Washing Stations in Developing Coffee Farming

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++Washing stations in developing coffee

farming in Huye district

Membership choice from the transaction cost

Submitted in fulfillment of the requirements for the award of Bachelor ofScience with honor in rural development and agribusiness

RUBIRIZI CAMPUS on July,2015

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Washing stations in developingcoffee farming in Huye district

Membership choice from the transaction cost

Authors are Bachelor Students in the School of

Agriculture, Rural Development and Agriculture

Economics

University of Rwanda,

College of Agriculture, Animal sciences and VeterinaryMedicine

Dissertation submitted for the fulfillment of the requirements to be awarded aBachelor of Science with honor in rural development and agribusiness

Rubirizi campus M a y , 2015

Department of agriculture economics and rural development,Option of agribusiness and rural developmentP.O.Box 210Musanze

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DECLARATION

We, Sixbert SANGWA, Josiane NIYONZIMA and Liliane UMUTONIWASE, hereby declare tothe best of our knowledge that this dissertation entitled: “Washing stations in developing coffeefarming in Huye district - Membership choice from the transaction cost”, here presented, is ouroriginal work and where another's work has been used, it is indicated in quotations and thebibliography. It has never been presented anywhere for a similar award at the University ofRwanda or in any other academic award.

S/No First name Surname Date Signature1 Sixbert SANGWA

2 Josiane NIYONZIMA

3 Liliane UMUTONIWASE

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CERTIFICATION

I, Dr. Jean Chrisostome NGABITSINZE, hereby certify that this research project entitled:“Washing stations in developing coffee farming in Huye district - Membership choicefrom the transaction cost” has been done under my supervision and has been submittedwith my approval to the University of Rwanda.

…… …………………..

Dr. Jean Chrisostome NGABITSINZEResearch supervisor

Date ………/………/2015

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DEDICATION

THIS MEMOIR IS DEDICATED TO:

Almighty God

Our parents and relatives

Our beloved supervisor

Our classmates

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ACKNOWLEDGEMENT

To the Lord Jesus we give you the glory!

Many people contributed to the completion of this work; we would like to express our sincerethanks to everyone who assisted and supported us to reach the completion of this work.

We are highly thankful to all staffs of the University of Rwanda, College of agriculture, animalsciences and veterinary medicine (UR,CAVM), and to every member of the department ofagriculture economics and rural development, especially to the lecturers who culminated bypartnering with us.

Our beloved supervisor, Dr. Jean Chrisostome NGABITSINZE, deserves special thanks for hisguidance, insights and ideas, his encouragement throughout this research and his tireless effortsto increase our knowledge, which have made this work genuine. We really appreciate andrecognize your kind support for our work since without you; this work would not be possible.God Bless you.

We highly owe special level of thanks all of our classmates of 5th year RDA 2014/2015 for theirgenerous and brilliant encouragement that helped us to overcome some huddles during ourstudies; we really say thanks for your good cooperation and collaboration.

We wish to express our sincere gratitude to the families: Marie Jeanne NYIRANEZA andAthanase GAKUBA for their support.

Lastly, all people not mentioned herein, who in various capacities, contributed to the preparationof this memoir, shall find in this document joy and pride of their constructive effort.

We, in particular and sincerely, thank all of our family members and all of you who in one wayor another contributed to the culmination of our effort and whom we may not mention but whosecontributions cannot be undermine. You really made this journey a shorter one!

May God richly bless you!

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ABSTRACT

Coffee is one of the most important traditional cash crops in Rwanda. It is the main source ofincome for a number of households. However, after the liberalization of the coffee sector inRwanda in 1998, the quantity and quality of the coffee produced have been affected. To searchfor a solution, the Rwandan government has striven to consolidate coffee growing cooperativesin different parts of the country by building coffee washing stations. These stations were mainlymeant to help coffee growing cooperatives produce high quality coffee which is competitive onthe international market. The main objective of this study is to find out determinants of farmers’membership status as a choice that affects the process of decisions regarding production andtransaction structures. With regard to transaction, traders form another structure in the coffeesupply chain in Rwanda which has been in existence before cooperatives’ emergence. TheTransaction Cost Economics Theory provided the basis for the study where the choice isconditioned by relative comparative advantage in terms of lower transaction costs. The studyanalyzes the membership choice to coffee farmer cooperatives and role of coffee cooperativesand coffee washing stations on socio-economic development and it’s improvement on thelivelihoods of local coffee growers in rural areas of Huye. The document is based on a researchsurvey performed in Huye district located in the Southern Province of Rwanda where four (4)cooperatives, represented by their washing stations, were visited and 71 farmers wereinterviewed: among them 48 are cooperative members and 23 non-members.

This survey was conducted from April to July 2014 to April 2015 on 71 coffee growers, chosenby means of purposive random sampling techniques. In addition to the survey, interviews werealso conducted with the managers of the cooperatives and of coffee washing stations. Thefindings showed that the benefit of coffee cooperatives to the members is highly appreciated.

Furthermore, on the point of socio-economic welfare, coffee provides rural income, employment,access to credit and poverty reduction through the cooperative to pay for schooling, inputs andmedical insurance of farmers. The cooperative has facilitated the bringing of electricity energy,safe water in rural area. It has improved the life standards of the rural population of Marabasector, new houses were built and the old ones renovated for small-scale farmers.On the basis of the above results it can be concluded that membership to cooperatives isimportant for farmers who aim at increasing production and improving their incomes.

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ContentsDECLARATION...................................................................................................................................iii

CERTIFICATION .................................................................................................................................iv

DEDICATION ......................................................................................................................................v

ACKNOWLEDGEMENT .......................................................................................................................vi

ABSTRACT........................................................................................................................................vii

Contents......................................................................................................................................... viii

LIST OF FIGURES.................................................................................................................................x

LIST OF ABBREVIATIONS....................................................................................................................xi

CHAPTER 1: INTRODUCTION...............................................................................................................1

1.1 General introduction...........................................................................................................................1

1.2 Background of the study .....................................................................................................................1

1.3 Justification of the study.....................................................................................................................3

1.4 Problem Statement.............................................................................................................................3

1.5 Research objectives and research question .......................................................................................4

1.5.1 Main objectives............................................................................................................................4

1.5.2 Specific objectives ........................................................................................................................4

1.6 RESEARCH QUESTIONS........................................................................................................................4

1.7 Conceptual framework........................................................................................................................5

1.9 RESEARCH HYPOTHESES......................................................................................................................5

CHAPTER 2: LITERATURE REVIEW .......................................................................................................6

2.1 GOVERNANCE STRUCTURES IN COFFEE TRANSACTIONS.................................................................... 6

2.1.1.2 Coffee cooperatives ..................................................................................................................7

2.1.1.3 Coffee cooperatives vs Traders: contractual relations..............................................................8

2.1.2 Coffee growing and transaction cost .........................................................................................10

2.2 Factors influencing coffee production ..............................................................................................11

2.3 The role of cooperatives in development.........................................................................................11

2.3.1 Marketing, processing and input supply activities.....................................................................11

2.3.2 Employments .............................................................................................................................12

2.3.3 Dividend .....................................................................................................................................12

2.3.4 Cooperatives and local community............................................................................................12

2.3.5 Principles of cooperatives..............................................................................................................12

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2.3.6 The obstacles to development of cooperatives in developing countries ..................................13

2.7 Summary ...........................................................................................................................................14

CHAPTER 3 METHODOLOGY .............................................................................................................14

3.1 Case study area .................................................................................................................................14

Coffee washing stations and farmer cooperatives .................................................................................15

3.2 Methods and techniques of the research.........................................................................................16

3.2.1 Literature research.....................................................................................................................16

3.2.2 Discussion with key informants .................................................................................................16

3.2.3 Farmers’ interviews....................................................................................................................16

3.2.4 Observation and informal interviews ........................................................................................17

3.3 Sampling plan....................................................................................................................................17

3.4 Analytical approach...........................................................................................................................18

CHAPTER 4 : DATA PRESENTATION AND ANALYSIS ...........................................................................19

5.1. Farmers’ characteristics ...................................................................................................................19

5.2 Coffee farming characteristics and transaction cost ........................................................................24

5.3 Costs of coffee production................................................................................................................26

5.4 Contractual element in coffee marketing.........................................................................................29

5.4.1 Type of coffee ............................................................................................................................29

5.2.2 Coffee price ................................................................................................................................30

CHAPTER 8 SUMMARY OF FINDINGS AND CONCLUSIONS..................................................................31

Membership status .................................................................................................................................31

The type of coffee...................................................................................................................................32

Choice of transaction structure ..............................................................................................................32

Conclusions .............................................................................................................................................33

Further research......................................................................................................................................34

Recommendations ..................................................................................................................................35

REFERENCES ....................................................................................................................................37

APPENDIXES ....................................................................................................................................40

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LIST OF TABLES

Table 2.1: Purpose of growing coffee .........................................................................................................10

Table 3.1: Number of informants as per cooperatives ...............................................................................18

Table 4.1: Membership according to Gender .............................................................................................20

Table 4.2: Membership according to Age...................................................................................................21

Table 4.3: Farmers education levels ...........................................................................................................22

Table 4.4: Household size ...........................................................................................................................23

Table 4.5: Coffee farming characteristics ...................................................................................................24

Table 4.6: Average seasonal labour requirements per membership .........................................................27

Table 4.7: The overall seasonal labour requirements ................................................................................27

Table 4.8: Fertilization type within membership status.............................................................................28

Table 4.9: transportation mode in coffee sector ........................................................................................29

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LIST OF ABBREVIATIONS

CWS: Coffee washing stationsEICV : Integrated Survey on Household Living ConditionsFAO : Food and Agriculture Organization of the United NationsGDP : Gross Domestic ProductICA: International cooperatives alliance

