Ethiopia: How Coffee Farmers Sponsor Government Projects

Nairobi — Ethiopia, a poor East African country with record of abject poverty, is now one of the fastest growing economies in that region. This achievement followed an effective value chain developed by the country's coffee farmers under the aegis of Oromia Coffee Farmers Cooperative Union (OCFCU) that does not only improved the earnings of the Ethiopian farmers but also empowered the OCFCU to sponsor some government projects.

Delivering a paper at the recently concluded conference on Finance for Revolutionising agricultural value chain in Nairobi, Kenya, co-sponsored by the African Rural and Agricultural Credit Association (AFRACA) and the Technical Center for Agricultural and Rural Cooperative (CTA), Mr. Dessalegn Jena of OCFCU said his union provides social services as part of its contribution to the government and people of Ethiopia.

He said the union has built 81 schools and related facilities and transferred to the government, constructed 20 clinics, provided 89 sources of potable water, 50 kilometres of all weather roads, built 7 bridges, four coffee processing mills, 46 warehouses, five flour mills and one coffee museum from the country's coffee farmers' profit.

Jena, who said coffee farming is the most viable agricultural activity in the country, revealed that agriculture accounted for 46.3 percent of the nation's GDP, 83.9 percent of export and employs 80 percent of labour.

He said small scale producers contribute over 90 percent of agricultural products.

He said before the establishment of the Oromia Coffee Farmers Cooperative Union, farmers in the country were producing at a loss without an effective value chain, adding: "We came together and formed the union with a view to proving market information to the various farmers cooperative societies in the country.

"The union is also helping farmers to sell their coffee products at better price at local and international markets, it also improves and maintain the quality, productivity and sustainability of coffee production and provide coffee farmers with social services. We have value chain supporting facilities for our farmers that consist of 127 wet mills, 26 dry coffee hullers and two coffee processing and grading machines among others."

He said part of the problems Ethiopian farmers faced in the past was the difficulty in accessing agricultural loans from banks as most commercial banks in the country demanded for huge collaterals before granting them loans with high interest rates.

He added: "To address that problem, we established the Cooperative Bank of Oromia designed to provide full fledged commercial bank service, solve the financial challenges of cooperatives, reach the rural communities where other banks do not reach and expand saving habits in the rural communities.

"At the moment, the Cooperative Bank of Oromia has Birr 7.3 billion as its asset, Birr 901.34 million capitals and its loan portfolio Birr 3.2 billion. In 2012 alone, the bank granted $12.3 million US dollars loan to farmers. In 2013, the loan the bank granted to farmers hit $15 million US dollars.

"Because farmers and farming activities everywhere require insurance service, the Oromia coffee farmers union also established our own Oromia Insurance Company (OIC) with a share capital of $7.7 million US dollars and $2.4 million US dollars initial paid-up. Cooperatives and farmers in Oromia regional state alone own subscribed share capital of $1.3 million US dollars in the insurance company."

Jena said the essence of establishing the insurance company is to provide insurance services, index based livestock insurance, farm insurance and address the need of farmers in the country.

Source: allAfrica.com