TRADE FOR DEVELOPMENT FAIR AND SUSTAINABLE TRADE IN UGANDA

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1 TRADE FOR DEVELOPMENT FAIR AND SUSTAINABLE TRADE IN UGANDA 1

2 CONTENTS UGANDA, THE PEARL OF AFRICA A history of Uganda The Ugandan Economy Coffee, the Black Gold of Uganda FAIR TRADE IN UGANDA What is Fair Trade? FAIR TRADE COFFEE IN UGANDA Ankole Coffee Producers Cooperative Gumutindo Coffee Cooperative Enterprise Mirembe Kawomera: Certified Fair Trade, Organic, Kosher and Halal coffee UNEX Union Export Services Ltd FAIR TRADE TEA IN UGANDA Mabale Growers Tea Factory Mpanga Growers Tea Factory Igara Growers Tea Factory Limited Kayonza Growers Tea Factory Limited FAIR TRADE FRUIT AND VEGETABLE MARKETING INITIATIVES IN UGANDA Fruits of the Nile: Sustainable and Fair Innovation Ndali Estate THE FAIR TRADE CRAFTS SECTOR IN UGANDA National Association of Women Organisation (NAWOU) Uganda Crafts 2000 Limited Bead for Life SUSTAINABLE TRADE INITIATIVES IN UGANDA Uganda Organic Certification Ltd. (UgoCert) KAWACOM The Bukonzo Organics Label NUCAFE, Global Cooperation Sustainable fishing on Lake Victoria Trees for Global Benefit Kampala Jellitone Suppliers OVERALL CONCLUSION

3 Managing Editor Carl MICHIELS COORDINATION Piezo - Samuel Poos (BTC) EDITING Dan AZRIA CONCEPT Julie RICHTER photo cover BeadforLife BTC, Belgian development agency, April All rights reserved. The content of this publication may be reproduced after permission has been obtained from BTC and provided that the source is acknowledged. This publication of the Trade for Development Centre does not necessarily represent the views of BTC. 3

4 INTRODUCTION In colonial times westerners considered Uganda to be the Pearl of Africa which was discovered while looking for the mythical sources of the Nile. The country boasted magnificent scenery, diversity of fauna and flora, fertile land, thriving plantations and prosperous farms. With so much to offer, at the time of its independence in 1962, Uganda seemed ready to face the modern world. But then war broke out. For more than 25 years, almost until the end of the 1980s, Uganda had to endure revolution, civil war, the bloody dictatorships of Idi Amin Dada and Milton Obote, ethnic and religious conflict, foreign invasion and armed rebellions. Once the Pearl of Africa, Uganda was reduced to one of the poorest countries in the world. Since 1986 and the political stabilisation of the country by Yoweri Museveni, matters have improved in Uganda, despite the persistence of unrest in the north. The economy is gradually recovering, as are the living standards of the inhabitants. Today, despite its geographical isolation, Uganda is enthusiastically embracing modernity and globalisation by developing high added-value activities to meet the emerging demands of large markets (organic farming in particular). Fair and sustainable trade is playing its role in this development project, as we shall see in this brochure. 4

5 UGANDA, THE PEARL OF AFRICA A HISTORY OF UGANDA The first kingdoms The first signs of human presence in the Great Lakes region of central Africa date back to the mists of time. From the 15th century onwards, large kingdoms appeared, each with a highly centralised political system covering very large territories. These included the kingdoms of Bunyoro-Kitara, Ankole, the Sese Islands and Buganda. The 17th, 18th and 19th centuries were marked by the expansion of the kingdom of Buganda, which took control of the main trade routes, including those connecting the Great Lakes to the Indian Ocean. Taking advantage of the declining power of neighbouring kingdoms, the kings of Buganda (the most famous being Kabaka Suna, Kabaka meaning King ) subjugated the tribes of these kingdoms, conquered their lands and assimilated their populations. Thus, Buganda, a minor kingdom at the start of the 17th century, was, by the start of the 19th, the major regional power in the Great Lakes region. It is from this time that historians began to assimilate the history of Buganda with that of Uganda. The pre-colonial period The first remote outsiders to enter the kingdom of Buganda were Arab merchants who were welcomed at the court of the Kabakas from about They were followed in the 1860s by the first British explorers searching for the sources of the Nile. These included Richard Burton, John Speke, James Grant and Henry Morton Stanley. Then came other adventurers from all over Europe, attracted by this huge country with its magnificent and fascinating scenery and advanced political system. It was Sir Winston Churchill who named this kingdom the Pearl of Africa. The permanent presence of Europeans in the country dates from with the arrival of first Protestant, and then Catholic missionaries, who embarked on a vast campaign of evangelisation, first in Buganda, then in the smaller neighbouring kingdoms. But the actions of the Christian churches clashed with the more ancient presence of the Arab traders and the Muslim Swahili who resented the conversion of the local populations. Unlike his subjects who converted en masse to Catholicism or Protestantism, Kabaka Mutesa showed no intention of turning to any of the monotheist religions introduced by Arabs and then by Europeans. The organisation of the kingdom and the history first of Buganda and later of Uganda were to be deeply affected by this religious element, which would be a major factor in the outbreak of civil wars between 1889 and