MINAGRI : Ministry of Agriculture and Animal ResourcesMINALOC : Ministry of Local Government, Community development and Social affairsMINECOFIN : Ministry of Finance and Economic PlanningMINICOM : Ministry of Commerce, Industry, Investment Promotion, Tourism and CooperativesNAEB: National Export Board

NGO: Non-governmental organizations

OCIR (Café) : Office des Cultures Industrielles du Rwanda (National Coffee Board)

PEARL : The Partnership for Enhancing Agriculture in Rwanda through Linkages-MichiganState UniversityPSTA : Plan Stratégique pour la Transformation de l’Agriculture (Strategic Plan for AgriculturalTransformation)Rwfs : Rwandan Francs

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CHAPTER 1: INTRODUCTION

1.1 General introduction

Coffee is the main source of income of the household producers of this crop in Rwanda. Itcontributes significantly to the inflows of foreigner currencies to the national economy. Althoughit is grown on only 6.3% of the total cultivated areas, it is the main activity of 5.000.002 coffeegrowers households at countrywide (GM Ya-Bititi, 2013). Since its introduction in the country in1904, coffee has always been operated by individual producers isolated in their villages. Afterthe liberalization of the coffee sector in Rwanda in 1998, the quantity produced has steadilydecreased and the quality deteriorated. This affects the price and income of coffee growers. Toaddress this issue, the Government of Rwanda sensitized coffee growers countrywide to operateinto cooperatives and set up coffee washing stations (CWS). The objective was to improve thequality and export fully washed coffee that is better sold on international markets. Coffeewashing stations are then considered as mean for producing high quality of coffee, they aremainly run by cooperatives, which are structural elements in the rural areas. Through thesestructures, such us cooperatives and coffee washing stations in rural areas of Rwanda, jobs arecreated for coffee producers, loans are granted, farmers are motivated due to the increase ofincome, the market is guaranteed and the prices become attractive for the members. Thus thesocio-economic welfare of producers is improved which reduce poverty among coffee growershouseholds. This study focuses on the membership choice to coffee farmer cooperatives and theanalysis of the impact of this structure on the socio-economic development of producers and therural surrounding environment of Maraba and Ngoma sector.

1.2 Background of the study

Rwanda is a poor rural country with about 90% of the population engaged in (mainly subsistence)agriculture and some mineral and agro-processing (Index Mundi, 2014). Tourism, minerals, coffee andtea are Rwanda's main sources of foreign exchange (Index Mundi, 2014). Agriculture is the mainactivity of Rwandan rural population. It contributes highly in terms of (1) employment as it constitutesthe main economic activity for the rural households (especially women) and remains their main sourceof income. Today, the agricultural population is estimated to be a little less than 80% of the totalpopulation (RDB, 2014); (2) GDP: the share of agriculture on national GDP is 31.9 %. Agriculture inRwanda accounts for a third of Rwanda’s GDP; the sector meets 90% of the national food needsand generates more than 70% of the country’s export revenues. (RDB, 2014)

The revenues in agriculture are raised mainly from exports of cash crops such as coffee, tea,pyrethrum, etc. These amounted on average to 71 percent of the country’s total export revenues in theperiod 1999-2004 (MINECOFIN 2002; MINAGRI, 2004) where coffee remained a major source of

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export revenue, generating over 36% of total export revenue in 2009 with projections for this figure tobe higher in 2010( Karol C.2010).

Actually, From January to July 2014, a total of 6,608,942 kilos of coffee were exported with a value ofUSD$20,576,437. The percentage of fully washed (FW) coffee exported to total new crop exports was32.3%. The average contract price per kilo for FW coffee in the past seven months since January 2014was USD$4.96, while semi-washed (SW) coffee USD$3.36 per kilo(NAEB, 2014).The amount of coffee produced in Rwanda has increased since 2011; however statistics indicate thatthe earnings have drastically dropped. The decline has been attributed to the dwindling internationalmarket prices. The income dropped to $60.9m (about Rwf38.4b) in 2012 from $73m the previous year.The production has steadily increased due to the privatization process, introduction of coffee washingmachines-from 2 machines in 2002 to 210 machines now.

According to statistics from the National Agricultural Export Board, total of 4,786,342 kilos of greencoffee were exported between January and July 2014, with a value of USD$12,871,083. The old stock(2013 harvest) that was exported generated USD$3.82 millions, and the new crop generated USD$9.1millions.The percentage of fully washed (FW) coffee exported to total new crop exports was 22.1%In 2012, 6,900 tons of washed coffee beans were produced, of which 5,500 tons were exported,bringing in $23.789m, compared to 32 tons in 2002. Farmers say that the drop in prices between(Rwf200 and Rwf300) and this has affected their incomes and welfare, but they still remaincommitted to bring out the best coffee on the world market (umuhinzi.com, 2014)

Coffee is absolutely one of the important traditional cash crops in the Rwandan economy. It hasbeen grown in the country since its introduction by German Missionaries as early as 1904. Coffeegrowing is often a smallholders’ activity. These are mainly poor people who work small,fragmented plots. Coffee is produced to supplement staple production and thus achieve basic foodsecurity. As compared to this report of 2004, there were some 400,000 producers of coffee inRwanda in 60 districts (OCIR 2005). Other actors in the sector include private traders, hulling andexporting companies, government institutions and in the recent decade, many cooperatives haveemerged.Cooperatives are established for multiple purposes. They are involved in the (1) provision ofservices to growers including accessing and managing inputs and monitoring their use; (2)production of high-quality coffee through washing stations and (3) improvement of farmers’participation in the coffee sector. The goal is to increase farmers’ bargaining power in order toearn higher prices for their produce and ultimately, improve their incomes and livelihoods(OCIR, 2005).However, coffee cooperatives face many constraints such as inadequate basic infrastructure (water,electricity, roads, etc.), difficulties in accessing loans for purchasing coffee berries and makinglong term investments. The Plan Stratégique pour la Transformation d’agriculture(PSTA)documented that the lack of human, material and financial resources and low level of participationof members in the cooperative organization and management were the constraints (MINAGRI,2004).

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Regarding the latter issue of membership, computations from the National Coffee Board (OCIR)figures show that, until 2006, only 8.2 percent of coffee growers were organized into cooperatives(OCIR, 2006). This is a big issue as membership participation is “the cornerstone of cooperatives”(Braverman et al., 1991). These cooperatives have not yet been able to attract many adherents. It istherefore a matter of investigation because it also reflects the low membership status observed in otheragricultural cooperatives in the country (MINICOM,2006a). The outcome is that these agriculturalcooperatives in general and coffee cooperatives in particular may achieve a low performance on theone hand because their financial capital, which correlates highly with membership, will remain low(MINICOM, 2006a) and on the other hand, there might be a sub-optimal use of the cooperatives’washing stations if there is no sufficient supply of coffee berries needed as raw materials forprocessing.

1.3 Justification of the study

Rwanda, like other developing countries, has adopted the policy of strengthening cooperatives dueto their importance in economic terms, the significance they gained in rural development and therole they play in the attainment of the basic needs to their members, and development of regionsand the nation. Indeed, the Government of Rwanda views Cooperatives as a potential vehiclethrough which the Cooperatives members could create employment and expand access toincome-generating activities, develop their business potential, including entrepreneurial andmanagerial capacities through education and training; increase savings and investment, andimprove social well-being with special emphasis on gender equality, housing, education, healthcare and community development. (RCA,2014). Though cooperatives are viewed by manycountries as a proffered tool for development of members and regions, this cannot be taken forgranted. Therefore, it is in this respect that the researchers were interested to carry out anempirical study on coffee cooperatives, to assess their effect to the development of their membersand evaluate their membership choice. The findings of this study will contribute to the betterunderstanding of cooperatives working model and to evaluate the membership choice to coffeefarmer cooperatives as policy instrument for coffee farming development.

1.4 Problem Statement

The emergence of cooperatives and coffee washing stations was associated with many expectationswith regard to improving the sector performance. However, these expectations may not be fulfilleddue to inability to attract members. The choice of membership status cannot be restricted to thesimple question of the reasons of farmers’ ultimate behaviour but should be extended to thecharacteristics of coffee production, organization and performance of cooperatives in the supplychain in comparison to other actors in the sector.Becoming a member of the cooperative or not is a decision that affects the choice of whethercoffee should be sold to cooperatives or traders. Cooperatives are interested in the berries whiletraders buy dry coffee beans processed by farmers themselves and berries that might not be ofgood quality and would otherwise be rejected by the cooperative. Therefore, although cooperatives

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would greatly reduce the burden of farmers in post-harvest processing, not all the farmers arewilling to transact with them.Looking closely, there are transactions costs in the marketing of berries and dry coffee but thesecosts differ depending on the transaction partner. Therefore, a decision on the transaction structurealso affects the type of coffee produced. Furthermore, traders are involved in other relationshipspertaining to the livelihoods in the society. Their exchanges with farmers are more than spot-market-buying-and-selling-arrangements.

The cooperative on the other hand provides a more stable marketing channel and secure access toinputs and technical advice. Therefore, the ultimate choice is weighed against these relationships or‘commitment factors’ associated with any membership status. The question remains then how thefarmers differently evaluate these different choices.

1.5 Research objectives and research question

1.5.1 Main objectivesThe main objective of this study is to analyze the factors that determine the membership choiceof farmers to coffee farmer cooperatives.

1.5.2 Specific objectivesThe present study will also evaluate the effect of coffee washing stations on farmers' socio-economic development and evaluate the effect of the interventions in the development of thecoffee cooperatives.

