Enhancing Coffee Farmer Ownership for increased Productivity, Sustainable Livelihoods, Customer Satisfaction and societal transformation.
NUCAFE empowers Coffee farmers to take ownership in coffee processing, marketing and influencing policy for shared value with stakeholders.
I confirm that I am fully aware of the eligibility criteria, and based on its description, I am eligible to apply to the CSV Prize 2017.
Established (the solution has passed the previous stages and demonstrated success)
Annual budget in 2017 (USD)
Number of beneficiaries impacted so far
Nonprofit, NGO, or citizen sector
Headquarters location: Country
Headquarters location: City
Kampala Plot 35, Jinja Road, Coffee House, 2nd floor
Location(s) of impact
Country: Uganda: City Kampala as coordinating office but the initiative is across the entire country rooted in rural coffee producing communities.
Through NUCAFE's 200 farmer associations with over 1million farmers, investment in coffee processing was made in; hulling, grading, roasting, grinding, blending and packaging facilities. Transforming from unprocessed forms of coffee to graded forms that earn farmers 250% rise in income and 900% on roasting. Buyers pay 30% more for quality with a story & 30% yield rise. Processors & NUCAFE earn service fees. 2915 youth with jobs, 20,021 good housing; families access good schools & medicare.
This video highlights a personal story of Joseph Nkandu, the Founder and Executive Director of NUCAFE with his long journey towards creating shared value from being born on the coffee farm and growing on the farm and the challenges experienced. It then gives the solution that involves acquiring entrepreneurial skills, international business partnership and collective investment by farmers in processing, manufacturing and exporting coffee successfully where farmers and the buyer are winners.
Problem: What problem is this initiative trying to address?
There are two problems; income poverty and climate change. Coffee farmers do not have access to affordable financing to fully grow or add value to their coffee and cannot invest in adaptation to climate change. They are forced to sell unprocessed coffee at less than 5% retail value. These have led to declining productivity and quality of coffee. In Uganda, over 10 million coffee farmers are in a cycle of poverty earning less than US$2 a day.
Solution Summary: What is the proposed solution? What do you see as its most promising aspects for creating shared value?
Using the "Farmer Ownership Model" where ownership means Coffee farmers take responsibility to assume some direct and indirect roles in the coffee value chain, thus increasing their shared value equitably with processors and buyers before the coffee ceases to belong to them. To create shared value, farmers through their associations either hire private processing facilities or use their own to process the coffee and pay a service fee and finally the value added coffee is sold to a buyer when still owned by the farmer. In 2005, I approached one, Hussein Walakira who owned a processing facility in Masaka town in Uganda and discussed with him how I would mobilize farmers into associations to get his factory work at full capacity and be paid a service fee and then the output sold to the best buyer. Farmers' income increased by 150%, Hussein's income by 83% and the buyers' orders were met 100% with exceptionally high quality coffee. A win for all; farmers, processors, buyers and consumers.
Impact: What is the impact of the work to date? Specify both the social and the environmental impact of your work
Social impact: Over 1 million coffee farmers are organized in 200 associations. Over 1000 Farmer leaders have entrepreneurial skills. 5956 direct jobs; 2915 youth. Invested US$ 5M in farmers' owned factory. Farmers were organized and advocated for an inclusive National Coffee Policy passed in 2013. Today, the coffee research institute gives good varieties. Farmers' yields are up by 30% and income rose by 250%. Private and farmer owned factories process coffee at 95% operating capacity from less than 40% in 2005. Buyers get exceedingly high quality coffee over 83+points on SCAA standard. 20,021 families with permanent houses, children go to good schools & medicare. Have facilitated reforms in curricula of BSc and MSC Agricultural courses of Makerere University with entrepreneurship. An incubation centre established and skilled 2915 youth and 51 SMEs. Environmental Impact: 10% coops are certified organic, Utz, fair-trade and 4C with 50,000 families climate smart. NUCAFE exports up 443%.
Financial sustainability plan: How is this initiative financially supported? How will you ensure its financial sustainability long-term?
The initiative has had the innovator's and farmers' own contributions, grants and earned income. Earned Income is from fees for processing & marketing coffee today & future. We even digitized the financial model. From 70% grant income (US$38,395) and 30% earned income (US$16,459) in 2010 to 26% grant income (US$380,404) and earned income 74% (US$1,108,985) in 2016. In 2010, total budget was US$58,616 of which individual donations were US$3,652 (6%), grant US$36,859 (63%) and earned income US$18,105 (31%). In 2016, the total budget was US$1,893,122 of which; grant US$368,155 (20%) and earned income US$1,497,130 (80%). We have embarked on phase two expansion investment worthy US$4.9m in processing infrastructure, marketing, solar energy to reduce power costs, new customers and partnerships.
Unique value proposition: What makes your initiative innovative? How does your project differ from other organizations working in the same field?