6 From post-colonial crises to the present Tensions increased between the Nilotic populations of the north, who were opposed to Buganda s economic and political domination of the whole country, and the Bantu populations of the south. In May 1966, Milton Obote, the Prime Minister, who came from the north of the country, sent the army into Buganda to impose central rule. With the help of his chief of staff, Idi Amin-Dada, who came from the Muslim minorities of the north-west, Milton Obote deposed the king, Kabaka Mutesa II, promulgated a new constitution which abolished the kingdoms and instituted a presidential regime. Colonial Uganda As a rival of Germany for control of East Africa, Great Britain sent the military to intervene in the kingdom of Buganda and end the ethnic and religious conflicts tearing the country apart. In 1894, Kabaka Mwanga, son of Mutesa I, signed a British protectorate agreement formally incorporating the kingdom into the British colonial empire. With the signing of a second agreement in 1900, known as the Uganda Agreement, Buganda and the smaller neighbouring kingdoms subjugated by the British Army were unified under the name of Uganda. Decolonisation Despite the strong presence of Catholic and Protestant missionaries, Uganda never had large British or European communities. The years between the signing of the protectorate agreement and the first demands for independence were marked by the emergence of a prosperous peasant class and the development of agriculture in the country. As in many countries subject to colonisation, the independence movement emerged after the Second World War. In 1953, Kabaka Mutesa II was exiled to London for three years for having expressed a desire for independence. The negotiations leading to an independence treaty were long and difficult, but on 9 October 1962, Uganda was recognised as an independent state. Very soon afterwards, problems arose concerning the political and territorial organisation of the new country. In 1971, Idi Amin Dada took power after a bloody coup. He increased the military, massacred his political opponents and instituted a reign of terror among both the Baganda ethnic majority in Buganda and the Nilotic populations of the north. The number of victims of his bloody regime is estimated at 200,000 men, women and children. As the country verged on the brink of bankruptcy, the Ugandan government obtained financial aid from the Arab states allied to Amin Dada. In November 1978, in response to Ugandan incursions into its territory, the Tanzanian army entered Uganda, supported the Ugandan rebellion and forced the dictator Idi Amin Dada to flee to Saudi Arabia. However, despite the re-establishment of a civil regime in Uganda and the departure of Tanzanian troops, the unrest continued. Three presidents succeeded each other within the space of a few months, before Milton Obote returned to power to exercise a presidential regime that was even more bloody than those of his predecessors. At the start of the 1980s, the country was in a disastrous situation. Inflation was soaring, a terrible famine was decimating the population of the north, opposition was being brutally repressed, and armed rebels in the north (former supporters of Amin Dada) and in the south (the National Resistance Army) opposed the government. In January 1986, Yoweri Museveni, leader of the National Resistance Army, came to power in Uganda and set about rebuilding the country, which had been severely weakened by the years of conflict and unrest. The new government undertook numerous reforms that set the country on the road of development. Economically, the situation has improved considerably (stabilisation of inflation, sustainable growth, etc.) but the situation remains difficult with the persistence of violent rebellion in the north, where the Lord s Resistance Army, supported by Muslim Sudan, imposes a reign of terror. Politically, a multi-ethnic government of national unity was established, and endeavoured to stabilise the balance of power between the former kingdoms. 6

7 THE UGANDAN ECONOMY Until its independence in 1962, Uganda was often regarded as one of the jewels in the crown of the British Empire, in particular for its highly developed agricultural sector. Over a long period, both Buganda and the peripheral kingdoms appeared to be models of rural prosperity, thanks to a dynamic peasant farming class and a highly productive agricultural system, especially in the coffee and tea sectors. But 25 years of dictatorship and civil war completely ruined the country, making Uganda one of the poorest countries in the world. It would have to wait until the end of the 1980s to re-establish its economic potential and set out on the road to development. Today, despite major geographical disparities (the north-east of the country continues to suffer from ethnic and sectarian violence), Uganda is experiencing remarkable growth (about 10% per year), largely due to a skilfully managed economic policy. In fact, since the assumption of power by Yoweri Museveni in 1986, Uganda, despite its geographical isolation, has opened up to foreign investment and has encouraged significant immigration, particularly from India. An essentially agricultural economy The main sector of activity in Uganda is still agriculture. With an ideal climate, fertile soil and large tracts of arable land, agricultural activities concentrate on the production of coffee, tea, cotton, sugar cane, fruits and vegetables. Today, agriculture employs almost 80% of the country s manpower and provides the bulk of foreign currency. Fishing For a long time, Uganda had great potential to develop fishing on the shores of the immense Lake Victoria and Lake Albert, in particular for Nile perch, but the dramatic reduction in fish stocks and the appearance of major ecological problems in these waters are now threatening this potential and are calling for new fishing practices. Under-exploited raw materials Underground oil deposits were discovered in 2006 in the Lake Albert region. As a result of the major investment made to allow their exploitation, the first barrels should come on to the market in 2010 (between 6,000 and 10,000 barrels a day) 1. In addition, mineral resources have been discovered (copper and cobalt in particular) but remain largely un-exploited. These discoveries could contribute to accelerating foreign investment in terms of infrastructure. Industry, trade and services The large industrial sectors and the main trading companies in the country are largely owned by extended families of Indian origin. These groups, which contribute significantly to the dynamism of the national economy, also have a significant presence in many service industries (tourism, finance, insurance, etc.). And now the financial crisis has arrived Overall, the Ugandan economy has performed fairly well in the face of the financial and economic crisis that began in the summer of With a growth rate of almost 7% in 2008, the country has been able to withstand the international economic turmoil and regional political instability. While national growth has hitherto been driven by agricultural activity, the latest growth figures have highlighted stagnation in this sector and strong growth in the service and industrial production sectors. But the political crisis in neighbouring Kenya, the exhaustion of fish stocks and the recent changes in oil prices should result in a fall in this growth, which is still estimated at about 6% for 2009 and

