How data is empowering cooperatives to transform the Ugandan coffee industry
In the world of coffee, data is becoming a game-changer, revolutionising the way cooperatives operate and attracting new opportunities for growth. Our partner in Uganda, the social enterprise Ndugu, first looked at data as a mere precondition for contracts with cooperatives, but soon realised its untapped potential. Today, they work to democratise the data process and increase visibility of farmers beyond the coffee supply chain.
Meet Ndugu, our partner in Uganda working with cooperatives to make the coffee sector a sustainable haven for everyone involved. Coffee, Uganda’s number one export product, not only fuels our caffeine cravings but also supports millions of households across the nation. Yet, the intricate web of intermediaries and fluctuating prices has hindered farmers’ livelihoods, threatening the entire industry’s potential. That’s where Ndugu steps in, empowering cooperatives with data to reshape their futures.
As incentives in the background, are new standards such as the EU Deforestation Regulation, mandating traditional coffee traders to ensure traceability, solidifying the need for data-driven supply chain operations. Eyeing the Premium prices and other incentives aimed at supporting this transition, Ndugu works with cooperatives to turn the increased demand for traceability and certifications – both feeding on quality data – into concrete market advantage.
Ndugu’s director of operation, Bless Agume’s shares in this article their robust structure to optimise the way data is governed within the so-called ‘super cooperatives’. Consisting of smaller cooperatives with similar backgrounds around the Ugandan district Masaka, their network provides support to 6,400 farmers – and that’s only in their second year of operation. With traceability in place, super co-ops’ data are now visible to business partners through Fairfood’s Trace platform. The data sharing processes, then, just gained a brand new strategic potential.
While most coffee companies still prepare to future-proof their value chains, this pioneer effort to digitise processes thorough village-based offers a blueprint for the industry, illustrating how compliance with EU regulations can enhance transparency while benefiting all actors involved. Below, Agume offers insights into data governance in practice, illuminating why optimising processes for coffee cooperatives stands as a collective imperative for the industry.
Farmers own coops. So if we invest in them, making them pivotal supply chain players, they can wield influence over market prices. The first goal is reducing intermediaries, but for that, we must ensure cooperatives have the capacity to comply with exporters’ policies.
Harnessing data for transformation
Shortening the value chain and ensuring direct long-term contracts for cooperatives is a priority to ensure farmers’ price stability. Yet, it’s not about simply reducing intermediaries: Ndugu in itself brings its own “middlemen” in the form of data collectors, cooperative leaders and coordinators that are paid with traceability Premiums prices. “There are plenty of actors willing to work with cooperatives in becoming transparent and socially responsible actors,” Bless shared. To amplify their impact, Ndugu aimed high, targeting industry leader Ugacof. Uganda’s foremost exporter is in a quest to make the entire coffee chain traceable. Safeguarding the buyer against potential drawbacks, Ndugu supports cooperatives in addressing issues of leadership, governance, and reliability.
The bedrock of business
As Ndugu delved deeper into data for traceability, new opportunities emerged. The interplay between the number of traced farmers and their coffee yields became the blueprint for a data-driven business model. Credit scoring and informed decision-making were some of the first “harvests” of this process. Next was attracting funding and seizing larger business opportunities. From mapping out farmers together with coops, other types of evidence to support business commitments came. For one, their ability to furnish evidence regarding the productivity of trees per farmer, a crucial facet for carbon claims, unlocked financing from new partners, like the RaboFoundation.
Democratising the data process
Part of Ndugu’s work is training cooperative leaders and coordinators to process data. In other words, to form relevant agribusiness insights out of their data in the simplest way possible to begin to own up their data processing. To ensure that the coffee journey goes beyond the data collectors, Ndugu partnered with Fairfood to showcase the journey of their coffee through the Trace platform. At the opposite end of the supply chain, this visibility beyond the coffee exporter means bridging the gap between Ugandan farmers and European buyers and consumers, who will soon be able to trace the origin of their coffee. After all, beyond new regulations, we all want to know our food is being produced ethically. “Increased visibility opens doors to support initiatives related to human rights, gender equality, and community development, as consumers can directly engage with and support specific cooperatives,” Agume adds.
The value of data and information
“For us, Trace is not merely a storytelling tool but a means to back up claims with tangible data,” Agume continues. By digitising and tracing farmers’ records, cooperatives gain a comprehensive understanding of their members, their coffee production, and their business transactions. This data empowers cooperatives to make informed decisions and guides their business directions. Agents within the cooperative also benefit from data as it becomes a tangible source of revenue, incentivising them to invest in an adequate workforce, and consequently, in improving the quality of coffee.
Empowering farmers and unlocking potential
The transformative power of data extends beyond Ndugu and the cooperatives. After successfully using data to credit score farmers for access to inputs on credit, data will soon be used to ensure access to other services such as school fee loans and medical insurance cover. “Coffee is a seasonal business, but coffee farmers are not free from being surprised with a business or personal problem off-season,” Agume says. By projecting farmers’ potential earnings based on data from their plantations, cooperatives can become eventual grantors for their farmers, preventing them from collateralising their land – as it often happens when other intermediaries take on this role.
Data has become the driving force behind Ndugu’s success and the transformation of coffee cooperatives in Uganda. Bringing cooperatives together in super networks has proven to streamline operations and provide professional expertise in a centralised manner, benefitting individual cooperatives and the industry as a whole. Finally, by leveraging data, Ndugu has attracted funding, empowered these cooperatives, and increased their visibility in the coffee industry.
As Fairfood helps them tell this story with the Trace platform, this small social enterprise is showing what a new era of transparency and opportunities for sustainable growth could look like. From cooperatives to Ndugu, and then from Ugacof to Sucafina, their traceable organic Robusta is soon reaching the European market thanks to another starred partner. Stay tuned!