Why was KCU Ltd accepted to the fair trade system?

The system much as it wishes to assist small producers, can not reach each individual. It has to work with small producer organizations which are believed to bear the following characteristics:

1. Should be a democratic organization, where benefits are distributed equally among its partners, and decisions are made within the participative structure.



2. Should have transparent administration where people at grass root level are informed about management of the resources – The established primary society network within KCU Ltd structures allows such transparency.



3. Should promote fairness and justice where there is no discrimination against any race, religion, gender or political affiliations. With the voluntary membership of KCU, discrimination lacks room for its existence.



4. Should look for sustainable development understood as the improvement of the quality of the producers, their families and communities.

The products KCU Ltd delivers to the fair trade system carry with them a message and rightly so, that they come from a group of small coffee producers that fulfil the above requirements among others.

KCU addressing the current international market requirements:

With the growing keenness of the International Markets on food safety, KCU would have found itself in marketing difficulties if it was not for the guidance we have been receiving from FT through the Generic Fair trade standards for small farmer organizations, which cover the following major aspects in marketing.

• Social development
• Economic development
• Environment developments
• Labour conditions

These aspects are addressed by different International Codes and agreements, to allow entry of food products into importing countries.

• When members collect and market their coffee together, they create a fund to which deductions against coffee sales are deposited to assist members’ children in attaining education, health services and other basic needs. This chance is usually wasted when coffee is collected by private buyers, who most of the times lack a collective responsibility drive.
• The Fair trade social premium has been another element which enabled KCU Ltd members to remain together, as they jointly enjoy the benefits of being related to the Fair trade movement. This premium has enabled our members to construct and improve roads and bridges to their crop collection centres.
• Classrooms and health centres have been constructed out of same Fair trade Social Premium, which cements not only the relationship within our members, but also creates a strong partnership between KCU members and the Fair trade buyers.

B) Economic Development
Individually and collectively, our members have attained survival level and beyond, out of their coffee sales, earning more for each kilo of coffee they sell to the movement. As already mentioned, with the collapse of the quota system of the International Coffee Agreement KCU could withstand the competition and effects of the coffee price fall. Members could still deliver their coffee to their Primary Societies, knowing that the value they earn through their own structure is not available through alternative coffee collections centres not linked to the Fair trade system.

• KCU Ltd acts as a price setter for coffee within its area of jurisdiction. Private buyers are usually compelled to pay slightly higher than KCU Ltd, enabling our members to earn more even for coffee which is not marketed through our movement. In case the Cooperative Union is not around to act as a price setter, some private coffee buyers pay extremely low prices to maximize their own profits at the detriment of the small producer.
• With the Fair trade minimum prices, KCU members have been able to invest into the Instant coffee factory, to ensure that value is added to the coffee that is exported by the union. The union currently owns 51% shares in TANICA Instant coffee factory with capacity of producing 500 tons of spray dried Instant coffee per annum.
• Information on markets is an important requirement if one has to deal with the outside world. KCU is currently kept abreast with market developments and information supplied by our Fair trade partners, labelling initiatives and FLO.
• Fair trade partners like Twin Trading, Fair trade original, Oxfam and Gepa have all along participated in capacity building for KCU members, leaders, and management; through workshops and financial support.

C) Environmental Development
Fair trade led to introduction of organic coffee production to Kagera Cooperative Union Ltd via Export Promotion of Organic Products from Africa (EPOPA) programme assisted by SIDA. Through the contacts in The Netherlands, KCU Ltd got connected to Agro Eco consultancy in 1998/99 to establish the organic coffee project within some primary societies under KCU Ltd.

This Fair trade engineered chances which made KCU Ltd the first and so far the only Organic Robuta Producer/Exporter in Tanzania under Fair trade terms.

Organic project take off would not have been possible without payment of an organic differential to organic coffee producers from the Fair trade reserves. This was necessary to motivate the project members during the conversion period, when the organic project coffee (in conversion) was being sold only as normal Fair trade coffee. KCU still uses the Fair trade reserves, to mobilize the new Primary Societies to comply with organic production requirements.

Today we are selling almost 300 tons of organic coffee to the Fair trade market, earning an organic differential of about 20 cts per lb and 10 cts for the Fair trade premium. It is important to note that the organic differential will not be felt if the base price is left to be controlled by the market forces. Fair trade sets a base line (the minimum price) that can be paid to the small producer, in order that cost of production may be recovered. Thanks to Solidaridad who partly financed the Organic/Utz part of our production for facilitation of professionalism in origin, transparency, traceability and quality.

Nevertheless this assistance will bear fruits only if the Organic/Utz coffee will be sold to the Fair trade market. Short of that, production and compliance costs will not be recovered. The struggle to protect natural environment is there to remain as KCU strategy is to make such protection part and parcel of the integrated farm management. Oxfam Belgium has also opted to be partner in the KCU efforts to produce coffee under the Organic project arrangements. Fourteen primary cooperative societies out of the total 125 societies of KCU Ltd are already under the programme with IMO as certifiers. The programme will assist KCU Ltd members not to think fair only to people, but also to the environment.

D) Labour Conditions
KCU Ltd might have done the right thing in the past on labour conditions, but without a clear reference point as to what is required by National as well as International Labour Laws. With Fair trade, the standards stipulate categorically what constitutes a violation and a penalty is clearly prescribed in case of non compliance.