Analysis of cooperative management models - what is working and what isn't in cooperativemanagement and governance? Where is the greatest "bang for buck" in improving management?Where is the need greatest and where is there a good possibility for readily improving things?The following summarized specific objectives:

1. To evaluate the impact of the intervention in the development of coffee cooperatives2. To identify the contribution of coffee cooperatives to the members

1.6 RESEARCH QUESTIONS

1. Do coffee growers farm out of tradition or a personal decision to grow cash crops? Do farmersessentially feel forced to grow coffee and thus will always be dissatisfied with thegrowing/marketing process no matter the incentive offered by cooperatives?2. What base do farmers self select to become members or not?3. Is the cost of selling to cooperative too high? Cooperatives charge a membership fee in orderto take in capital- Is the cost of this fee higher than the incentives farmers receive through added

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benefits and rebates/patronage dividends at the end of the season? Should more incentives beadded to make selling to a cooperative more attractive?

1.7 Conceptual framework

The conceptual framework of this study was constructed based on exiting theory andresearch.

Figure 1.1: Conceptual framework

1.8 Thesis structureThis thesis is made up of eight chapters. The introductory chapter is followed by the review ofliterature and the third chapter which highlight all the methods used in the study. The fourth isconcerned with data presentation and analysis and finally the last chapter summarizes thefindings. It is in this last chapter that our recommendations are included and a better conclusiontaken.

1.9 RESEARCH HYPOTHESES

Associated with the above research objectives, the following hypotheses are formulated:1. Farmers’ characteristics, contractual elements, commitment factors and location factors arethe main determinants of their benefits towards the cooperative;2. The type of coffee marketed is determined through production and by membership status;3. Farmers are either looking for some incentives or are forced to join coffee farming

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cooperatives in order to improve marketing plan4. Only cooperative members are employed by coffee cooperative and different washingstations

5. Besides transaction costs, the choice of transaction structure depends on the membershipstatus towards the cooperative.

CHAPTER 2: LITERATURE REVIEW

2.1 GOVERNANCE STRUCTURES IN COFFEE TRANSACTIONS

The previous chapter concluded with a note on the existing association between the type of coffeeproduced and subsequently marketed with the transaction structures namely cooperatives andtraders. This chapter is a detailed analysis of these structures.

A general presentation of the main actors participating in the coffee sector in Rwanda is madethrough analyzing the supply chain. It is then followed by a specific emphasis on the structuresacting as direct partners to farmers in their sales of coffee namely traders and cooperatives. Theorganization of cooperatives and their achievements are shown. A comparative analysis oftransaction structures is made on grounds of transaction costs and contractual relationships.

2.1.1 Main actors in the coffee sector in Rwanda

2.1.1.1 Coffee supply chain in Rwanda

The coffee supply chain is given in figure 21. It is divided into 3 stages corresponding to the typeof coffee: berries, dry/parchment and green coffee. Not mentioned in the figure but important isthe National Coffee Board (OCIR Café) that intervenes through regulatory measures.

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Figure 2.1: Coffee supply chain in Rwanda

Cooperatives buy berries from farmers, either members or neighboring non-members.These berries will be processed into parchment coffee at the cooperatives’ washing stations. Theoperational area of the cooperatives is also an area for other buyers such as private operators whomight own mini-washing stations. These also buy the berries, but mainly from the non-membersand undertake the same processing into parchment coffee. The bad quality berries or the produceof the non-members who do not trade at all with cooperatives are processed by farmersthemselves who sell them as dry coffee to the traders.The exportable coffee from Rwanda is green coffee. The transformation of berries intoparchment coffee takes place through the process of depulping and drying. The subsequenttransformation into green coffee by hulling (to remove the parchment) is performed either bycooperatives (few own their washing stations) or ‘hulling and exporting’ companies.

2.1.1.2 Coffee cooperatives

General presentationThe recent coffee cooperatives that emerged in the 1990’s are a response toGovernment policy, but remain the farmers’ own initiatives. In some cases, the founders areerudite farmers, who have an experience with coffee growing. Other cooperatives wereestablished by simple farmers who, reasoning on reconstructing their livelihoods after the warand genocide, decided to join hands and organize their production in cooperatives. Later, other

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coffee growers joined them and the cooperatives grew in size and capacity and these cooperativeswere further able to construct washing stations.The membership of cooperatives kept increasing annually. The increase in membership for othercooperatives is associated with their success.In all cooperatives, members are encouraged to actively participate in the organization of theircooperatives through different committees. The main organ at the cooperative level is theGeneral Assembly that meets 2 times a year depending on the cooperative.

The exportable production of the cooperatives through the operation of washing stations has beengenerally increasing. When coffee is exported, the main issue is whether the benefits reach farmers.This depends on the price at which coffee is internationally sold.

2.1.1.3 Coffee cooperatives vs Traders: contractual relations

Cooperatives

A contract between cooperatives and farmers stipulates each party’s rights and obligations.Cooperatives engage themselves in making available inputs to the farmers such as chemicalfertiliser and pesticides. Farmers are closely monitored and offered constant advices andtrainings with regard to better coffee farming practices.On the members’ side, farmers have the duty of ensuring proper maintenance of their coffeetrees, pruning and mulching them, adding fertiliser in sufficient amount and on time so as toproduce good quality coffee. The result of such relationships is that farmers obtain a goodharvest in terms of quantity and quality. Moreover, they have market assurance as they knowtheir cooperative will buy the harvested berries.

These contractual relationships are built on the trust that each party will honour his duties that gobeyond the simple buying and selling transactions. They include more complex involvements thatentail benefits to the members. Moreover, since coffee farming is a recurrent activity, especiallywhen there are no other sources of income in rural areas, cooperatives get involved in building long-term linkages with farmers through the incentives they provide. These incentives are obtained bymembers only in proportion to the coffee they have sold to the cooperatives. They are distributed asshares of the profits from coffee exports. They are distributed in addition to dividends proportionalto their membership contribution.

Cooperatives also undertake monitoring of farmers to ensure that they are implementing theadvices and using the inputs provided to them for the purpose of coffee; for instance that thechemical fertiliser is not used by farmers to other crops.

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Traders

The relationships with traders are not as easy to describe as those of farmers with thecooperatives. Focusing on the coffee business, traders who buy berries and/or dry coffee often actas intermediaries on behalf of private operators who will process the berries or the hullingcompanies which process the dry coffee. Traders constitute a second group of buyers in thecoffee sector. They are not only involved in coffee but also in other transactions such as smallboutiques at the rural trading centres or markets.

In coffee transactions, traders act as intermediaries on behalf of larger operators.These are themselves exporters or deal with coffee hulling companies that will export the greencoffee. This immediately implies that dry coffee is the main type of coffee in which traders areinterested in. This is bought from farmers after they have depulped it. Traders have been buyingthis type of coffee even long before cooperatives were established.

At present, traders compete with cooperatives in gaining a share of the coffee market, even forberries. This is because apart from the washing stations owned by the cooperatives, also big privateoperators own such stations. The difference with cooperatives is that profits from the sale of coffeeaccrue to the private owner, without any interest in the sustainable survival of the growers. Anotherdistinguishing factor is that traders are not interested in the high-quality production but more inquantity.

Therefore a strategy for them is to accept berries without any rigorous quality requirements ascooperatives do. Not much documentation on traders’ activities exists except for theirrelationships with farmers that involve malpractices on behalf of traders. Traders are oftenqualified as ‘opportunists. Normally, a common practice for them is to propose their "services"when farmers are experiencing difficulties such as in planting crops, incurring unexpectedexpenses such as for weddings, children are going back school or are sick, etc. The fact is thatthey are in the community and are more likely to sympathize with the farmers when the latter areexperiencing problems. As such they remain a reliable source of income since they areindependent in their decision rather than waiting for the cooperative’ agreements and policies inrespect of insuring farmers in their needs. The unpleasant outcome is that often farmers are forcedto pay exorbitant interests, either made in kind or cash. The other practice is to hold up farmerswith their agricultural products mainly coffee and force them to sell their produce to them with nochoice to accept whatever price these traders are offering.

Often, traders offer lower prices to farmers indicating that there are fluctuations on the market,while the intention is to continue to exploit the farmers. Despite the problems in the tradingarrangements, traders cannot altogether be labelled as unimportant in the sector. They in factconstitute a form of market structure which has been in the business much longer thancooperatives. They are now faced with a difficult position of changing structures in the supplychain (due to the government policy of promoting cooperatives) which disrupts traditional waysof transacting in the society.

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2.1.2 Coffee growing and transaction cost

Farmers cultivate a diverse range of food crops (beans, maize, potatoes, sorghum, bananas, etc.)and cash crops such as fruits and export products like coffee. These cash crops are undertaken tosupplement rural farmers’ income (Personal communication with farmers). Farmers also ownlivestock animals including cows, small ruminants (goats, sheep), poultry, etc.

There are differences in the cultivation and livestock ownership patterns depending ongeographical criteria.Income from coffee is treated as unique by farmers since it is generated in a short period due to theseasonal aspect in coffee harvesting and can be obtained as a lump sum. Therefore for a coffeegrower, it is with this money that he/she expects to fulfill many of his/her own needs and those ofthe household (Karekezi, interviewed May, 2014).

The drawback of coffee farming is that it involves a cycle of long-term commitment. The treesproduce after 3 to 4 years of planting and after 7 or 8 annual crops; trees are cut for regenerationand will be productive again in the next 1 or 2 to 3 years.

Motivation for growing coffee

The interviewed farmers expressed their motivation for growing coffee. Among the given reasonsare that coffee growing has become part of the culture, due to the compulsory nature of itscultivation inherited from the colonial period. Therefore, farmers have been cultivating coffeebecause their fathers and grand-fathers had been doing so. In addition to this, coffee was found tobe, in those geographical areas where it is suitable, the most important source of income in the ruralarea. The reasons indicated by respondents are shown in the table 2.1

Lack ofAlternative

Tradition Best moneyMaking

All the above Others

6% 34% 42% 14% 4%Table 2.1: Purpose of growing coffee

According to the above data, it was found that the main reasons for growing coffee are toearn some income (42 percent) and to follow the tradition (34 percent) as farmers inheritedthe plantations from their parents.

