A long history of agrarian reform as well as government programs supporting small farmer cooperatives has created a greater counterbalance between the interests of small farmers and those of large plantations in Costa Rica. COOCAFÉ, the Consortium of Coffee Cooperatives of Guanacaste & Montes de Oro, is an excellent model. COOCAFÉ was founded in 1988 as a coalition of small producer cooperatives working in the Fair Trade market in order to build an economy of scale large enough to provide direct marketing and services to the nine member cooperatives. In January of 2001, Global Exchange visited COOCAFÉ to hear directly from producers about how Fair Trade affects their lives.
Costa Rica was the first country in Central America to register coffee exports in 1840. Coffee currently accounts for 11% of export revenues and employs 5% of the nation's labor force, which represents 20% of the rural workforce. Costa Rica accounts for 2.6% of world production of coffee and 20% of Central American production. There are 72,942 coffee growers in Costa Rica, 45,000 of whom are members of cooperatives (62%).
Although Costa Rica claims a stronger focus on small farmers than in other countries in Latin America, concentration of land in the hands of the few still disadvantages small producers. Most farmers (92%) produce with less than 5 hectares, which amounts to 44% of the total coffee production. In terms of medium-sized farmers, 6% of growers own between 5-20 hectares, accounting for 21% of the national production. However, while only 2% of coffee growers own more than 20 hectares, they produce an entire 35% of the national crop. In terms of processing, the concentration of mills reveals even more disparity; of the 94 coffee mills (beneficios), only 25 are owned by cooperatives. Additionally, there are only 35 roasters and 44 exporters in the country.
Representing nine of the smallest co-ops in the country, COOCAFÉ works to improve standards of living and provides resources for crop diversification, rainforest reforestation, women's development and educational programs. They have twelve staff; 3 sales and marketing, 3 accounting and finance; 3 general administration; 1 quality control; and 2 technical assistance and proposal writers who work directly for coops. Founders of the Latin American Small Coffee Growers Front (Frente Solidario), COOCAFÉ also works to strengthen co-ops in other countries.
COOCAFÉ is a second level cooperative of nine producer cooperatives, with a total of 4,000 small farmer members. The average landholding in production of coffee is 2 hectares. They account for 3% of the total coffee production of Costa Rica. Many of their members are also involved in production of citrus, plantains, tubers (root vegetables like yucca) and macadamias. Cooperatives of COOCAFÉ include Pilangosta, Tilaran, Coopeldos, Santa Elena, Sarapiqui, Buenavista, Montes de Oro, and Llano Bonito.
Although COOCAFÉ is a strong cooperative offering good quality Costa Rican coffee, the Fair Trade market is still not yet big enough to absorb all of their production. From 1993-2000, an average of 53% of their sales went to the Fair Trade market, meaning that 47% had to be sold at conventional terms to importers or to national exporters. Their primary Fair Trade market is Holland, followed by Germany and then the United States.
Since their founding ten year ago, they have earned over $7 million in premiums from Fair Trade out of a total income of about $40 million. How have they allocated these premiums?
- $2.8 million into the savings loan fund, so that they can give loans to the cooperatives at a 2% interest rate; most bank loans are 22% in colones or 11% in dollars.
- $2.3 directly to growers
- $1.5 million commissions for COOCAFÉ
- $250,000 to the Frente Solidario (Latin American Small Coffee Growers Front)
- $250,000 to the Hijos del Campo educational scholarship program; see below
COOCAFÉ cooperative of Sarapiqui, Costa Rica One of the producer cooperatives of COOCAFÉ is the Coope Sarapiqui. Sarapiqui has its own processing mill, which has a capacity of about 15,000 QQ (quintales, or 100 pounds) per year. Sarapiqui markets its own packaged coffee. They also have two local stores for members to purchase goods at reduced rates, as well as a delivery service for bulk cooperative purchases of farm goods.
Coope Sarapiqui has invested significant resources into sustainable coffee production. They have a large water treatment facility, with three different lagoons with a capacity of 5,000 QQ (quintales; 100 pounds) each. Up on the hill, a large vermiculture compost mill churns out beautiful organic compost. They are developing a model diversified organic farm on the hillside above the mill. There they grow impatients as groundcover (to attract the nematodes away from the coffee), banana and other trees, and palmito, or the plant from which comes the hearts of palm.
