The Oromia Coffee Farmers’ Cooperative Union (OCFCU) is a smallholder farmer-owned cooperative union based in the Oromia region of Ethiopia. The region is characterized by its unique native vegetation and tropical climate conducive to coffee bean growth. OCFCU is a democratic, member-owned business operating under the principles of the International Cooperative Alliance and Fair trade, and the Union plays a central role in the Ethiopian coffee marketing chain. The members of OCFCU grow, process, and supply organic Arabica coffee for export.
History and development
Though the Oromia region was the area where coffee was first discovered, the previous socialist Derg regime imposed collective ownership, and farmers were required to channel all sales through local traders and auction centers in Addis Ababa and Dire Dawa, thereby stunting the growth of the coffee trade in the region. Importantly, farmers had little autonomy over sales and exports and therefore were impoverished. In the 1990s, the OCFCU’s first General Manager, Tadesse Meskela, spent two months in Japan as a trainee in cooperative initiatives. He returned to post-socialist Ethiopia with informative DVDs on Japanese cooperatives and cooperative principles. These DVDs were shown to the Oromia agricultural bureau management, and Meskela's idea for a market-oriented democratic organisation was accepted and implemented. The OCFCU was established on 1 June 1999 by thirty-four cooperatives representing approximately twenty-two thousand members with US$90,000 in capital. Soon, Oromia became the capital of coffee for the nation, holding more than 65% of the lands designated for coffee growth. The Union started by training farmers, agricultural staff, cooperative promoters, and government officials in cooperative principles for eight months. Initial exports amounted to seventy-two metric tonnes and sales of US$130,000. As of 2020, the OCFCU had 405 cooperatives representing over four hundred thousand members with capital exceeding US$20 million. Furthermore, exports had grown to seven thousand metric tonnes with sales exceeding $40 million. Previously, the Union would facilitate the exchange between farmers and local coffee roasters who would purchase raw coffee beans. In July 2018, OCFCU invested the equivalent of more than USD$1.5 million to build its first coffee roasting and packaging complex at Gelan Town in Oromia Regional State. The plant was completed and started production in February 2020 with the aim to roast, grind, and package the coffee for local use.
Vision, mission, and objectives
The OCFCU states their vision for the Union is that they "aspire to see cooperative societies who strongly emerge as the engine of development in rural and urban settings to achieve transformation."
Guided by the principles of the International Cooperative Alliance, the primary mission of the Union is to reduce transaction costs through the facilitation of direct sales of coffee. The direct sale/export of coffee sees the by-passing of auctions and elimination of intermediaries sales through vendors such as coffee collectors, suppliers, and exporters; thereby, deriving greater profit which is given back to farmers through dividends. This has the subsequent aim of trying to solve the problem of delay in payment from the exporters.
Furthermore, the Union has six focus objectives:
Improving farmers’ incomes by exporting their coffee directly. Improving the quality and productivity of Ethiopian coffee. Improving the quality of services to member farmers and clients. Improving the social conditions of farmers. Improving the sustainability of the local coffee industry. Regulate and stabilize the local market.
Management structure
The Union has five key managers: General Manager, Deputy General Manager, Commercial Department Head, Financial Department Head, and Export Sales Head, as well as a general assembly consisting of one representative chairperson from each of the 405 cooperatives. The annual general assembly meetings include top management and the representative chairperson from each cooperative. This is where the definition and evaluation of Union strategies take place. Policies and strategies approved at the annual general meetings are subsequently given to the Cooperative’s Boards for execution; and then, the board delegates to management to undertake day-to-day activities. Cooperative management is answerable to their respective board of directors and the cooperative members, the vast majority of which are indigenous small landholders located in the Oromia region.