However a non-negligible proportion (14 percent) asserted that these conditions werecombined to the lack of better alternatives in terms of other cash crops and soil conditions.The other reasons mentioned for growing coffee are the response to cooperative sensitizationand/or government promotion in the region, protection against soil erosion, etc. A significantassociation between the purpose of growing coffee and membership status was found where

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only 32 percent of members grow coffee due to lack of other alternatives or tradition whilefor the same reasons 54 percent of non-members cultivate coffee.

2.2 Factors influencing coffee production

The factors influencing the production of perennial crops, whether directly or indirectly, includeclimate, soil fertility, land owned, schooling, agricultural training, conservation extension, potsize and slope (Jansen 2006).

Prior to 1998-1999, coffee production and consumption were relatively equal. The recent declinein coffee prices has been due primarily to a surge in supplies, but the equally important long-termproblem for coffee producer is weak demand. He per capital consumption in Europe and theUnited States which accounts for nearly 90 percent has been declining due to increase in percapital consumption of soft drinks (World Bank 2002).

The main coffee problems confront producers

Price fluctuation: The fall in output (or even fear of the fall in output) from one region can sendthe price rocketing. For a short time while the production of the commodity can be extremelyprofitable and this of course can prompt new producers to switch to growing the product, in the

(mistake) belief that the price will remain high.Oversupply: The price of coffee on the international market has fallen dramatically because toomuch was being grown. Global overproduction has been exacerbated by a World Bank programto introduce coffee into Vietnam, which has risen rapidly to account 10 percent of globalproduction (Burnell and Randall 2008)

2.3 The role of cooperatives in development

Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equityand solidarity. In the tradition of their founders, cooperative members believe in the ethical valuesof honest, openness, social responsibility, and caring for others (Bibby and shaw 2005).Cooperatives owned enterprises are the common formal farmer’s organizations, recognized bylaw in most countries (Cleaver 1993). Cooperatives depend upon village spaces, materialresources and cultural norms to realize their production activities: They share local histories,usufruct rights, and mutual social and economic obligations (Angelique D., 2009). Cooperativeswere formed by those experiencing difficulty dealing with an aspect of economic change. Theircreation came about partly because they offered practical advantages (Angelique D., 2009).

2.3.1 Marketing, processing and input supply activitiesVarious authors like Alderman 1987, Cleaver 1993, Michael and Eden 2001 and Anderson 2001;pointed out the role of cooperatives in marketing, processing and input supply activities. Cleaveradds that cooperatives can be efficient, using low-cost cooperative member labor, motivated by self-

12

interest since the cooperative members own the enterprise.

2.3.2 EmploymentsThe international cooperative alliance has estimated that cooperatives contribute to the livelihoodsof some 800 million members and their families. They provide direct employment and seasonal andcasual work. Yet cooperatives also allow many farmers to maintain their self-employed status andcontribute to rural community development. The impact of cooperatives in providing income torural population creates additional employment through multiplier effects such as enabling otherrural enterprises to grow and in turn provide local jobs. What’s more, cooperatives provide realeconomic benefits to farm families through increasing the stability of the farming sector, improvingmarket access for their products and strengthening the farmers’ position in the agri-food chain (ILO2008)

2.3.3 Dividend

A large portion of the earnings generated by the cooperative can be returned to the members atthe end of the year. At this time, net earnings are calculated by taking the total revenuegenerated from the sale of the value added product and subtracting the total expenses of thecooperative. The earnings are then divided among members in proportion to the amount of rawproduct they deliver (Angelique D., 2009).

The overall share of economic activity accounted for by cooperatives is larger in advanced marketeconomies than it is in less-developed economies. For example, in USA State (which many peopletake today to be epitome of a capitalist),cooperative dominate important industries, such as basicagricultural products and supplies, and have a large market share in others, such as wholesaling andproduction of business supplies and services, electricity generation and distribution, housing, bankingand insurance (ILO, 2008)

2.3.4 Cooperatives and local community

The communities that host the cooperatives also receive economic impacts. This might be especiallytrue in the case of processing cooperatives that requires investment in a local processing facility, thehiring of local workers, and the potential for increased farm income to spend within the localcommunity. The idea is that when a firm begins operations in a community, it generates an initialeconomic impact or direct effect due to initial construction costs, purchase of local utilities, andwages paid to workers. The farm also generates so- called effects as it purchases inputs from otherfirms in the community, finally the induced effects can be measured as workers throughout thecommunity spend more money due to increase income generated (MARRETT and WALZER 2004)

2.3.5 Principles of cooperatives

There are seven ‘Principles of Cooperatives’ which guide the cooperative operations.1. Voluntary and open membership to all persons able to use their services and willing to

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accept the responsibilities of membership without any discrimination;2. Democratic administration implying accountability and equal voting rights;3. Members’ equitable participation to the capital of their cooperative;4. Autonomy and independence;5. Provision of information, education and training to members, elected representatives,

managers and employees so they can contribute effectively to the development of theircooperatives;

6. Cooperation among cooperatives in order to strengthen the cooperative movement byworking together through local, national, regional and international structures and last butnot the least

7. Concern for community since cooperatives also work for the sustainable developmentof their communities through policies accepted by their members.

Generally cooperatives have a dual objective:(1) Scale economies in commercial production or market transactions and(2) Improvement of bargaining position in regards to external agents. Braverman et al.

(1991) mention other benefits such as gains of risk sharing, access to credit, input supplyand profits to members.

2.3.6 The obstacles to development of cooperatives in developing countries

The major obstacles to the development of cooperatives in developing countries include:Misconceptions among policy-makers and planners of what cooperatives are and how they work;unrealistic expectations of what cooperatives can actually accomplish; the establishment ofcooperatives irrespective of whether or not the minimum requirements for successful cooperativedevelopment are met; and the artificial acceleration of cooperative growth (ILO 2001).The implementation of cooperatives in developing countries has faced obstacles of a cultural,political and economic nature (inadequate and irregular income; or savings potential; insufficientmobilization of resources; embryonic financial infrastructure) on the part of communities and, inmany cases, on the part of governments too. In countries, the retreat of the central state to supportsocial policies and transfer of responsibilities to implement these policies to local governmentbodies, without the correspondent transfer of resources, adds to the difficulties in achieving somesuccess in partnership programs (Fruet 2005).

A common mistake in donor, assistance to cooperatives and farmers groups has been the view thatsuch assistance should be provided through government, and that the objective is to provide aservice of some kind to farmer members of the group. This approach reduced the members‘management autonomy and responsibility. It also did not consider the interest that farmers mightor might not have in cooperating.

Cooperatives were formed with high hopes for reducing rural poverty. Members were not self-selected. In addition to land and labor, cooperatives were provided access to working capital, and

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later on technology and managerial support ( through the cooperative manager) to offset thebeneficiaries’ lack of experience in managing large farm. AS in many other countries, results havebeen disappointing. Productivity has declined, diversification has stalled, there is little innovation,and investment have not been forthcoming as earnings have been used for dividend distributioninstead of investment and diversification, and for providing social services to members and otheruses. Cooperatives have faces increasing debt, low productivity and less job creation for non-members which has hit women hardest because they are the first let go when wage labor falters(ElSalvador 1998)

2.7 Summary

This chapter shows reviewed literature related to coffee growing in Rwanda, the role ofcooperatives in development, the international principle of cooperatives, history of cooperativesin developing countries: their function, success and causes of their failure. It has also reviewedfactors influencing coffee production. The literature shows that cooperatives have long been anidea worldwide; being widely promoted in many of the developing world as an integralinstrument of national rural development policy. Even though in many developing countries,results have been disappointing, in some countries where the cooperative principles wererespected the cooperatives contributed much to the development of their members and thecommunity.

CHAPTER 3 METHODOLOGY

This chapter explains the methodology used based on both qualitative and quantitative data. Thestudy was carried out in the district of Huye located in the southern province of Rwanda. Therationale behind choosing this province was that coffee production has been successful in theprovince due to its natural soil endowment while the district is known for its cooperative thrive inthe coffee sector even though the climatic and soil fertility are not so suitable. This was viewed asgiving representativeness of cooperatives and the coffee sector in Rwanda.

3.1 Case study areaThis study was conducted in Huye district, especially to four different washing stations locatedin Maraba and Ngoma sector. Huye district is located in the southern province of the country.The Southern Province borders the Republic of Burundi in the South. In the east, it bordersKigali City, The Eastern Province and Kirundo (Burundi). In the north there is the NorthernProvince and the Western Province in the west. The Province is composed of 8 districts.The predominant sector is agriculture and animal husbandry with 90 percent of rural populationrelying on subsistence farming for their survival. The province boasts an abundance of cultivablemarshlands that are favorable conditions for the production of rice, soya, beans and maize.Coffee and tea dominate the cash crops:

1515

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The Southern province has a lot of tea factories and coffee washing stations. The province is alsoproud to be hosting numerous food and milk processing units. The handicraft industry is thrivingand this is done mostly by associations. Other economic domains include trade, services and mines.

Maraba and Ngoma sectors are the two sectors of Huye located in the south of the district characterized

by a subequatorial temperate climate, with an average temperature ranging around 200C. Its averageannual rainfall is around 1160mm. As it is on the whole country, the climate is marked by 4 quitedistrict seasons: A long rainy season (Mid February – May), a long dry season (June – MidSeptember), a small rainy season (mid September- December) and a short dry season (January –Mid February). It has abundant rainfall of 1400mm per year.

Coffee washing stations and farmer cooperatives

Coffee is one of the most important traditional cash crops in Huye and the main source of incomefor a number of households. The effect of liberalization of the coffee sector in Rwanda in 1998pushed the Rwandan government to strive to consolidate coffee growing cooperatives in differentparts of the country by building coffee washing stations. These stations were mainly meant to helpcoffee growing cooperatives produce high quality coffee which is competitive on the internationalmarket.