8 COFFEE, THE BLACK GOLD OF UGANDA A little history At the start of the 20th century in Uganda, Europeans discovered the virtues of Coffea canephora, the coffee plant variety that produces one of the most highly regarded coffees in the world, robusta, whose beans contain twice as much caffeine as those of arabica. The special properties of this magical plant had been known for a long time on the African continent. Consumed since the dawn of time by the local populations of East Africa, coffee was used especially in traditional medicine and in religious practices and rituals. In the kingdoms of Buganda, Ankole and Bunyoro (which form the present Uganda), coffee was considered a luxury and was used widely in grand ceremonies, marriages and rituals. From the 18th century, coffee became a colonial product, similar in stature to sugar and spices, trade in which was to constitute one of the pillars of the slave trade at first, and of colonial oppression later. Max Havelaar was the name of the eponymous protagonist in a novel published in Holland in 1860, which recounts the terrible working conditions imposed by Dutch colonists on indigenous populations working on coffee plantations on the island of Java. Throughout the 19th century, the number of these plantations increased in the majority of the colonial territories located between the Tropics of Cancer and Capricorn. 8

9 The coffee economy From the end of the 1980s, the world coffee market underwent a major structural crisis, which profoundly affected the populations and production structures of all the producing countries. Supply greatly exceeded demand and there was a sudden fall in coffee prices, which by 2000 had fallen to their lowest ever levels. The World Bank estimates that at this time, coffee producers lost an average of USD 4.5 billion a year. In Africa and Central America, this crisis severely weakened national finances that were largely dependent on exports of raw materials, and the governments of these countries were forced to make drastic cuts in social programmes and the fight against poverty, to the detriment of millions of coffee planter families. The end of the International Coffee Agreement in 1989 marked the beginning of the crisis. Many factors were involved: the failure of production growth strategies imposed by the IMF on the producing countries, the intervention of coffee multinationals (including Nestle, Philip Morris, Kraft, etc.) that stored large quantities to keep prices as low as possible, and the fall in consumption in wealthy countries 3. With competition from Colombia, Brazil and Vietnam, the African producing countries were among the first victims of this crisis. Poorly organised, the production sectors proved unable to adopt common positions and to make themselves heard by the major players, in particular in international negotiations. From 2005, the situation improved and the price of coffee returned to a more acceptable level for the producers. But this crisis illustrated the volatility of prices and the need to set up a stable and fairer system. 9

10 FAIR TRADE IN UGANDA WHAT IS FAIR TRADE? Fair trade was born out of a simple observation: the gap in wealth between the populations of the richest countries and the poorest countries is not getting any narrower despite the amounts invested in development aid. In less than a century, the difference in income between the top 20% of the richest countries and the bottom 20% of the poorest countries has changed from 11:1 (1913) to 75:1 (now). Wars, natural disasters, failing infrastructures, and corruption are among the causes of this imbalance; however, basic structural economic problems also play a major role. Speculation in raw materials, the debt spiral, subsidised competition from producers in the North; all these mechanisms constitute obstacles to the sustainable growth of the poorest countries that are unable to control their development. Although these commercial inequalities have been apparent since the 19th century (in particular with the publication in 1860 of the novel Max Havelaar by the Dutchman Edouard Douwes Dekker), it was only in the post-war years that the first fair trade project appeared, promoted by US and British organisations (Ten Thousand Villages in the US and Oxfam in the United Kingdom). 10

11 In 1999, the main international organisations for fair trade (World Fair Trade Organisation, Fair Trade Labelling Organisations (FLO) and the Network of European Worldshops agreed on a common definition: Fair trade is a trading partnership, based on dialogue, transparency and respect that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalised producers and workers especially in the South. Fair trade organisations, backed by consumers, are actively engaged in supporting producers, awareness-raising and campaigning for changes in the rules and practices of conventional international trade. To support the implementation of this economic system, these organisations created a list of 10 main principles to be respected: Creating opportunities for economically disadvantaged producers. Transparency and accountability. Capacity building. Promoting fair trade. Payment of a fair price. Ensuring gender equity. Providing decent working conditions. Preventing child labour. Protecting the environment. Encouraging trading relations based on trust and mutual respect. In practice, fair trade guarantees producers in the poorest countries more remunerative purchase prices than world prices as well as relative price stability and the establishment of favourable payment periods and terms (and the possibility of advance financing), which means peasant farmers and craftsmen are no longer obliged to virtually give away their products or resort to loan sharks. The fair price is negotiated. It must cover all production costs, including environmental costs, and must guarantee the producers a decent standard of living. In addition, fair trade purchases normally undertake to support social programmes (literacy, access to education and health care, etc.) and support production investment by the producer organisations. 11

