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Data leads to bigger profits: Traceability gains for coffee farmers in Uganda

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Joseph Nkandu, executive director of NUCAFE (on the right with a hat) training farmers on coffee bush management for better coffee, and improved investment returns under the farmer ownership model

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Agriculture accounts for 70% of employment on small farms and occupies half of all land area in Uganda, providing half of all exports and one-quarter of the country’s GDP. It is considered a leading sector for future economic growth and economic inclusion in the current National Development Plan. Coffee remains the leading agricultural export commodity in the country and is expected to greatly contribute towards the realisation of the 2040 national vision.

It is in this regard that Uganda’s National Union of Coffee Agribusinesses and Farm Enterprises (NUCAFE), CTA and the Pan African Farmers Organisation (PAFO) partnered in the Data4Ag project to improve data management systems and financial skills of NUCAFE and its hub members for development of the coffee value chain. The intention of this capacity building was to strengthen entrepreneurial and financial skills of the farmers union.

Six months after its launch, during the period of September 2018 to February 2019, the initiative has produced promising results. NUCAFE has generated farmer profiles and maps of coffee farms in order to develop a targeted and informed marketing strategy for the Union. Moreover, a Memorandum of Understanding with Centenary Bank was conceived to promote access to finance for NUCAFE farmers. Most importantly, by digitally profiling farmers, the traceability of coffee back to its roots has been enabled and is paying off for NUCAFE’s 210 coffee farmers and farmer organisations – totalling 205,120 farming families.

Access to finance: The role of traceability

The design of a geospatial database and improved financial literacy as a result of the initiative, has helped Ugandan coffee farmers to access new markets as well as higher prices. Among others, international buyers from Italy and South Korea have offered higher prices for coffee produced by the profiled farmers, paying €3.51 per kg instead of €2.16 or lower for untraceable coffee of similar quality. The premium increase of 24% on the basic price is directly related to product traceability, which ensures consumers that coffee farmers truly benefit from their purchase and that coffee beans carry specific geological and geospatial quality markers.

“We have benefited from the additional income we get from our coffee being traceable and certified, and we are now able to take our children to school,” says Gibezi Yunus, a farmer from Bufumbo Organic Cooperative Association and NUCAFE member.

The geo-referenced data has also enabled extension workers, businesses and hub managers working with the coffee farmers’ associations to improve logistical planning. Having a detailed overview of the territory and location of farmers makes it easier for them to schedule coffee bean collection, effective agricultural advisory support and supplementary services. Awareness raising on the value of drought insurance, training in climate-smart agriculture, and positioning of strategically located wet processing machines are among the services delivered by NUCAFE.

In the second phase of the project, from March 2019, the improved database will help to generate added value production by effectively providing each batch of coffee with a ‘passport’ in the form of a QR-code, which proves its authenticity and origin. This passport will include information about the farmer who grew the beans, the farmer group, the geographical farm location, the product date of delivery to the warehouse, and details of the coffee’s subsequent journey along the supply chain.

Upskilling and support for smallholder entrepreneurs

To improve data management systems of NUCAFE and enhance the financial skills of its members, the partnership along with Centenary Bank, helped NUCAFE to train 53 members of its farmers’ organisations on:

  • cash flow management,
  • credit and savings,
  • financial literacy,
  • financial analysis,
  • access to finance,
  • capital mobilisation,
  • financial risk management,
  • production costs,
  • profitability and return on investment and
  • the use of digital platforms.

Hub managers and staff, for instance, were trained on ArchGIS a geographic information system (GIS) for working with maps and geographic information and the Open data Kit tools which help people around the world to collect, manage and use their data.

In the same regard, 55 farmers from 30 different NUCAFE member organisations were trained on quality produce management and marketing skills, to strengthen, expand and upscale entrepreneurial skills in agribusiness using coffee value chains 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. This training is expected to lead to the development of value-added products.

Together with the United Nations Capital Funds, NUCAFE implemented the digital Innovation Challenge for Agriculture, which supports and motivates start-ups in Uganda to develop customised digital innovations that address specific challenges within the agriculture sector. The challenge intends to find solutions to how farmer loyalty programs can be built, how to improve the management of agriculture value chains and how to enable farmers to access and share farm extension workers, tools and equipment. The winners will be selected in July 2019.

Among other achievements, NUCAFE has broadened its network by participating in business meetings at i.e. the South Korea Coffee show, the 2018 Social Capital Markets event in San Francisco, USA and the 2019 California and African Fine Coffee Conference and Exhibition which took place in Kigali, Rwanda. This increased NUCAFEs broad range of international buyers including those from Italy and South Korea.

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