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Maraba coffee is probably one of the most known varieties from Rwanda.The coffee is grown on thehigh-altitude hills of Maraba, Huye district in the south of the country. For the last ten years, Marabacoffee has managed to maintain its brand name and is sold around the globe. Private and cooperativewashing stations are accurately more predominant in Maraba sector as compared to other sectors.

3.2 Methods and techniques of the research

Several techniques were used to get the data required such as literature research, discussion withkey informants, survey and observation. An explanation of how each was performed follows below.

3.2.1 Literature researchThis technique helped in acquiring secondary data which were analyzed in order to have betterinsights into the agricultural situation in Rwanda, and in particular, the cooperative movement in thecoffee production. The data were also used in providing background information on the study areaand the cooperatives which acted as the research subjects. This literature was important in setting upthe foundation of all other techniques that were used later. Several documents that were collectedinclude past studies and reports considered relevant to the research problem, policy papers anddevelopment plans from different institutions.

3.2.2 Discussion with key informants

Discussions with key informants were useful to collect as much information as possible about theresearch area and cooperatives. Informants were the staff in different cooperatives and washingstations. Lengthy conversations held with these key informants were recorded and transcribed laterfrom which, in the informants’ own views, much needed data on the cooperative movement in Huyedistrict in general and in coffee sector in particular were extracted.

These discussions also paved the way for refining the questions designed for the farmers’ formalinterviews.

3.2.3 Farmers’ interviewsA total of 71 farmers were interviewed with a formal questionnaire (See Appendix). Thisquestionnaire was subdivided in 3 main parts. The first part included open and closed questionsaddressed to farmers related to farmers’ characteristics, coffee farming/production systems,transaction partnership and membership status towards the cooperative. The second part of theinterview was addressed to 4 washing stations and related to farmer’s perceptions and attitudestowards trust and solidarity, risk elements and risk coping strategies. The third part included open-ended questions where the farmers could detail the benefits from or constraints towards thecooperative and expresses their views on how to improve their situation, the cooperative

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functioning/performance or the coffee sector in general. The interviews were conducted either at thecooperative head quarters, washing stations, the administrative cells’ office or the farmers’ homes.

3.2.4 Observation and informal interviews

Observations made during interviews or when travelling around the rural areas, farms andespecially to different washing stations were also important in explaining certain findings. Forinstance, farmers made reflections on the many problems they faced in the past and how theyused to deal with them. This provided an understanding of the cooperatives benefits that werenot mentioned in any document. Farmers also mentioned problems of selling secretly some ofthe produce by spouses or children, protecting the crops against thieves while at the same timeexperiencing the insufficient storage space.Through visits of farmers in their homes, observations were made as to how the coffee istraditionally depulped by stone and the subsequent washing and drying process. In assisting one ofthe cooperative’s management meetings, clarifications were made on how the washing station ismanaged and the planning of coffee-related especially during harvest campaigns.

3.3 Sampling plan

An exploratory study provided the basic information on the coffee sector. Seventy-one(71) farmerswere visited and interviewed. They provided information on the processing and export of coffeeespecially with respect to the cooperatives that export their produce through these washing stations.Also four washing stations representing coffee cooperatives were visited. The aim was to meetfarmers operating under coffee farming cooperatives.The selection of cooperatives and individual farmers was then performed in a multistage samplingprocess. In the first stage, 4 cooperatives were purposely selected for an in-depth study. Thesecooperatives are Kawa nziza, Kawa yacu, Twitezimbere and Derambere muhinzi in Ngoma andMaraba sector. These four (4) cooperatives belong to four (4) different washing stations.

In a second stage, a selection of coffee growers was randomly made from lists of members withineach cooperative.A third stage was the sample of non-members. A snowball sampling was performed to find thesenon-members: the members indicated some of their neighbours who are not members of thecooperatives and in turn, during their interviews, these would name other non- members.

For achieving the objectives of our research, a sampling of respondents to be interviewed was randomlydetermined by using the Kothari random sampling formula for each coffee cooperative:

Where:

n= sample size

N= Size of Population

Z= Coefficient (Normal distribution)

P= probability of success.

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Q= Probability of failure D= Margin error

For Kothari, the margin error varies between 6% and 10%. In this study, we will use the margin error of10%, then the confidence level of 90%, our probability of success is p=0.5, failure probability of q= 0.5 asz0.5=1.65.

A total of 71 farmers (As calculated) were interviewed as indicated in the table 3.1 below.

Table 3.1 Number of informants cooperative and membership status

Cooperative name Type of farmer in relationto

CooperativesMember Non-Member

Kawa nziza 14 7Kawa yacu 14 5Twitezimbere 11 6Derambere muhinzi 9 5

Table 3.1: Number of informants as per cooperatives

3.4 Analytical approach

A step-wise approach is adopted in order to analyze reasons behind farmers’ choices where:(1) farmers are described according to their personal and production characteristics;(2) the contribution of coffee cooperatives on members(3) choices of membership status, production of coffee per type and transaction structure aremodeled

Membership decision depends on many factors. Among them are farmers’ characteristics, elements incontracts offered to farmers and location factors.

Characteristics of farmers may be general (age, gender, education) or specific to the households (size andcomposition). Contractual elements include trust in the contracting party, expectations regarding the price,access to credit and other inputs, etc. The latter are however looked at in the context of productiondecision. Security of land ownership, perceptions regarding the cooperative status in the supply chain, etc.are the other factors that act as opportunities or constraints towards the cooperative membership choice.Location factors include in general the farmers’ location in the study sample (Huye). Particular to thechoice of membership, the distance to the cooperative is also assumed to be an important factor that couldinfluence the choice.

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Membership status subsequently affects other decisions such as that of producing a certain type ofcoffee and choosing the structure in which to market it. This effect is direct. Though not studiedhere, it is important to note that membership has also an indirect effect to decision making throughthe access and use of production factors and transaction costs. Production factors include the sizeof their coffee plantation and access to inputs such as labour, fertiliser, pesticides, etc. Themagnitudes of these factors vary between farmers within a particular area and even betweendifferent areas.

The first type of produce obtained is the coffee berry. This can be marketed as such or transformedinto dry coffee (also called parchment coffee). Farmers have the option of selling both too. Thestructure of choice depends on the different characteristics embedded in transaction costs.Transaction Cost Economics theory provides the theoretical framework of study where a comparisonof characteristics such as asset specificity, uncertainty and frequency is performed with theassumption that chosen a transaction structure offers relative advantages in terms of lowertransaction costs.Proxies are set up through which these characteristics, such as size of coffee plantation,perishability and distance for asset specificity and access to inputs, price variations and delays inpayments for uncertainty. Frequency is related to yearly coffee production and to farmers’ needs inthe context of the rural community.

CHAPTER 4 : DATA PRESENTATION AND ANALYSIS

This chapter aims to present, analyze and interpret the results of our work . Farmers differ in theirindividual characteristics and production patterns. Combined, these features determine the typeand amount of coffee sold. By type of coffee, a distinction is made between coffee berries andparchment/dry coffee; this distinction is made clear in subsequent sections of this chapter.

4.1. Farmers’ characteristics

The sample was made up of 71 farmers out of which 48 were cooperatives members, and 23 arenon-members. General characteristics of farmers were analyzed as shown in the tables below

GENERAL DESCRIPTIVE OF FARMERS’ CHARACTERISTICS PERMEMBERSHIP PER COOPERATIVE

A general observation is that farmers are different in their personal characteristics when acomparison is made between members and non-members.

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MEMBERSHIP ACCORDING TO GENDER

KAWA NZIZA KAWA YACU TWITEZIMBERE TERAMBEREMUHINZI

TOTAL

MEMBERSHIP

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERSMALE 4 2 5 4 6 3 5 4 33

Average 5.6 2.8 7.0 5.6 8.4 4.2 7.0 5.6 46.47FEMALE 7 2 5 4 7 2 9 2 38Average 9.8 2.8 7.0 5.6 9.8 2.8 12.7 2.8 53.5TOTAL 11 4 10 8 13 5 14 6 71TOTAL

AVERAGE

15.4 5.6 14.0 11.2 18.3 7.0 19.7 8.4 100%

Table 4.1: Membership according to Gender

Overall, the sample comprised of more females than males: out of a total number of 71 respondents,38 were females, constituting about 53.5% in the proportion. It is interesting to note that womenconstituted a proportion of 53.5 percent as compared to 46.47% of men.

This is probably because women are increasingly becoming heads of the household and therebygrowing coffee. In the social setting however, they are more responsible for the householdchores. Coffee depulping and regular sun-drying are also part of these chores but would cost toomuch, therefore the quantity of dry coffee decreases with women whereas men would prefer tosell dry coffee. However, since women might be burdened by these household chores, sellingberries might be more appealing to them, hence their high number in coffee cooperatives

On the other hand, our expectations were that men might be also more interested in coffeecooperatives due to their culture of participating in cooperatives and clubs. Furthermore, theyare the ones to attend meeting of campaigns while women are left at to attend the householdchores. And in addition, men are the main recipients of incomes that will be generated fromselling berries. Women also might share the same interest; however, since there are othercooperatives in which they are more traditionally fitting than men such as cooperatives forgrowing and marketing fruits and vegetables or making handicrafts, less interest in becomingmembers of coffee cooperatives could be observed but it was not the case.