12 FAIR TRADE COFFEE IN UGANDA The history of fair trade is inseparable from the history of coffee. With the crisis of the 1990s, which affected the living standards of millions of small producers in many poor countries, the benefits offered to this sector by the principles of fair trade soon became abundantly clear. Higher and guaranteed purchase prices, premiums for social development, assistance with production investment, advice and training these were all fundamental components of the coffee fair trade system which helped to alleviate the difficulties of these producers and to organise themselves in order to face the risks presented by the world coffee organisations to small-scale farmers in poor countries. 12

13 ANKOLE COFFEE PRODUCERS COOPERATIVE Combined with the world crisis in agricultural raw materials in the 1990s, the liberalisation of the coffee market in Uganda caused major upheavals in the production, management and marketing of tea and coffee, the main production sectors of the country; this often went to the detriment of the state-controlled organisations inherited from the post-colonial era. Many of these mammoth organisations found themselves unable to repay their debts and went bankrupt due to their inability to adapt to market changes and the demands of international buyers. Such was the fate of the Banyakole Kweterana Cooperative Union Limited (BKCU), one of the largest cooperatives producing robusta coffee in the southwest of Uganda, which went bankrupt in At first, the small local producers that depended on the cooperative had no other choice but to turn to other intermediaries to provide the centralised collection and marketing of their harvests on the international markets, the majority of which operate in the form of auctions, usually held in Mombassa, Kenya for the East African countries. Farmers from the Bushenyi district therefore turned to UNEX, a specialist Ugandan marketing agency that takes commission on sales for its management and brokerage services involving foreign buyers. In the meantime, the producers of robusta coffee in the region received support from several fair trade organisations, including CoffeeDirect, which set up a Producer Partnership Programme in 2000 to support local producers in their reorganisation projects and to train local farmers. About ten local groups totalling some 4,000 producers that received fair trade certification at the end of the 1990s decided to set up a new intermediate cooperative, smaller and more flexible than its predecessor, and called it the Ankole Coffee Producers Cooperative Union Limited (ACPCU), using the name of the former kingdom incorporated into Uganda at the start of the 20th century. By organising themselves in this manner, these producers demonstrated their intention to be masters of their own destiny, to take on the role previously performed by the intermediate marketing agency and to create employment, by keeping value-added activities at local level. Supported by international fair trade organisations, including CoffeeDirect (one of the main central purchasing organisations for fair trade coffee, which immediately undertook to buy future harvests and pre-finance certain investment), the cooperative underwent rapid growth. As John Nuwagaba, the general manager of ACPCU, testifies: CoffeeDirect has given us a lot of help since our creation in They buy our coffee at a very good price, and the premium has allowed us to carry out many projects. As from the second payment, the fair trade premium has allowed growers to make provision for educating their children. Our members have developed a genuine culture of solidarity and the cooperative has been recapitalised. We have also been encouraged and supported in development of the cooperative and in our negotiations with strategic partners. So many good things 4. 13

14 The premium paid by CoffeeDirect has allowed some very practical projects to be implemented to the benefit of the whole community: Construction of a communal dwelling house and a library at Kashekuro Renovation of Kihumuro primary school and the headmaster s house Repair and renovation of four other village schools The cultivation of new seedlings Repair of a bridge With the support of its partners, the Ankole Coffee Producers Cooperative Union has also recruited two people to manage the cooperative and undertake commercial negotiations with international buyers. The project for conversion to organic farming Since the end of 2008, the newly-formed cooperative has started an organic certification procedure for its produce and processing procedures with the help of international funding. The fact that the robusta coffee plant has few natural predators and requires very little fertiliser made this project so much easier to implement. The ACPCU coffee producers use natural soil-enrichment methods and virtually no pesticides or herbicides. The arable land is fertilised using banana leaf compost and manure from the cattle that wander freely among the plantations. Pesticide is also produced naturally using extracts of the Bird s-eye pepper, a plant that grows among the coffee plants. The coffee trees are surrounded by banana trees, yams, bean plants and other food crops, which enrich the shaded soil. Set up in January 2009, this programme for converting to organic farming is particularly ambitious. In fact, it is designed to allow the 4,000 producers of the cooperative to supply up to 800 tonnes of fair trade and organic certified coffee starting from The managers of the cooperative also hope that the increased revenue generated by sales of this very high quality coffee will lead to new producers joining the programme and current members increasing their production of organic fair trade coffee. To achieve these results, the managers of the Ankole Coffee Producers Cooperative Union have some major resources at their disposal. Some 13 personnel have been recruited, a coordinator and 12 field officers, who are assigned to each of the 10 village associations comprising the cooperative. Trained by experts from the National Organic Agricultural Movement of Uganda (NOGAMU), these field officers roam through the plantations on bicycles, checking the growth of young plants and advising the growers. This programme, which is implemented over three years, aims at certifying at least 95% of the producers in the cooperative. Developed with the support of Agriterra, a Dutch NGO that supports rural communities, the economic model for this programme is quite remarkable. The total budget for the organic conversion of the cooperative, amounting to some EUR 160,000 over three years, represents an estimated cost per direct beneficiary (bearing in mind that the average farming family consists of 7 persons) of about two euros a year. To find out more: 14