Unlike competitors, farmers don't lose ownership of coffee at farm-gate. They continue to own and sell processed coffee through Associations & NUCAFE. Associations & NUCAFE don't buy coffee but provide services at a fee. Competitors buy unprocessed coffee and farmers get less than 5% of retail value. Our initiative enhances co-ownership and negotiation power relations. Private factories process at 95% capacity and earn service fees. Buyers get quality coffee. Farmers' shared value up by 30%.
Founding story: Share a story about the "Aha!" moment that sparked the beginning of this initiative.
I was born and grew up on the coffee farm and I experienced how my parents were toiling to get money from coffee for my school fees. At school we were always taught that coffee was Uganda's main cash crop and foreign exchange earner bringing in over 80% of total exports. However, this did not translate into making enough money for our household income. It was ironical to me that my parents did not have enough money. I also learnt that coffee was the world's second most traded commodity after oil -another paradox!! Therefore, after University, I moved on to do a coffee value chain analysis. When traders asked farmers coffee prices, none would tell the price. Instead farmers asked traders the price! For chicken, farmers said the price. I asked them. Do you own the coffee when you can't say or negotiate for price? This was when the Farmer Ownership model was born to create shared value.
Where did you hear about the Nestlé Creating Shared Value Prize?
Program Design Clarity: We are hungry to know more about what exactly your model consists of. Succinctly list a) what main activities are you doing with your beneficiaries, b) where you carry out the activities? c) how often? d) for how many hours? e) who delivers the services? and f) any other brief details
The Farmer Ownership Model is designed and developed following five main phases of activities with 13 detailed steps that prepare farmers for business readiness and execution including:
Phase 1 Marshaling support
1 Baseline and Value chain analysis
2 Introducing the rationale of the model
3 Identifying farmers and geographical location
Phase 2 Mobilizing and organizing to build the base
4 Farmer organization formation
5 Leadership selection and capacity development.
Phase 3 Stimulating action
6 Developing the shared vision
7 Developing a simple vision-based business plan.
Phase 4 Implementation
8 Registration of the farmer organization.
9 Piloting low hanging fruit projects
10 Consolidation and deepening of activities.
Phase 5 Sustaining action
11 Developing a strategic plan.
12 Clustering farmer organizations
13 Monitoring and evaluation
Day-to-day activities of staff are based on two coffee seasons annually. These are:
1Training farmer leaders in governance, gender equity and policy advocacy from January to February and September
2 Training farmers in good agricultural practices from March to August and October to November
3 Processing and marketing of coffee at NUCAFE factories and outsourcing private factories from October to January and then from April to August
4 Facilitating farmers’ access to financial and insurance services
5 Facilitating farmers’ access to inputs outlet daily
6 Business development services & Project management
We are interested in learning more about your initiative's broad impact on sustainable development. Please reply ONLY to the question(s) related to your above focus area.
The initiative is based on the premise that farmers are masters of their own development. With that premise, the approach is market driven along the entire coffee value chain. NUCAFE has organized 1,000,521 farmers and legitimized them into the formal sector in 200 rural associations. These have built strong direct relationships, co-ownership and negotiation power with coffee roasters.
Coffee yields up by 30% and quality improved threefold. Farmers’ income up by 250% and so is purchasing power. Business asset base grew by 48% from US$1,501,362 in 2013/14 to US$2,227,939 in 2016/17. Earned income grew by 151% from US$464,765 in 2013/14 to US$1,168,318 in 2016/17. Transport costs reduced by 11%.
Improved gender relations in 76,100 families with joint decision making.
5956 direct jobs and 76,000 indirect jobs created. 20,543 households have permanent houses.
90% farmers in associations are food secure with balanced diet.
50,000 families adopted climate smart practices and 10% certified.
Farmers access 22% less expensive micro-irrigation tools.
3000 farmers with drought indexed insurance cover ensuring income security.
Farmers access Medicare. Staff have travel health insurance, open cafeteria and open office environment.
NUCAFE organized farmers and advocated for the formulation of the first ever Uganda’s National Coffee Policy passed in 2013 by Government. Farmers are now part of decision making. They access good coffee varieties. Uganda coffee exports up by 31%.
Creating shared value: How does your initiative create value for different stakeholders?
We promote good gender relations, negotiation power, co-ownership, joint decision making, succession planning, productivity along value chain. We organize farmers in associations with compassionate leadership. We train farmers in climate smart practices and traceability. We have built coffee clusters to improve quality and productivity.
We operate an agribusiness incubator to develop skills.
We participate in University curriculum reforms for job market. NUCAFE facilitates farmers’ access to financial services.
We recruit staff from different tribal, ethnic and religious groups and geographical areas.
We invest in infrastructure for farmers to add value. We write stories about the coffee for buyers.
We work with media for needs of farmers to be known. We enforce code of conduct for conformance.
We pursue Coffee policy and law implementation. We digitize services for farmers.
We operate drought insurance for farmers. We work with weather forecasting department for farmers.
How is your initiative funded, now and over the next 5 years?
