Learning Agenda of the FSRE April 2014 Addis Ababa

Introduction Implementer : Ayetu Agriculture and Trading PLC Project: Testing inclusive business model in coffee value chain Intent of the project tackling the current severe shortage in the supply of specialty coffee seeds confronting coffee growers by forging innovative PPP Project Client 1560 (25% women) 40 hectares is used for seed multiplication

Technology / Technical The project will bring into picture two technologies: (I) environmentally sound wet coffee processing, (2) speciality coffee seed multiplication and marketing Rationale for technologies selection : a)coffee seed production need wet processing technology b)economic benefit will be anticipated from : initial investment saving, operational cost saving ( labour, energy and water ), less damage and/or loss of final product c)conserve the environment d)Access to service : collectively farmers business organization can use by leasing for certain days/weeks.

Technology / Technical d) Possibility and opportunity exist to build the technical capacities of farmers to handle speciality coffee production e) Possibility of improving productivity f) currently price of speciality coffee seed g) diseases resistance are some of the befits of the speciality coffee Challenge : Legal procedures to produce and sell this speciality coffee? Currently there is no legal system support production and marketing of coffee seed. Thank to JARC, coffee growers and exporters association negotiation has been started with Ministry of Agriculture to involve private coffee farms in seed production and marketing.

Organisation 1. The company started to work with 20 outgrowers (5 women, 5 youth and 10 model farmers) in a form of outgrower model 2. MOU was signed between the company, Gera Woreda Administration and Woreda Agricultural Office 3. Training on speciality coffee seedling managing provided to the outgrower by JARC 4. Farm tools purchased and distributed for the 20 out growers

Marketing Premium will be paid to the farmers based on the prevailing market price of speciality coffee seed at that harvest time Although there is no bullet proof mechanism that protect side selling for the time being, the company has been trying to get the confidence of the outgrowers

1.Starting 2017, Out-growers will get additional income estimated at 844 euro each per year- from additional ½ hectare of land HHs will uses the facility of the company (coffee washing ) –A guaranteed buyer permits seed growers to focus on producing, rather than marketing their products –Access to original seed from the company, –Access to technical support in coffee and coffee seed production and improved agronomic practices leading to higher yields and productivity, –A peer learning process with other farmers participating in the outgrowing scheme. –Trustable and transparent business linkage will be built between the company and coffee seed and coffee growers – Value chain enablers will start providing the needed services to the coffee growers Economics

Financial efficiency The services of the company will be provided in finically viable way, except providing free seedling excess of the company plan The financial benefit of the company working with farmers basically diversify tractable supply sources.

Environmental issues The project will positively affect the environment: a.Coffee plantation will encourage protection of the exiting forest or plantation of new forests since coffee by nature requires shades. b.The new pulping/washing machine uses little water and it is environmentally safe. c.There is a plan to construct waste treatment plant

Gender The project gave good attention to women both on its farm and on the outgrowers’ scheme. 5 model women included as outgrower, more than 100 women working as a company employee. Out of its total project client (1560 farmers) 25% will be women. Except challenge activities like digging and bush clearing the company preferentially hire women.

Food Security Coffee being the main source of livelihood in the area, improving its performance will automatically have an impact on the food security of the community. ECO-Coffee planned to improve productivity, quality and marketing of coffee in the area which will enhance the income of the farmers. Having higher income means their purchasing power will be improved and can buy food crops from the market.

Entrepreneurship Extend the lesson from this project to other NTFPs like honey and spices; and add value to the coffee through roasting, grinding and packing.

Conclusions The technical aspect: Capturing the benefit of using the specialty coffee seed productivity improvement thorough recording the yield difference of specialty and normal coffee. The economic aspect : capturing the additional income smallholder will generate by using services of the company through Conduct assessment and document the pervious trend of coffee price and comparing sells of coffee immediately after harvest and wait some time until the price goes up. The environmental aspect : Actively engage environmental protection agency and stakeholders and confirm the impact of the new technology (The agency might uses the information to amend the regulation they issued / forbidding installation of additional pulping machine within 5KMs radius). The social aspect: Motivating women actively participates in the project and control the income generated at the end through selecting role model women, Organize a separate FGD session and encourage women by provide additional incentive

Learning questions The company wishes to draw lessons in order to (i) scale-up the approach & incorporate more outgrowers in the future, (ii) create synergy with stakeholders, and (iii) share the experiences to other development practitioners. 1.Make sure that outgrowing operations are appropriate to private company needs - improving the company competitiveness- diversifying the company supply sources) 2. Cost effectiveness of outgrowing operations and viability to scale-up with the company resources. 3. Level of participation, translating theoretical training into practices and avoid side-selling by outgrowers. 4. Knowing practical pros and cons of outgrowing operations and provision of credit to coffee growers.

Expected learning from this project …. 5.To know clearly productivity gains outweigh price gains for both; company and outgrowers. 6.Level of accountability, commitment and transparency needed to the success of the outgrowing operations from both sides. 7.Learn what factors contribute positively to enforcing contract requirements and avoid side selling To look in-depth how to establish long-term, mutually beneficial and growth –oriented relationship with outgrowers. 9.Level of involvement of company agents, top management and key stakeholders needed to make the scheme more successful.

Action plan: what to measure and how to organize this ? The company will measure, monitor and calculate in order to learn about those things that the company want to know: 1.Quality and quantity of coffee seeds and coffee supplied by outgrowers and coffee growers 2. Cost incurred and benefit generated 3.Yield calculation ( for coffee seeds and coffee), productivity increment, addition income gain 4.Credit repayment and supply increased due to this scheme 5.Monitor legal enforcement, accountability, commitment and transparency among stakeholders

Thank you

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