15 GUMUTINDO COFFEE COOPERATIVE ENTERPRISE (BTC PARTNERSHIP) Established in 2000, the Gumutindo Coffee Cooperative Enterprise was created out of the remains of the old Ugandan cooperative system. In fact, since the 1960s, Uganda, like most of the African countries, organised its agricultural production around huge associations of cooperatives whose ponderous structures were largely dependent on the State. The liberalisation of the Ugandan coffee market in the 1990s saw the emergence of new organisations that were able to organise their production and their marketing activities themselves, to the detriment of the old Bugiso Cooperative Union (BCU), which had until then dominated coffee production but had not been able to adapt to this new system. With its hundreds of thousands of affiliated producers, the BCU represented the very archetype of the African production structure that centralised the marketing of hundreds of basic cooperatives, known as Primary Societies. But this system, which was very inflexible and too state-controlled, could not adapt to the international coffee crisis at the start of the 1990s. These mega-cooperatives proved incapable of meeting the demands of the wholesalers and foreign importers who appeared on many African markets following the move to liberalisation. The Gumutindo ( Good farmer in the Bugisu language) cooperative was created by four of the most active and transparent Primary Societies in the BCU, with the objective of producing high-quality coffee that could be sold at the best price. Set up in 2000, with the technical support of TWIN, a British fair trade NGO, and the financial support of alternative funds such as Shared Interest, the Gumutindo cooperative, which on creation comprised some 3,000 producers formerly affiliated to the BCU, was quickly joined by other basic cooperatives wanting to benefit from the mutual structures of this intermediate organisation. 15

16 This initially involved rationalising production, organising transportation and creating small processing units that were responsive to market changes. However, the cooperative managers quickly realised that in order to survive and expand, they had to learn how to control the whole sector, from production to exportation. Accordingly, they set up the Gumutindo Coffee Cooperative Enterprise in 2003 and obtained fair trade certification the following year. With the support of the Gumutindo Management Agency, an internal consultancy specialising in certification and marketing, all the products of the affiliated farms are now certified organic or are undergoing such certification. These farms are located in the Mbale district, in eastern Uganda, close to the Kenyan border, on the slopes of Mount Elgon, an extinct volcano and the highest mountain in the country. The subtropical climate and the fertile volcanic soil are an ideal environment for coffee production. Banana and other specially chosen fruit trees are planted among the coffee trees, as well as bean plants or maize. Research is carried out with the assistance of experts to achieve the best balance between the vegetable species, and anti-erosion techniques are employed to obtain the best possible yields without harming the environment. Today, the Gumutindo Coffee Cooperative Enterprise consists of 6 large village cooperatives: Busamaga (422 farmers), Bumayoga (428 farmers), Buginyanya (690 farmers), Nasufwa (553 farmers), Konokoyi (745 farmers) and Peace Kawomera (976 farmers). Thanks to the fair trade system, these farmers benefit from pre-financing of their harvests. The basic cooperatives deliver their produce to the central store at Gumutindo where it is bagged in 60 kg sacks and stored in the cooperative warehouses before being transported to the port of Mombasa in Kenya for exportation to Europe and the United States. The list of collective initiatives carried out by the Gumutindo cooperative under the fair trade system is impressive: the purchase of new warehouses and modern offices in 2006, conversion of farms to organic farming, expansion of the clinic, construction of three primary schools and a secondary college, establishment of two local health centres, electricity supply to the villages, to name but a few. The fair trade importers, such as Cafedirect or Equal Exchange, pay the Premium price for the coffee produced by the Gumutindo cooperative, which is considered excellent. The growers are actually paid USD 2.70 a kilo, while the average price on the world market has been USD 1.6 a kilo for the last six years. Difasi Namisi, a producer affiliated with Gumutindo, says: The money I received from the premium (Fair Trade Premium) last year has allowed me to pay for sending my daughter to school. I have told my friends and my children we must devote our time to producing coffee of a very high quality. And since the other farmers have seen us receive this premium, they are trying to imitate us and quality is improving. This recognition of the quality of the product constitutes one of the characteristics of the Gumutindo system, which strongly encourages its affiliated farmers to commit themselves to this concept, to accept the fact that it is the excellent quality of the product that justifies its high purchase price. Lydia Nabulumbi, quality manager of the Gumutindo cooperative, runs the technical laboratory, advises and trains the producers of the basic cooperatives, and manages the tasting rooms. As she explains, the work consists of making the farmers aware of the fact that they must produce coffee of excellent quality to obtain a good price and increase their income and the living standards of their families. The support of the Trade for Development Centre BTC s Trade for Development Centre (TDC) supports the promotion and marketing activities of the Gumutindo cooperative in order to increase the value of its production, in particular to importers and European and US consumers. The project which the TDC supports in cooperation with the British fair trade NGO Twin, which provides technical assistance, is designed to develop a new range of high-quality products and to support the promotion and marketing of this new gourmet coffee. This project is implemented over two years. In the first year, priority was given to identifying currently existing coffee varieties and finding specific commercial opportunities in the different target markets. Sales aids will be developed and an initial series of contacts is to be made to bring about the first pilot sales. The second year is devoted to the deployment of the marketing initiatives for the products in the range of Gumutindo gourmet coffees with the intention, on the one hand, of consolidating commercial relations established with the initial buyers in the form of sustainable partnerships and, on the other hand, of developing a larger clientele by contacting new purchasers. This project benefits from funding from the Trade for Development Centre to the amount of EUR To find out more:

17 Joab Jonadav Keki, Initiator of the project MIREMBE KAWOMERA: DELICIOUS PEACE CERTIFIED FAIR TRADE, ORGANIC, KOSHER AND HALAL COFFEE Surprisingly, the history of the Mirembe Kawomera cooperative has it is roots in the distinctive religious history of Uganda. In 1919, while the British Protestant missionaries were involved in vast movements to convert the local populations, Semei Kakungulu, a charismatic warlord from the town of Mbale and an ally of the British, was given a Bible by a missionary. History recounts that after reading the Holy Book, Kakungulu, who had worked alongside the British colonists since childhood in the hope of becoming the Viceroy of Buganda, eventually concluded that he agreed more with the teachings of the Old Testament than those of the New Testament. In that case, he was supposedly told by a missionary, you re not Christian, you re Jewish. Semei Kakungulu, now abandoned by the British occupiers who were beginning to find him a nuisance, decided to declare himself Jewish and was converted along with his 3,000 subjects and their families. For several years, the new community strived to follow the dictates of the Torah without having any direct contact with the people of Israel. It was not until 1926 that Semei Kakungulu met a Jew for the first time, a merchant at Kampala, who taught him the rites and practices of modern Judaism. This community, which took refuge in the region of Abayudaya, constitutes the only instance of an endogenous Jewish religious community in history. Although surviving the death of their historic leader, the people of this community suffered many difficulties, in particular during the tyrannical regime of Idi Amin Dada, who persecuted its members with bloody repression, forcing a large number of them to convert to Islam or Christianity. By 1979, only 300 remained, but with the help of the state of Israel (which nevertheless found it difficult to recognise this very unique community) and of the international Jewish diaspora, the community was revived and received religious recognition and the support of Israeli and American rabbis. 17

18 THREE COMMUNITIES, ONE PROJECT At the start of the new millennium, Joab Jonadav Keki, the leader of the Jewish community in the Mbale region, and also a farmer and musician, decided to visit all the producers in the region on foot, regardless of their religious persuasion, in order to find a communal solution to the crisis that was threatening the coffee sector. This worldwide crisis of overproduction has profoundly affected the standard of living of Ugandan producers. Some among them even had to sell the land they had been cultivating for decades or take their children out of school to make them work on the plantations. Our most serious problem is religious, said Joab Jonadav Kek 5, who highlighted the strong tensions existing between the communities, in particular since the time of Idi Amin Dada, during which the Jews were held in contempt, bullied and publicly denounced as killers of Christ by the Christians and as forgotten by God by the Muslims. The words of conciliation and tolerance spoken by Joab Jonadav Keki bore fruit and in 2002, he was elected to the Council of the Sub-County of Namanyonyi with the support of the three religious communities who recognised him as a credible leader. Then in 2004, after long collective discussions, the cooperative of Mirembe Kawomera ( Delicious Peace in Luganda, one of the Ugandan languages) was created with the objectives of bringing the communities together and contributing to their development. We had long discussions, recounts Joab Jonadav Keki, concentrating on what brought us together. We looked for all these common points in our holy books. For example, we recognised the fact that we all greet each other with the word Peace : Shalom, Salaam, Mirembe. I m buying everything, i want the whole story Once these common values had been recognised and accepted, an economic project had to be constructed and new markets had to be found. The new cooperative received many offers of support, in particular from the American singer, Laura Wetzler, who since the mid-1990s had been interested in the traditional Hebrew-African music of the Ugandan Jewish community. With her help, the Mirembe Kawomera cooperative obtained the support of the CEO of the Thanksgiving Coffee Company, Paul Katzeff, who undertook to buy the production of the cooperative at a price about 30% higher than the market price and to support it in its certification process. I m buying everything, said Paul Katzeff, All or nothing, I want the whole story. I want to bring this story to the world. The Mirembe Kawomera cooperative, which today numbers more than 1,000 small producers and their families, is itself part of the bigger Gumutindo cooperative. The three main religious communities are represented on the Executive Board: the current chairman is Jewish, the vice-chairman is Christian and the treasurer is Muslim. 18

