (for example, SNNPR), sell to the Ethiopia Exchange Commision, (for Sidama coffee, this is in Hawassa), where there is a warehouse for storage and adjacent cupping lab for quality control. Coffee is then sold/traded by individual traders who sell on the conventional market. Export quality coffee is not allowed to be sold in local markets.

Most cooperatives who supply to the export market, will process coffee at the primary cooperative level then supply washed/unwashed coffee to the union(s), by-passing processing at the zone level. For example, the SCFCU, in Addis Ababa where it is processed for export market. Quality control is done in the Union’s own separate cupping lab. The unions generally work with buyers on the export market. (See summary of highlights from meeting with Tesgaye Anebo, General Manager with SCFCU, for more information on role of unions). Co-ops in the SNNPR are connected by 5 kebeles (similar to county level government structure in Wisconsin).

Each primary co-op has a farmer committee, which is charged with oversight of co-op finances and strategy and oversees performance of general manager. There are 20 cooperatives that represent a district level forum for each zone/woreda in the

Sidama region and these co-ops will get together for meetings, to share insights and technical/production expertise. Each district has farmer/member representative who represents the cooperatives during the annual meeting with the co-op Union, SCFCU. Country-wide challenges include commodity market price fluctuations the high level of up-front investment and capital needed as well as working capital for green bean processing and transportation.

While Ethiopia boasts over 200 species of coffee from the Arabica genre, there are currently 22 varieties that are formally released to growers by government researchers. In other words, government research staff (similar to Extension Staff) are responsible for testing, growing, and supplying varieties used for production. While farmers will experiment and graft from their own trees, they are required to grow specific varieties for export as adhered to by the government. Often there will be 1 – 2 coffee specialists on staff, who support work with cooperatives on supplying and testing nursery plants. As a result, farmers face some challenges arising from limited selection within varieties; the time it takes for improved varieties to be released further limits options. With good management, coffee plants will produce steady yields for 20 – 30 years, though some growers harvest coffee on 50 year plants. The latter is an issue, both reflective of the challenges with costs of nursery plants, replacing plants in the field as well as the limited selection available to growers.

Ferro Cooperative

Most of FERRO cooperative coffee is first de-pulped then goes through three washings before it is dried and sorted. Pulp is separated out for composting. The water from washing goes through greywater treatment facilitated by a combination of microorganisms inoculated post pulping (microbes are also used as an organic foliar fertilizer and added to compost) and an impressive wetland plant called vectvar (the root system surpasses that of bluestems – i.e. vectvar is like a prairie grass on steroids). The combination of microbes digesting sugars/acids and plants further filtering/absorbing by-products in their root zones, helps regulate pH, and the end water is drinkable, supports a diversity of aquatic life.

The fermentation process lasts between 32 and 72 hours. If the temperature is hot enough, fermentation will finish between 36 and 48 hours. In general, fermentation changes flavor profile, and over-fermenting can be an issue affecting quality. Unwashed/natural processed coffee brings out more aromas and flavors though takes more time (up to 12 days) and more labor.

Coffee grows best in the shade as part of an agroforestry system. I observed coffee interplanted with avocado, mango, and nitrogen fixing trees. Enset is planted as a hedgerow and exhibits amazing water absorption properties in its leaves and cell structure. Often Enset leaves are used as a mulch to both prevent weeds and for retaining soil moisture during the long dry season. The root of the plant is also an important food staple. Interplanted in the understory is tunaye, a plant that is good for digestion and alleviating stomach ailments. In some cases, alley cropped rows of grasses and herbs are planted in the farms. Farmers also extensively use compost provided by primary co-op. Most production challenges are related to labor, the need to do 3 – 5 harvests/season, and the relatively low yields obtained. Yields may be a result of organic practices, delaying replacement and harvesting from older plants (50 plus years), and in some cases disease pressure.

FERRO Cooperative provides its members support with transporting green coffee beans.
Decisions are made by general assembly and by farmer committee. There is co-op to co-op for export, washing resources, free compost to members, technical training in field production and support with some co-op development, profit sharing, participation and member-share in the co-op. Networking, meetings for training and support at the local kebele woreda level as well as
regionally and at the annual membership meeting at the union level in Addis Ababa.

While buyers and coffee consumers are interested in organic and fair trade coffee, the production costs associated with these practices are higher than that of conventional inputs, in part due to the heavily subsidized conventional market for inputs and prices paid to growers. Thus, even in a good year, with a good harvest, if there isn’t a good market and/or the global commodity market for coffee is depressed, farmers will still lose.

FERRO is a lead innovator in the region especially when it comes to water conservation and extensive composting and they have won awards for the cup quality of their coffee. They have piloted co-op restructuring in the region and have a growing membership, especially amongst women members.

In the local market the price of coffee fluctuates, though with export grade coffee and fair trade, organic certification(s), growers are able to get some constancy with premium paid. For example, this year $0.85/kg was paid to each farmer.Farmers will often hire workers to assist with harvest and in some cases help with production/management. Farm workers on average receive 30 ETB ($1.70) for every 1.5 kg of coffee harvested.

70% of profits from coffee sales go back to primary co-ops/individual farmers; Coffee Unions keep 30% for support with washing, marketing, quality control/cupping. For example this past year SCFCU was receiving ~ $4.00/lb, farmer would get $2.80/lb. In general, minimum amount needed is $3.20/lb or $2.24/lb back to the grower.Producers in general appreciate the repayment from the co-op and profit sharing, though profits are not always enough to send kids to school.