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MEMBERSHIP STATUS ACCORDING TO AGE


TOTAL

MEMBERSHIP

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS≤30 2 1 3 2 2 1 0 0 11

Average 2.8 1.4 4.2 2.8 2.8 1.4 0.0 0.0 15.431 to 40 4 2 5 4 3 3 3 4 28Average 5.6 2.8 7.0 5.6 4.2 4.2 4.2 5.6 39.441 to 50 4 1 2 2 8 1 11 2 31Average 5.6 1.4 2.8 2.8 11.2 1.4 15.4 2.8 43.6

≥61 1 0 0 0 0 0 0 0 1.4Average 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 71

TOTAL 11 4 10 8 13 5 14 6 100.0TOTAL

AVERAGE

15.4 5.6 14.0 11.2 18.3 7.0 19.7 8.4

Table 4.2: Membership according to Age

The average age of the respondents is over 35 years old with variations within membership categoriesand per cooperative. The biggest proportion of farmers belongs to the age range of 31 to 50 years ascompared to all cooperatives. These bounds can be explained by lower life expectancy of 59 years formales and 60.8 for females (UNICEF, 2013) and as a consequence of war and genocide. The lowerbound is also explained by the fact that the younger people are pursuing their studies and/or otheroccupations than farming. Those that are engaged in farming do so because they have no formaleducation or have discontinued their education at a younger age due to various reasons.

In addition, older farmers might show resistance to becoming members of the cooperative sincethey are used to processing (they might even have bought small depulping machines). Youngerfarmers might prefer the ease of selling berries instead of processing them. However, the reversemight also be true due to experience in coffee farming and associated realization of the costs andburdens.

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MEMBERSHIP STATUS ACCORDING TO EDUCATIONAL LEVELS


TOTAL

MEMBERSHIP

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERS

MEMBERS

NON-MEMB

ERSNo formalschooling

1 0 0 1 0 1 0 0 3

Average 1.4 0.0 0.0 0.0 4.2Primaryschool

8 3 6 7 7 3 9 4 47

Average 11.2 4.2 8.4 9.8 9.8 4.2 12.6 5.6 66.1Secondary

school2 1 3 0 5 0 1 2 14

Average 2.8 1.4 4.2 0.0 7.0 0.0 1.4 2.8 19.7Technicalschool

0 0 1 0 1 1 4 0 7

Average 0.0 0.0 1.4 0.0 1.4 1.4 5.6 0.0 9.8TOTAL 11 4 10 8 13 5 14 6 71TOTAL

AVERAGE

15.4 5.6 14.0 11.2 18.3 7.0 19.7 8.4 100%

Table 4.3: Farmers education levels

Education of farmers reveals that only 29.5 percent of interviewed farmers have had an educationlevel higher than the primary school. The latter comprises the biggest proportion as shown in table.Farmers with some secondary education are found in agriculture due to own interest or the need toundertake farming. The proportion of farmers who have attended technical schools is quite small,only 9.8 percent of the interviewed farmers. This is comprehensible as other activities such asconstruction, carpentry and mechanics are open to them.At higher levels of education, farmers might be in a better position to evaluate benefits and costsassociated with the membership choice.

Household

Other important aspects relate to the household; these are the size and dependency ratio. Ineconomics, the dependency ratio is calculated as a proportion of family members not included in thelabour force either because they are too young (under the age of 16) or too old (over the age of 65)to work. The below table describes these aspects.

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Household characteristics per membership status and cooperatives


MEMBERSHIP

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RSAverage

Householdsize

6.2 6.3 6.0 6.1 6.9 5.9 6.5 6.9

AverageDependents

3.5 3.5 3.9 4.0 3.7 4.2 4.1 3.9

AverageDependenc

y ratio

1.7 1.8 1.5 1.5 1.8 1.4 1.5 1.7

Table 4.4: Household size

Our expectation to this point was that the availability of family labour can be regarded from 2perspectives: (1) in terms of supplying coffee berries- more family labour is available forharvesting and transporting berries to the selling points or (2) sufficient labour is available forprocessing berries into dry coffee by farmers themselves. Labour requirements are associated withthe coffee plantation size. Higher ratio of family labour to plantation increases quality, therebysupply of berries.

With regard to household characteristics as shown above in the table, the size of the householddoes not display any difference in membership status, neither does the dependency ratio.The average household size is of 6 to 7 members but this number can go to as high as 13 persons.This is because in addition to parents and children, often other family relatives (grand-parents,nieces and nephews, etc.) stay in the household either permanently or at least for a long time. Thehousehold size and structure determine the availability of family labour especially in the harvestseason when any extra hands are needed.

However, there are dependents that are too young or too old to be counted on for labour in anyseason. Their number is significantly different according to membership or to cooperatives. It is onaverage 3 to 4 dependents per household. In larger families the number of dependents can go to 9persons. The dependency ratio is on average similar for all farmers.In our case, farmers would join cooperatives in expectation of some real benefits and not due to any ofthe household characteristic. In the rural agricultural context, larger households are associated withlabour for coffee cultivation. Here proper maintenance and harvesting increase prospects for becomingcooperative members as these households would be able to meet the cooperative’s high-qualityrequirements which involve the need for more labour. Furthermore, large families may also have manysources of income where possibilities for hiring labour are present.

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4.2 Coffee farming characteristics and transaction cost

Other characteristics explaining the behaviour associated to coffee farming are experience interms of the years farmers have been growing coffee and number of coffee trees. The lattercan be decomposed into the number of trees that were productive in 2013 i.e. were harvestedand those that are not productive because they were too young or have been cut forregeneration. These characteristics are shown in table 4.5.


MEMBERSHIP

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RSAverageexperiencein coffeegrowing

(Years)

26.2 19 27 18 27.6 16 27.2 25.8

Averagenumber oftrees perfarmer

270.8 252.7 255.0 167.8 279.2 206.5 278.2 199.0

Averagereproducible trees per

farmer

237.2 224.0 233.1 92.9 259.4 166.2 260.0 181.7

Averagenumber ofcoffee plotper farmer

2 1 1 1 1 2 2 1

Averagenumber oftree perplot

309.5 169.8 300.0 180.5 333.3 192.0 294.4 179.7

Averagedistance tothe furthestplot(inmunites)

16 15 15.5 13 17.0 13.5 19.8 12.5

Averagedistance towashingstation(inmunites)

30 25 25 22 15 26 45 42

Table 4.5: Coffee farming characteristics

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Experience in growing coffee

Farmers have been growing coffee for a long time: 23 years on average. However, there arelarge variations in the number of years of growing coffee: differences among membershipstatus are significant.

The experience levels support the finding regarding farmers’ age and education. If thefarmers have none or only a few years of education, their entering into farming in an earlyage is associated with longer experience of growing coffee. However, there are also farmerswho started growing coffee in the last 5 years. Among them are those who have recentlybeen sensitized in trainings and comprehended or observed other growers’ benefits fromcoffee production.

Number of coffee trees

Significant differences of ownership of coffee trees were found between members andnon- members. As could be expected, members and farmers in the studied cooperativesown on overage more trees compared to non-members in those cooperatives. This issimply explained by the fact that only committed farmers join cooperatives and receivedifferent incentives from their cooperatives.

It could be expected that those farmers who have been growing coffee for many years are theones owning more coffee trees. However, only few farmers with long experience have a largenumber of coffee trees. This can be explained by trends in the 1990’s which saw theinternational coffee crisis, the neglect and consequent reduction of coffee trees due to war andgenocide, changing agro-climatic conditions, lack of land or excessive costs as compared to theearnings from coffee (Loveridge et al., 2003). The situation worsened up to a point wherefarmers themselves destroyed their trees. Since recently, positive trends have been observedfollowing the government policy as mentioned in chapter 1. The average number of coffeetrees per farmer is now increasing from 155 trees (Loveridge et al., 2003) to more than 250trees in the study sample.

Number of coffee plots

On average, the number of coffee plots is 2 with significant differences in the members and non-members categories. These categories are shown in table above that indicates the percentages offarmers per number of coffee plots.The largest share in any membership category is of farmers who have just one plotSignificant differences are also observed with respect to the average number of coffee trees that areplanted in the plot. In all cases, this amount is around 300 trees for the members. For the non-members, the number of trees per plot is much lower: 180 trees.

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Distance to reach the plot

The importance of this description of coffee plot distance is that it might explain certaindifferences in terms of maintenance of coffee plantations and the resulting production. Thesedifferences are associated with the distance to reach the plots.This distance is on average 15 minutes. But, there are large deviations: in some cases farmersmay even walk for an hour long to reach their plots. This explains the attitude that if farmers owna few plots which are also close to home, then maintenance is easier and the productionincreased, where the need to sell berries on cooperative.In interviews with farmers, they confirmed that further plots tend to be neglected.

Distance to the cooperative (Washing station):Shorter distances to the cooperative would increase the likelihood of becoming its member andmotivated for coffee cultivation: in this case, the membership choice towards the cooperative may beinfluenced by the farmer’s behaviour behind coffee farming. If the farmer has undertaken coffeecultivation with a strong purpose of making money or improving his/her livelihoods, his attitudewill not be the same as the one cultivating coffee just because he has been traditionally doing so orjust because he has no other choice.

Number of reproducible coffee trees:More trees imply more production making it quasi impossible (as more costly) for own processing,thereby increasing the likelihood of supplying berries. Since members were found to own moretrees compared to nonmembers, an interaction with membership was used to account for thelatter’s influence on the number of coffee trees.

4.3 Costs of coffee productionCoffee farming involves maintenance costs in all seasons whether coffee trees are productive or not.However, the related income is only generated in the harvest season. Farmers were asked to recallelements of their expenses in production such as land, fertiliser or labour. Often, these are home-supplied and not traded in the market, therefore, it is difficult to calculate all the costs. The maincost elements were found to be land, labour and fertiliser.

Land

The land ownership structure in Rwanda is individualized for farm households in rural areas.However, land distribution is characterized by increasing inequalities due to ways farmers canaccess and sell land. This has resulted in a high degree of land fragmentation which results inparcels too small to be productive. Land transactions for coffee plantations are mainly donethrough sales because other practices would not permit the long cycles and investments that areinvolved in growing coffee. Costs of land vary depending on the size of the plot, the soil and

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location conditions and whether the plot was already under some coffee trees or not.