19 Now we are hoping to make our cooperative a model for development projects between the communities, explains Joab Jonadav Keki Adding that we hope other cooperatives will commit themselves to this model of peaceful coexistence. Together we can live much better. You cannot imagine the harmony and peace which now reign in our large community since the creation of the cooperative. DOUBLY CERTIFIED: ORGANIC AND FAIR TRADE The mild arabica variety grown by these farmers on the slopes of Mount Elgon is certified fair trade, organic, kosher and halal. Although relatively small in terms of quantity (about 50 tonnes), the production of the Mirembe Kawomera cooperative is recognised for its quality, mildness and flavour. As a result of its fair trade and organic certification, the sales of coffee by the cooperative not only provide more reasonable remuneration for the producers but also allow the cooperative to reinvest part of its revenue in social and economic development projects, the training of growers and the setting up of sustainable projects. Fair trade certification also guarantees producers access to credit and advance payment for part of their production before harvesting. So, over the last few years, the members of the cooperative have together established a dynamic community and implemented a whole range of practical initiatives to help the farmers and their families, including the construction of schools, access to drinking water and the provision of electricity in the villages. To find out more: 19

20 UNEX - UNION EXPORT SERVICES LTD. Born out of the remains of the old monopoly held by the Coffee Marketing Board, Union Export Services Ltd. (UNEX) is an export company that manages the marketing of the coffee productions of many Ugandan producer organisations. UNEX was labelled Fair Trade by FLO-CERT for the favourable commercial terms it offered to its groups of producers, in particular relating to the purchase price and prefinancing of sales. This system allows the growers to be paid on delivery of their production, without having to wait for it to be sold at the auctions in Mombasa. Today, UNEX is one of the main commercial representatives of fair trade importers who do not wish (or are unable) to work directly with the cooperatives and the groups of coffee producers. To find out more: 20

21 FAIR TRADE TEA IN UGANDA With an estimated production of 35,000 tonnes in 2007, Uganda is the 8th largest tea producer in the world 6 and the 3rd largest in Africa. Unlike coffee and cocoa, tea is sold exclusively by way of private transactions or auctions held in Mombasa, Kenya for the whole of East African production. There is no futures market for tea. Aware of the structural advantages of the country in terms of agricultural production (fertile soil, low consumption of artificial fertilisers), the Ugandan government committed itself to boosting the sector by mobilising significant investment, in particular in processing activities (drying, etc.) and sector organisation projects. This proactive approach of the Ugandan authorities to enhance the value of production is also reflected in the support provided for the creation of a certified organic sector and the welcome given to fair trade organisations. As an example, TraidCraft, one of the leading British fair trade tea importing organisations, buys mainly from production cooperatives in Uganda that benefit from advantageous terms guaranteed by the fair trade system. A legacy of the post-colonial era, the previously state-owned tea processing plants have gradually become the collective property of the small producers who have become willing participants in the development of fair trade in Uganda. 21

22 MABALE GROWERS TEA FACTORY Created in 1994 in the District of Kyenjojo, the Mabale Growers Tea Factory Ltd cooperative consists of more than 1,000 small growers who have come together to collectively manage a cooperative industrial site for their production of green leaf tea. The main varieties cultivated are Broken Pekoe, Pekoe Fannings and Pekoe Dust. Located at the heart of one of the main growing areas in Uganda, on the slopes of the Rwenzori Mountains (also known as the Mountains of the Moon), near Fort Portal, one of the main urban areas in the west of the country, this cooperative production site today consists of a processing plant, two large tea plantations and one eucalyptus plantation that provides the fuel for the plant s furnace. Originally built in 1969, the whole site was formerly managed by Ugandan government departments but was abandoned during the regime of Idi Amin Dada. It was only in the 1990s, when the government launched its Smallholders Tea Programme, that the site was taken over, renovated, restored and privatised in favour of an association of 950 shareholders, mostly owners of small plantations (less than two hectares on average) that supply the plant. 22

