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A loan helped rural coffee farmers to own their coffee along the value chain and get 400% better prices for their harvest.
Smallholder coffee farmers in Uganda do not have access to the equipment or finance add value to their coffee beans. They are forced to sell unprocessed coffee to middlemen at less than 5% of the retail value. Over 10 million smallholder coffee farmers are in a cycle of poverty from one generation to another.
NUCAFE, the National Union of Coffee agribusinesses and Farm Enterprises, is a coffee farmers’ organization founded in 1995. NUCAFE uses a "farmer ownership model" whereby ownership of the coffee remains with the farmers while adding as much value as possible to the coffee. NUCAFE owns processing facilities (for cleaning, drying, grading, roasting, grinding and packaging services), which are used by its members to add value to their coffee. There are currently around 198 member associations working with NUCAFE, impacting more than 27,000 farmers. NUCAFE also helps farmer associations sell their produce by marketing their coffee to potential buyers. Members pay a service fee to NUCAFE for using their processing facility and marketing their coffee. Before partnering with NUCAFE a small farmer in Masaka Uganda sold 60kg bags of unprocessed coffee at UGX1,000 (USD0.40 per kg). He now sells 40kg bags of processed coffee at UGX4,350 (USD1.73 per kg). Learn more about NUCAFE in this video.
The loan will be used by NUCAFE to advance funds against the inventory brought in by the members associations for processing. NUCAFE will advance 60 to 70 per cent of the inventory value while the coffee is processed and sold. .