LabourLabour usage in coffee is typically seasonal, required for maintenance of the coffee plantation:weeding, mulching, cutting off old branches, spreading the pesticides, etc.More intensive labour is needed during harvest as the berries ripe almost simultaneously.Moreover, due to the quality requirements, berries have to be supplied within 3 to 6 hours to thewashing stations. In case farmers choose to do their own processing and sell the coffee as dry,labour is also needed for the extensive harvesting and subsequent depulping. Since processing is nottied to a specific time limit, this labour is accounted for in the ordinary season.

In terms of the type of labour, a distinction is made between family and hired labour.Family labour is used in both seasons for the ordinary coffee maintenance and during harvest.Additional family members including school going students also help. A strong and significantrelationship was found between family labour and household size.

Hired labour in coffee is also used: either continuously as part of other household chores and paidmonthly or in other cases some casual labour for a few hours/days is needed for instance intransporting the manure from the household compound to the plot or in harvesting.

Table 4.6: Average seasonal labour requirements per membership


MEMBERSHIP

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RSOrdinaryseason

4 2 3 2 4 3 5 4

Harvestseason

7 4 8 5 6 5 7 4

Average per day Members Non-member

Ordinary season 4 3Harvest season 7 4

Table 4.7: The overall seasonal labour requirements

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Differences in labour usage are significant within the membership categories during the ordinaryand harvest seasons. This is because members need to meet cooperatives’ quality requirements,therefore need more labour both for maintenance of the coffee plantation and during harvest. In theordinary season, members on average employ 4 persons per day while non-members employ 3.

There is a noticeable difference in the harvest season where the members use on average 7 personsper day and non-members use 4 persons per day.An adult person can harvest on average 1 basket of berries equivalent to 10-15 kgs per day (Personalcommunications); this is almost the equivalent of the average production per coffee tree which wasfound to be equal to 12.8 kgs. Therefore, a difference is also reflected in the number of daysaccounted for the hired labour in both seasons.

Fertilization and other inputs

Farmers use organic and chemical fertilizers for coffee. The use of each type of fertilizer depends onlocal soil conditions and its availability. Differences were therefore expected among famers.The presence of more fertile soils in Huye district implies the use mulch to significantly increase theproduction and mostly not much of other types of fertilizer are used. The District on the other handrequires much fertiliser as the soil is mostly infertile due to erosion. Table 4.8 shows the use ofdifferent types of fertiliser among farmers.


MEMBERSHIP

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RSMulch 2 3 2 2 3 0 0 1

Manure 0 1 1 2 0 0 1Mineral

fertilizers1 0 2 0 1 0 1 0

Pesticides 0 0 1 0 3 0 2 0At least twoof the above

8 0 5 0 6 5 11 4

11 4 10 8 13 5 14 6Table 4.8: Fertilization type within membership status

There are differences in the use of fertiliser between the membership categories. In general, fertiliseruse is higher for the members who can combine mulch together with manure and/or other chemicalfertiliser. Manure is home produced and mulch comes from crops residues. Chemical fertiliser onthe other hand is distributed by cooperatives to the members.Non-members have difficulties in accessing almost all fertiliser. In fact, a proportion of this group

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does not use any fertiliser at all. Mulch seems to be the most common type of fertiliser used, in avery few cases combined with manure or chemical fertiliser for those who can afford it or haveobtained it in one way or another.If the farmer has been planning to take up activities of improving his production in terms ofquantity and/or quality, the choice of becoming a member would be associated with access toinputs, technical advice and security needed to achieve his plans.

Transportation mode is used to transport the cherriesKAWA NZIZA KAWA YACU TWITEZIMBERE TERAMBERE

MUHINZIMEMBERS

HIPMEMBE

RSNON-

MEMBERS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RS

MEMBERS

NON-MEMBE

RSCarry on

head71% 79% 88% 88% 90.2% 90.4% 67% 86%

Bicycle 29% 21% 12% 12% 9.8% 9.6% 33% 14%Table 4.9: transportation mode in coffee sector

Based on the above results as shown in the table, a large proportions still pays people who carrycherries on head. However, members in all cooperatives tend to use bicycles as a transportation modetowards their washing stations. This can be explained by the fact that cooperative members experiencemore coffee production than non-members. It is notably that the choice of cooperatives can beassociated with both the production and transport mode.

4.4 Contractual element in coffee marketing

4.4.1 Type of coffeeAs mentioned above, two (2) types of coffee can be produced: either berries or parchment/drycoffee. Dry coffee is usually a small proportion of the produce that is of low quality rejected by thecooperative/washing station or the sluggish berries harvested towards the end of the season.However, the entire produced coffee can also be sold as dried coffee if the farmer is not a memberof the cooperative, or is not interested in selling his coffee as berries. The following paragraphsgive a brief overview of post harvest handling of coffee berries to obtain dry coffee.

The practice of depulping

The coffee berry is made of different layers associated with different type of coffee product aspictured in figure 20: the outer skin (green when growing and red when ripe (1), the parchmentskin for dry coffee (2) and the silver skin that covers the green bean (3).

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Figure 4.1: Coffee beans

Depulping entails the removal of the berry’s outer skin. Then after, coffee is left to ferment for 3days and then water-washed many times to clear-off the pulp so that it is the parchment coffee isleft. This is sun-dried for 10 to 14 days (Pearl, 2005). The processing of dry coffee involvesremoving the parchment so that there remains the green coffee. It will then be roasted inpreparation for final consumption.

Distance

Cooperatives’ washing stations require high quality berries in order to produce the processed coffeethat is of good quality. Quality of berries is checked by their density in a floatation tank. It followsfrom farming practices (through the use of inputs) and the harvesting process. One of the aspectsinvolved in harvesting already described is labour. Another aspect is the distance to the washingstation or the collection points set by cooperatives to ease the burden of transport. In case of drycoffee, the average distance to traders was also estimated by farmers.

4.2.2 Coffee priceAt the beginning of the harvest season, NAEB fixes a minimum price per kg of berries and drycoffee that farmers are to receive for the sale of their coffee. For the 2012 season, the berries pricewas 140 Rwfs and 300 Rwfs for dry coffee. For the 2013 season, the minimum price was fixed at200 Rwfs and 400 Rwfs per kg of berries and dry coffee respectively. In different locations theberries and dry coffee prices went higher to 240 Rwfs and 620 Rwfs respectively. However, inother locations, the dry coffee was sold at much lower prices even to 280 Rwfs depending on thetrader.

Therefore, this price is not constant, variations are observed especially with traders who have thehabit of modifying the price offered to farmers. The weight given by farmers to the level of pricewould determine the choice of structure in which to sell their coffee.

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4.1.3 Choice of transaction structure

By commitment to the cooperatives, members are expected to sell their berries to cooperativesand non-members would sell to traders. Cooperatives and traders are the transaction structures orthe farmers’ partners in coffee transactions.

CHAPTER 5: SUMMARY OF FINDINGS AND CONCLUSIONS

The main objective of this study is to analyze factors influencing farmers’ choice towardscooperative membership status in coffee sector. The rationale is that the membership statusaffects other decisions (directly or not) taken by farmers with regard to the type coffee marketedand the transaction structure.The Transaction Cost Economics Theory provides the basis for the study where the choice is

studied through the mirror of transaction costs. In coffee marketing, traders are other transactionstructures besides cooperatives that operative in the coffee supply chain in Rwanda.Subsequently, the choice between cooperatives and traders is expected to be guided by levels ofasset specificity, uncertainty and frequency as determinants of transaction costs.

With respect to each set of decisions, hypotheses were formulated as study guides.Specifically, these hypotheses relate to determinants of production per type of coffee (berries ordry coffee), transaction costs and contractual relations associated with the different tradingpartners (cooperatives and traders) and commitment factors to the transaction structure offarmers’ choice.

Membership status

Farmers make the choice of adhering to the cooperative and becoming its members depending ondifferent reasons.It was found that the influential factors include both the easy access to labour as reflected by the sizeof household size; expectations regarding access to cheap and reliable credit; access to land so thatinvestments in coffee investments can be securely made. Evidences on distance to the cooperativeshowed that there might be free-riding problems as farmers who are closer to the cooperative do notlargely become its members. In connection to this, another negative influence to the choice is theparticipation of other relationships-family ties, neighbors, etc., which can be regarded as a reflection offree-riding since farmers can still obtain benefits offered by the cooperative without officiallybecoming its members. Trust in the cooperative is another important factor leading to membershipespecially the higher levels of trust.

Farmers do not simultaneously make the choice with regard to membership status.Some are early joiners whereas others are laggards. It was found that the highly educated farmers,those belonging to larger households or face higher risk of being stolen in any way are more likely

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to become early members. Late adherence is caused mainly by low trust levels, the existence ofrelatives by which farmers can obtain the same benefits without committing themselves to thecooperative and a cautious attitude with regard to the cooperative’s participation in a largernetwork.

The type of coffee

Decisions regarding the type of berries are mainly influenced by membership status wheremembers are more likely to produce only berries that will be processed at the cooperativewashing station.The choice for the supply of berries only is constrained by experience in coffee growing, theavailability of family labour that facilitates the processing in dry coffee.On the other hand, positive influences include the availability of hired labour and that of mulch. .

Choice of transaction structure

Membership is the most important determinant of the choice of transaction structure. Inaddition to this, transaction costs and contractual relationships play a major role.These differ according to the type of coffee but also with respect to governance structures.Cooperatives are associated with high asset specificity due to their requirements in terms ofownership of coffee trees and quality of marketed berries.