23 Collectively owned by the association of tea planters, the Mabale site today employs more than 100 permanent and as many temporary workers, who essentially perform the activities of drying, processing and bagging the tea, while the plantations at Nyamasoga and Mparo, also owned by the cooperative, support more than 100 staff. With the exception of production destined for the fair trade sector or (a very small proportion) for the local market, most of the tea processed on the site is sold to international buyers at the Mombasa auctions in Kenya. The Mabale Growers Tea Factory cooperative works in close collaboration with its sister cooperative, the Mpanga Growers Tea Factory, which operates on a similar basis. In this rural region of Uganda, where the agricultural sector is the main provider of employment, these two cooperatives provide a significant proportion of the available development opportunities to the local population, mainly small farmers, the majority of whom are just about able to support their families. Despite an environment that is very favourable for agriculture, the region is poor and villages with electricity are rare. Most of the population does not even own a bicycle. The cooperative site therefore plays a fundamental role in the local economy. Effectively, it offers producers commercial outlets that are all the more attractive because they form part of the fair trade system. In fact, not only are member producers remunerated at a price per kilo of about 25% above the market price, but this purchase price is guaranteed over time and forms part of the contractual relations between the producer and the cooperative, which provide for the purchase by the latter of the whole harvest (providing the quality remains constant). In 1997, the Mabale Growers Tea Factory cooperative became Fair Trade certified. The benefits of this certification were very quickly reinvested in the production system, with the installation of modern production lines, the construction of roads and the organisation of training courses for the producers. This virtuous circle led to an improvement in quality and to an increase in the sale prices at the auctions, and therefore to an increase in revenue, most of which was redistributed to the shareholding producers. Only a small part of production is sold through the fair trade circuits (less than 5%), but the premium paid by the importers in the fair trade sector constitutes a major contribution for the site, the cooperative and its members. This fair trade premium system is an additional amount calculated on the basis of the volume of sales in the fair trade circuit and is systematically reinvested in production investments or to support collective economic and social projects. A special committee consisting of elected representatives of the shareholders and workers decides how to use these amounts. Silver Kasoro-Atwoki, a grower and member of the committee, says: Thanks to the fair trade system, we have considerably improved the quality and quantity of our tea production. We have opened new roads in the region, built a health centre and added a new building to the secondary school. Fair trade is making a very significant contribution to the social development of our community and allows us to look forward to a better future for our children 7. In 2008, the Mabale Growers Tea Factory cooperative factory was the first Ugandan tea processing plant to be HACCP certified (Hazard Analysis Critical Control Point). This certificate, which validates the methods and principles of health and safety management used in the plant, confirms the intention of the cooperative to commit itself to a quality control system for its products. To find out more:

24 MPANGA GROWERS TEA FACTORY Located in the District of Kabarole in western Uganda, the Mpanga Growers Tea Factory processing plant is one of the four sites (along with Mabale, Igara and Kayonza) that formerly belonged to the Uganda Tea Growers Corporation (UTGC), an organisation created by the public authorities in February Originally built between 1971 and 1976 to process the harvests of local producers and provide them with a wide range of services, these large industrial sites suffered a long period of neglect and deprivation during the Amin regime. The plant only began proper operation in 1988 under the aegis of the UTGC. In 1995, immediately after the liberalisation of the tea and coffee markets in Africa, the Mpanga site was privatised in favour of the local producers who jointly acquired shares in the new organisation, which took the name of Mpanga Growers Tea Factory Limited. Supported by the European Union, the process of liberalisation launched in the 1990s by the Ugandan state was clearly aimed at encouraging small producers to invest in collaborative projects, to develop their production and mutualise their investments. Since 2000, the 200,000 shares in the company have been fully owned by some 500 local producers who have adopted a cooperative type organisation headed by a Board of Directors who are elected at the General Meeting of Shareholders and who are all tea growers. With more than 460 workers employed directly by the company on the site or in the production areas, the Mpanga Growers Tea Factory Limited directly supports about 4,700 people. 24

25 Besides its processing plant, the Mpanga Growers Tea Factory Limited owns four tea plantations, which are in addition to the growing areas owned individually by the shareholder farmers, giving a total of some 1,300 hectares (of which 16% belongs to the company). Like its sister organisation at Mabale, the Mpanga Growers Tea Factory sells its processed production on three markets: sales to international buyers at the Mombasa auctions in Kenya, the local market and the fair trade sector. Although the latter accounts for only 2% of sales, it represents far more for company management, who want to develop this type of sales. When Martin Odoch, one of the managers of Mpanga Growers Tea Factory Limited, was invited to the Fair Trade Fortnight in Devon, England, he pointed out that On the tropical slopes of the Rwenzori Mountains, the tea producers who own Mpanga Factory harvest and process more than just tea. We process our harvests with the greatest care and we market it with a smile because we know that thanks to fair trade, we will not suffer sleepless nights wondering whether the market will reward our efforts by offering us a reasonable price. I would really like to emphasise the importance we attach to fair trade consumers, because it is thanks to them that our producers can continue smiling in Uganda. 8 The premium paid by fair trade importers, including CoffeeDirect, has in particular allowed a number of production investments to be made on the Mpanga site, including the purchase of a modern industrial bagging machine and the construction of a canteen and toilets for workers on the site. But the main benefit for the Mpanga Growers Tea Factory of its favoured relations with customers in the fair trade sector involves the adoption and implementation in 2006 of the HACCP system, which defines the international standards for health and safety in the farm produce industry. Implemented as part of the CoffeeDirect Producer Partnership Programme, the adoption of the HACCP standard has greatly benefited workers on the site (who now have new toilet facilities and better working conditions), but, above all, it has contributed to increasing the quality of the finished product while offering important guarantees to all company customers (in particular British importers). Considering the characteristics of the international tea market, this type of initiative makes a real contribution to increasing the sales price of the product, thereby guaranteeing continuous quality at international level. A holder of a Food Hygiene Certificate awarded under the project, Patrick Tiberondwa, one of the production managers, says: The introduction of the HACCP system and BRC (British Retail Consortium) food standards and the training carried out has allowed us to improve all the production processes, resulting in a better quality tea. 9 To find out more:

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