Fairtrade Strengthening Governance of Coffee Co-operatives
In the 1970s and 1980s, coffee was the leading export commodity for Kenya. By local standards, coffee growing areas were affluent with well-developed infrastructure. Children born in coffee growing households were assured of a decent education.
Coffee co-operatives were a government unto themselves. They owned large investments across all sectors of the economy. Kenya’s economy was growing at an average rate of 7%. Everything looked rosy until the coffee prices collapsed in the early 1990s.
Many coffee co-operatives could no longer afford to sustain their activities. Farmer deliveries were not paid, bank loans could not be serviced and workers not paid. This state of affairs, fuelled by corruption at national level led to collapse of many giant co-operatives. There was sustained looting of co-operative property as banks moved in to auction what was left to recover their loans.
Many farmers despaired and decided to pursue other profitable enterprises. For those who kept faith in coffee (often people too old to start other enterprises), they continued to suffer years of poor leadership and corruption. Production declined from 130,000 tonnes annually to about 55,000 tonnes in 2008.
Rising Above the Tide
Gikanda coffee co-operative in Nyeri County Kenya was Fairtrade certified in 2007.
Gikanda is made up of 3 primary societies with a total membership of 2,700 farmers. The co-operative had suffered years of mismanagement. The year prior to certification, Gikanda paid its member Kshs 30 (0.27 Euros) per kilo of cherry. There was also a lot of complaint about farmers being short changed on the actual volume delivered since recording was inefficient and subject to abuse.
The rigorous process of Fairtrade certification ensured that Gikanda had to put strong management and governance structures in place. Their business plan ensured that they make their services efficient and transparent. Decision making was made participatory.
The co-operative gradually registered increased returns to its members. In 2011, it paid an average of KShs 107 per kilo of cherry delivered. The cooperative has eliminated class 7 and 8 coffee since it joined Fairtrade. As a result, the coffee sells out fast during the coffee auctions attracting premium prices. In 2008, it was the best paying co-operative in the country. The co-operative also won recognition from a leading UK retailer for being a trusted supplier. The co-operative has also been able to improve its facilities. It now occupies a modern office building (probably the best in Kenya for coffee co-operative). The chairman Mr Muriuki attributes the success to responsive and accountable governance that his board has put in place.
Fairtrade premiums Use at Gikanda cooperative
Gikanda has invested its Fairtrade premiums in various projects. Thenge-ini primary school was rehabilitated in 2009. A local health center has been equipped as well as rehabilitation of coffee drying beds.