The proxy elements for these are respectively the number of coffee trees, perishability and distance.The latter depends on the location of selling points (washing station, collection point or rural tradingcentre) relative to the farmers’ location. This location specificity is also high for transaction withtraders. Furthermore, traders are linked with high uncertainty for what relates to access to inputs andprice variations whereas delays in payment are more found in case of cooperatives.Associated with the above sources of uncertainty are the structures’ responses such as generalincentives provided by the transaction structures: cooperatives are engaged in the provision ofinputs, market and price security whereas traders are active participants in the daily life of thesociety and therefore are more responsive to farmers’ needs of cash in the rural area. Since coffeeproduction is a long-term enterprise, frequency of transaction is high both for cooperatives andtraders.

However there are reservations regarding the survival of the latter to the government policy ofpromoting cooperatives.Transaction costs elements that move farmers’ choice towards transacting with the cooperative arethe quantity of berries produced associated with perishability and shorter distances to thecollection point. However, the ownership of coffee plantation and easier access to labour movethe farmers’ choices in the opposite direction towards traders.

Farmers’ choices are not exclusive to one type of structure or the other. Farmers can transact with the

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cooperative together with a trader. Distance to the trading centre and access to labour are thesignificant variables that increase the likelihood of making transactions in both structures.

Conclusions

From the perspective of farmers and cooperatives there are factors that positively influence thechoice of cooperative membership. These include the farmers’ ability to assess their decisions asgained from years of coffee growing and education. From the cooperative’s side, some of thepositive influences are its regular monitoring and constant technical advices. For farmers who aim atincreasing production and improving their incomes, membership to cooperatives signifies securityof accessing inputs especially chemical fertiliser, security of market for the produced coffee andsecurity of income since cooperatives offer steady prices. Furthermore, cooperatives are to memberssources of reliable and cheaper credit which is another incentive for farmers who have short termmoney requirements for consumption and investments.

However, coffee cooperatives are one among the many types of cooperatives operating in therural areas. Therefore, if farmers have to make the choice particularly in favour of coffeecooperatives, these should offer relatively higher comparative advantage especially becausethese other cooperatives might be able to impact farmers’ livelihoods in a short-time byresponding to their needs rather the once-per year income from coffee.

Membership also increases with farmers’ perception of risk sharing for the loss of produce due tohighly perishable coffee and burden sharing in terms of coffee processing. In addition to this, otherincentives such as offering rebates after coffee sales and distribution of dividends from the realizedprofits might increase the cooperative’s attractiveness.

There are other factors constraining coffee cooperative membership. At the outset, a distinctionbetween cooperatives and traders should be carefully considered: while cooperatives are closer infeatures and performance to the hybrid described in theory, traders in coffee transactions on theother hand behave like spot markets since they are autonomous in buying-and selling relationships.But traders also act as hybrids, as they are involved in repeated transactions related to daily livingrequirements and in bearing building long-term relationships in the community as they have beendoing so before the advent of cooperatives. In this context, a distinction of coffee by type shows thatsome farmers are attached to the tradition of doing their own processing and selling to traders. Theseare closer to them in the society as the latter are responsive to their immediate needs and no matterthat traders behave opportunistically, they are preferred because of these relationships they alreadyhave with farmers. Changing this tradition may not be easy for cooperatives, but there are prospectsas these offer incentives’ to farmers and gain their trust through long-term relationships arising fromcontinued transactions.

Corresponding to the needs for increasing the quality and quantity of coffee berries that will beprocessed at the washing stations, cooperatives impose requirements that have to be met by farmers

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such as ownership of coffee trees and timely delivery of berries. Accordingly farmers may notadhere to a cooperative because the above requirements are not met nor are costless. Associated tothis is the market location where cooperatives establish different collection points at which farmerssell their berries. If these are not situated closer to the farmers, these will prefer to process berriesand sell their coffee as dry. Furthermore, ownership of coffee trees requires ownership of land, butthis factor is often ignored. Similarly, quality of berries implies maintenance in production whereproblems of accessing organic fertilizer and pesticides may be prohibitive. Moreover, the numberand location of selling points is an obstacle added to existing problems in transport especially forfarmers who have to carry their coffee for selling purposes.

Another factor is the absence of an exclusion mechanism: due to high cost of monitoring,organizational problems within the cooperative or otherwise, nonmembers do not realize theneed for subscribing to the cooperative. This might be due to the fact that they can gain thesame price and incentives offered by cooperatives to the members are not as high or theirimpact is not visible. Non-members would therefore prefer to remain free- riders.

Further research

The fact that cooperatives are promoted through the Government policy does not guaranteeimmediate and satisfactorily membership as shown by evidences from this study trough thelenses of transaction costs.Further research could therefore focus on the cooperatives’ organizations with the aim ofidentifying proper and feasible exclusion mechanisms in combination with strategic actions forenforcing them and a reward system of incentives to substantiate the superiority of cooperativemembership.

Traders act as an important structure in coffee transaction. But they have received little or noattention; this trend could be reversed with an understanding of their activities and interactions.

There are other institutional arrangements that need intensive attention in subsequent researches.They could enable an overall assessment of membership problems. These include (1) informal rulesincluding traditions in the society that influence or prevent action and impact of social networks onmembership decisions; (2) formal rules including laws and regulatory measures pertaining to landuse, agriculture in general and coffee in particular and cooperatives; (3) role of other actors in thecoffee supply chain including input providers, marketing unions and exporters. Research should alsobe oriented towards consumers in such a way that domestic and international markets for Rwandancoffee are investigated.

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Recommendations

In order to move cooperatives forward as an effective and sustainable business model equipped toaddress many of today’s social and economic challenges, there must first be a greaterunderstanding of what cooperatives are, what they do, and how they are able to function mosteffectively in the increasingly global socioeconomic context. As such, efforts to raise awareness oncooperatives within and beyond the International Year of Cooperatives 2016 must focus on:

1. Promoting a clear and shared definition and characterization of cooperatives;2. Highlighting the strengths of cooperative enterprises in promoting sustainable

development and economies;3. I nforming about the viability of the cooperative business model and the presence andsuccess of existing cooperatives and their contributions to social, economic and environmentalinnovation; and4. Identifying and assessing effective methods for raising awareness about cooperatives. As

such, it is important that all relevant stakeholders recognize the merit of cooperatives as acomplement and/or alternative to the mainstream public and private enterprise models. Theremust be a clear promotional emphasis on cooperatives as autonomous, values-driven enterprises,owner and controlled by their members, and developed from and embedded in the social, culturaland economic needs of their membership. The distinct nature of cooperatives must thus beproperly understood, and elaborated upon in promotional efforts, and given adequate treatment inbusiness focused curricula in both formal and non-formal education and training situations, as ameans of firmly establishing the model as a complement and/ or alternative to mainstreambusiness.The efforts at promotion of the model are firmly rooted in promoting robust research oncooperatives, adequately supported by relevant and comparable data and accessible anecdotalinformation. As such, there must be greater efforts to:1. Identify and make accessible available research2. Address gaps in knowledge and data on cooperatives3. Develop a global database on comparable and harmonized information on cooperativesResearch on cooperatives should invoke a model that adequately combines conceptual andapplied research methodologies so that it is grounded in the context of cooperatives and theirdistinctive nature, but applicable across similar contexts and useable for long-term developmentof cooperatives and of supportive regulatory and legislative frameworks.As effective research needs the support of valid and reliable data, efforts must be made amongrelevant stakeholders to develop an agreed set of core indicators and related extensions to allowfor the collection of comparable data at a global level.In raising awareness about cooperatives and seeking to strengthen available data and researchinitiatives, the long-term aim is the promotion of the formation and growth of independent andsustainable cooperatives.As such, attention to good practices and capacity-building within cooperatives is essential.Emphasis should be placed on the adherence to shared objectives, within and acrosscooperatives, competent management from both a business and co-operator perspective, and

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good internal governance.No matter the extent of cooperative capacity-building and the internal structuring of the model tofollow good practices, cooperatives cannot reach their full operational and/or contributorypotential without a positive legal environment and economic context. As such, governmentsshould work to establish policies, laws and regulations that support the formation, growth andstability of cooperatives. Governments should undertake review of the prevailing policies, lawsand regulations impacting cooperatives and identify strategies for the creation of a supportivepolicy environment.Governments are encouraged to work with cooperative enterprises and other relevantstakeholders to develop a plan of action or policy framework that outlines concrete action pointsfor moving cooperatives forward in a meaningful way.

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Bijman J., 2007, The role of producer organisations in quality-oriented agrifood chains,an economic organization perspective In Tropical food chains-Governance regimes forquality management,

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Cleaver,K.M.(1993). A strategy to develop agriculture in sub-saharan Africa and a focusfor the World Bank.Washington,D.C.

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APPENDIXESQuestionnaire for Coffee farmers

Name:Education:

Farmers

Gender:Cooperative:

Age:

1) When did you join the cooperative?2) Is coffee production/growing coffee cherries the sole income of the household? Yes/no?3) Number of coffee trees owned?4) How many are productive?5) What is the production of the trees?6) How many years have you been producing coffee?7) How many trees do you plant each year?8) How many coffee plots do you have?9) What is the distance to the washing station in minutes?10) What transportation mode is used to transport the cherries?11) Is there a patronage or other benefit returned to the farmer at the end of the season? Yes orno? If yes, how much?12) Are you aware of the minimum price of cherries?13) Are you aware of price differences between local washing stations?14) Do you sell at more than one cooperative? Yes or no? If yes, please explain why.15) What inputs do you use? (Advising, seedlings, fertilizers, pesticides, herbicides, other)

16) Where are your inputs acquired? (Advising, seedlings, fertilizers, pesticides, herbicides,other)17) Are you satisfied with the quality of the advising, seedlings, fertilizers, pesticides, andherbicides or other? Yes or no? If no, please explain.18) What is your incentive to deliver a quality product?19) Is the cooperative a fair system for its members?20) What type of variety do you grow?21) What types of maintenance do you use on your trees? (mulching, shading, pruning,manure, fertilizer, and others)

Washing Stations in Developing Coffee Farming

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