Part 2 of a 2 part series on Oikocredit’s recent study tour in Ecuador
I had the privilege to take part in the latest study tour organized by Oikocredit International and I have witnessed how this social investor is giving a much needed hand to coffee and cocoa growers in Ecuador.
Cocoa producers handpick each cocoa pod and each coffee bean from small trees growing in the shade of dense vegetation. It is hard work and if the growers have a small plantation their best option is to join a cooperative which will help them, their family and the bean pickers they sometimes hire to reach a decent level of life. Thanks also to the financial support provided by Oikocredit, their work place, (i.e. the plantation) is safer and cleaner while their community is able to provide essential services.
We visited several small cocoa and coffee producers in the vicinity of Guayaquil and in the Andean Highlands who are members of a local cooperative which itself is a member of two associations, FAPECAFES for coffee and UNOCACE for cocoa.
To become a member of the cooperative, participating growers agree to produce beans which meet the standards of various organic certification agencies. In addition, the cooperatives, have to abide by the requirements of fair trade certification to be affiliated with the coffee or cocoa farmers associations.
Standards are demanding
For export commodities like coffee or cocoa, meeting all the organic standards is fairly demanding. As we have learned from the producers, an entire shipment of coffee had not received the certification due to traces of insecticides they were using to protect themselves from mosquitoes. (We were also reassured that they were experimenting with natural products and that they were confident to find soon a perfectly innocuous product. Who knows, one day that cream or lotion will be found on the shelves of our drugstores?). All that is to say that it is hard work to produce organic cocoa and coffee and, most of us, as consumers, should be aware of this when we pay a premium price for our organic certified coffee or chocolate bar.
That is where these associations come into play. They are the ones negotiating the prices of the organic coffee and cocoa beans that North American and European importers are looking for. Although the prices vary from one season to another, prices received for certified commodities are noticeably higher than the prices of non-certified cocoa or coffee beans.
It is at that internationally negotiated price, slightly lessened, that the growers will sell their sacs of coffee and cocoa to their cooperative which, in turn, will sell them to the Association which will take care of processing, packaging, shipping and certification procedures.
Payment upon delivery ensured by Oikocredit loans
And that is when the loans provided by Oikocredit international to the Associations come into play. These funds allow them to supply their members, the cooperatives, with the money they need to purchase the beans from their members upon delivery. There are no waiting delays, no “up the line” approvals, no hidden fees. Just certainty and predictability for the producers who can concentrate on what they do best, growing coffee beans and cocoa. Remember, none of them are rich, quite the contrary, and they do not have access to loans from local banks needed to keep working their plantations.
That is not to say that these plantation owners have no other options. Intermediaries representing big trading firms roam around. Their negotiating power is immense when they approach a small plantation owner. These representatives, called “coyotes” in some places, have deep pockets and they may offer on the spot good money for an entire crop. But it will happen only once; after that, the conditions will be much less favorable, and the cooperative, if the grower belonged to one, would be of no help. As a member, you have rights, but also responsibilities and duties, and selling exclusively to the cooperative is one of the rules.
Apparently, these rules are one of the reasons given by coffee and cocoa growers when asked why they chose to remain independent. Abiding by the strict protocols of organic production and not being free to sell to those offering the best price is not to everyone’s taste. Moreover, cooperatives follow a democratic decision making process where each member, whatever the size of his or her plantation, has one voice. If you possess acres and acres planted with coffee and cocoa trees, you may not like majority rule.
Another feature of the cooperative system some growers don’t like is that, before paying the members, the cooperative keeps a small fraction of the money it gets from the association it belongs to. It is true that, like a coyote, the cooperative is an intermediary between the growers and the association which sells their production abroad. But at the same time it is so different because that money, the cut the intermediary would take otherwise, stays with the coop and is used for the benefit of the community. In fact, it represents the added amounts to the price obtained by the Associations in their negotiations with importers agreeing to buy fair trade certified coffee and cocoa.
Fair trade premium used for snake venom antidote
Through their association, the cooperatives agree to a list of community projects they will implement with the returns obtained as a result of that heightened price. For example, we were told of coffee farmers’ cooperatives in the Province of El Oro, near the Peruvian border, whose isolated plantations are infested with venomous snakes. The cooperatives have decided to use their fair trade surpluses to build a small dispensary with a refrigerator they filled with live-saving antidotes.
We heard many other revealing stories, but to summarize my state of mind when we made those visits, I can only say that I was honoured to spend time with these people providing us with quality coffee and chocolate. We have not met anyone we would consider wealthy but those we met deserve the little they had and were proud of what they were doing, and rightly so. They were also cognisant of the thousands of investors who make Oikocredit possible. I don’t think that they see these investors as charity providers; after all their association pays interest on the loans provided to them by Oikocredit. I heard some farmers, cooperative and association workers referring to Oikocredit International and its investors as enablers. I could not have come up with a better word.