COOCAFÉ has made serious investments in environmental conservation programs on the cooperative farms and processing mills. One is the ten-fold reduction in the amount of water used in the processing to separate the bean from the cherry pulp. The 9 cooperatives have collectively invested $600,000 in these water treatment systems. They have reduced the overall usage of chemicals by half. The Montes de Oro cooperative boasts the only hi-tech solar dryer in Costa Rica. Coopeldos is certified organic, and Montes de Oro and Santa Elena are in the three year transition period towards organic. They have serious investments in reforestation programs (see below). They have reduced wood use in dryers, using the coffee husk instead to fuel the drying ovens.
A recent document entitled Fair Trade in Costa Rica: An Impact Report gives concrete examples of some of the achievements of COOCAFÉ from working together in the Fair Trade market. The information in the following summary is taken from that report by Loraine Ronchi, University of Sussex, l.ronchi@sussex.ac.uk
Like its member cooperatives, the management and departments of COOCAFÉ are accountable to an Administrative Council elected by the General Assembly. Most major cooperative policy decisions are made in the General Assembly, the highest decision-making body, held once or twice a year to which all members are invited to attend.
Some of the benefits and programs of COOCAFÉ include the following:
Financial
The Fair Trade premium is the difference between the higher price paid by the Fair Trade market and the conventional market. COOCAFÉ cooperatives have decided to divide the premium as follows: 15% to the Development Fund, 15% to the Social Capital Fund, and 70% to the Producer's Fund for distribution to producers by the primary level cooperatives. Over the ten years of operation, the producer's fund has distributed $1,260,000 to some 4,000 affiliated small coffee producers and their families. The Social Capital Fund provides much-needed credit to the farmers in a revolving loan fund. Records of coffee prices demonstrate consistently higher prices paid to cooperative farmers than to farmers in the area who were not involved in Fair Trade.
Preserving landholdings
The best indicator of the financial impact of Fair Trade on the cooperatives is witnessed by the continued existence of the cooperative in times of low prices and high production costs. "In the period from 1989 to 1994, the Fair Trade market and COOCAFÉ were essential to the survival not only of the Cooperative Sarapiqui: to ALL of the cooperatives of the consortium," says the Manager of Coope Sarapiqui. Many other cooperatives closed their doors during this time period, leaving the farmers with no marketing options.
Development of final products
The export department of COOCAFÉ entirely credits the successful production of final products to the assistance received from Fair Trade organizations. The experience has had a positive impact that is only inadequately described in financial terms. Producing for the final market has given them an important understanding of the full coffee marketing chain and hence allowed them to learn a great deal about a number of markets and build capacity of the organization to independently develop and control their own marketing.
Solidarity work and education
Working with the Fair Trade market has also positively impacted the social development of the cooperatives through their ability to carry out solidarity work and education. Most of the member cooperatives conduct educational programs concerning the benefits of cooperativism, and proactively attempt, through education, to instill a sense of solidarity in their members. They also consistently and financially support the Frente Solidario, a San José-based solidarity and activist body of Latin American coffee producers.
In 1996 the nine cooperatives in the consortium established a foundation known as Fundación Hijos del Campo, which operates three programs; secondary and university scholarships and an extension program. In the first two years of inception, the secondary school scholarships were awarded to 71 schools at an average donation of $360 per school, directly benefiting 5061 students. From 1997-1999 the university scholarships directly benefited 574 students, 54% of whom are women. COOCAFÉ also promotes an educational extension fund aimed at bridging the enormous gap between the quality and accessibility of urban versus rural education. Funds from the Fair Trade market are used to administer the three programs.
Environment
Over the ten years of operation, more than $3,500,000 has been invested in environmental protection and development programs. A recent report by a independent environmental auditing association traced the source of these funds to the Funcadión Café Forestal, which is entirely funded by sales from COOCAFÉ's Café Forestal brand of roasted coffee to the fair trade markets ($1 per kg sold) as well as COOCAFÉ's Social Capital Fund. Projects include: environmental education and research, converting the entire beneficio (mill) to 'Clean Technology,' the development of hydroelectricity programs, developing coffee dryers using renewable resources, conversion to intercropping programs with shade trees, reforestation, and conversion to organic coffee production.
Thanks to Loraine Ronchi for the above information. For more information or to contact Coocafe directly, email Director Carlos Vargas at coocafe@sol.racsa.co.cr.
You can purchase Coocafé's coffee through Equal Exchange and Café Campesino.
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