NUCAFE has over the years developed mixed financing mechanisms of both grant and earned income which stood at 26% and 74% respectively as at 30th September 2016 and 18% and 82% respectively as at 30th September 2017 financial years.
In the last 3 years seen our sales grew by 280% by 30th September 2017. This is projected to increase to 408% over the next 5 years 2021/2022 and this is our main revenue stream and will continue to ensure that NUCAFE is funded. In the next 5 years in 2022, NUCAFE funding will be 92% by Earned Income.
Our grant dependency is from 70% in 2010 to 26% in 2016 and at 18% in 2017. We will still require 8% of grant funding in 2022 due to expansion and scaling with new farmers and investments.
How do you plan to influence your field of work if you are a winner of this edition of the CSV Prize?
I will continue to create awareness about CSV through avenues including but not limited to farmer organizations, nongovernmental organizations, universities, civil society.
Inspiring the people with experiential learning and case studies.
Involving the media; social media, print media, radio, television in awareness creation.
Joining and participating in networks of influence.
Supporting young people under internship with earn as you learn program will be promoted.
Recognizing champions through CSV competition prize in our annual incubator innovation competition awards.
I will continue to develop my capacity and my team in creating shared value.
I will also influence Higher education business curriculum reviews with CSV.
How will you leverage an investment from Nestle to expand the impact of your work?
I will facilitate investment in 20 solar energy installations each at US$10,000. Having solar energy will replace diesel generators. Benefits include (i) reduced emissions, (ii) reduce 20% coffee processing costs and increase farmers’ incomes by 20%, (iii) retain and recycle coffee waste products. Solar energy will be used for micro-irrigation too.
For food security, I will invest US$130,000 to deepen work on creating shared value in the maize value chain. We encourage farmers to practice mixed farming; coffee on one plot and maize on another. Otherwise, farmers sell maize grain and in turn buy maize flour ten times the price they sold maize grain.
Solar energy & food security will enable farmers earn more & business impact will improve.
Spread Strategies: Moving forward, what are the main strategies for scaling impact? What’s the projected impact for the coming years? Are you planning to expand your programme into new locations? On what assumptions do you build your scale-up plans?
We will build 10 more clusters with higher education, industry and farmers. This will develop different skills sets for different teams along coffee and maize value chains in new locations.
In addition, automation/digitization of the farmer ownership model will expedite wide spread.
I am also currently working with Santa Clara University's Miller Center for Social Entrepreneurship to develop and transform the farmer ownership model into a certification scheme ready for accreditation, franchising, training and policy reforms.
I am working also with the European Union’s Center for Agriculture and Rural Cooperation (CTA), which identified my model as one of the world top 20 innovations benefiting farmers for spreading in Africa, Caribbean and Pacific countries.
As the model is developed into a certification scheme, I will create teams of fellows that will in addition to their enterprises help in carrying out policy advocacy to governments to adopt the model in the public policies
Team: What is the current composition of your team (types of roles, number of full-time vs. part-time staff, board members, etc.)? How will this team evolve as your initiative grows?
Strategic direction led by Board Chairman with social, banking and farming expertise. Board members have qualifications in Business Development, Research for development, Project & farmer organization management, advocacy and gender.
(i) Executive Director, a Social Entrepreneur with a BSc in Agriculture and MBA.
(ii)Two Deputy Executive Directors; Operations Management, Finance and Administration with BSc and MSc degrees in Agribusiness Economics and financial administration.
(iii) There are four graduate department managers for Business, Finance and Administration, Gender Equity, Farmer Development and Advocacy.
There are 40 full time graduate staff and 66 part-time.
The team will evolve based on the needs of the farmers, markets and communities and the relevant skills needed.
Awards: What awards or honors has the initiative received?
Continental, Regional & Country Awards in agriculture2017, Investor of the Year Award 2016, Innovations that change the world 2016, Impact award 2016, Rural development 2015, Best Entrepreneur 2014, Africa Farmer Organization Award 2013, Best Agribusiness Model 2013, EU’s CTA Top20 innovations 2013, African Role Model 2013 & Ashoka fellowship 2013.
Organizational leadership: How are you influencing your field of work in the present?
I promote social entrepreneurship in organizations which many refer to as intrapreneurship. Team members become social entrepreneurs. I facilitate them to grow their personal and family businesses by linking them to opportunities. I recognize innovative and entrepreneurial spirit with awards. I have also provided compassionate leadership by being practical. Other farmers learn sustainable best practices from my farm; e.g. climate smart agriculture practices. People have baptized me a role model. I also give guest lectures and retooling talks to students and lecturers to ensure that universities can produce graduates that are relevant to the job market. From time to time, media companies; call on me to give inspiration talks to the public.
Should you be successful, please confirm your availability to attend the Ashoka Impact Boot camp and Creating Shared Value Prize Live Pitch Event at the World Water Forum 13-16 March 2018
Yes, I am available to attend the events on 13-16 March 2018