18/12/2014 14:22

Case Story

Thuan An Fairtrade Coffee Agricultural Cooperative: Increased economic collective power for small coffee farmers in Vietnam

 

The cooperative name Thuan An Fairtrade Agricultural Cooprative was first established under the CDI’s Irish Aid grant project’s  support in 2012.  Originally it was supporte to establish 4C sustainable coffee in the district. Both 4C and Fair Trade are certifications that promotes the sustainable and quality-based production of coffee. However the limitation of 4C system in direct market access, 4C model was about to lose its attraction to the local people for “working together” manner. Then, Fairtrade model was introduced in early 2012, and the cooperative was then established under legal procedure and became official member of fairtrade system. It is the institution that operates under Cooperative Law.

 

 

First, several study visits were organised for local authority and farmers to other Fair Trade models in Cu M’Nga district of Dak Lak province and Kon Tum province. The farmers were interested in the model and decided to try it in their commune. First few training courses were initially conducted with support from the CDI’s project on Fair Trade requirements to coffee producers,  to introduce coffee sustainable production. Then more trainings were required to improve coffee quality and environmental friendly coffee farming practice such non-chemical organic fertilization. At this stage, after 2 years operation, the cooperative plan to improve its capacity to do export and trading including market development, as well as management and governance.

 

Despite considerable hesitation amongst farmers at the beginning for the fact that old model of cooperative went bankrupted and lack of economic effectiveness of 4C system, there incures interests of farmers in fairtrade and the strong will of the commune and district authority in new cooperative model. First, 49 coffee farmers in Thuan An decided to start Thuan An Fair Trade Coffee Agricultural Cooperative. After one year, it was expanded double to now 98 members with the production capacity up to 600 tons coffee/year. Also during 2013, the cooperative successfully engaged and expand a sub-group of 13 small farmers in Lam Dong province, a remote group which produce Arabica. This cooperative therefore become the first cooperative which produced fairtrade Arabica coffee in Vietnam. Now the cooperative joins hand with other 6 coffee cooperatives in the region network for small producers in gaining more power in the market.

 

As a fairtrade cooperative, the institution requires to comply strict procedures, encoded in its register charter. It ensures democratic and collective decision making. It means members have rights to decide on all matters of the cooperative, including setting price, contract, planning of activities, budgeting, spending of fund, and reporting. The cooperative ‘s board of management is accountable for reporting of all spending and the daily operation. General Assembly is organized at least annually to evaluate performance. Election of the board of management is also organized democratically according to term. 

 

Members of the cooperative gain significant higher income from selling coffee under fairtrade system (average VND 4,000 per kilogram of coffee ie. 10% higher than market price). Beside, a premium fund of US$ 440 for each of the sold ton of coffee (approx. 10% of market price) was received for the cooperative for the development fund. In 2 crops of 2012-2014, the total quantity of sales for farmers via the cooperative was 529 tons, which makes up total sales of $1.3 million dollars and $232.000 was set aside for this devleopment fund. The premium was used for two major purposes: i) re-invest in coffee production for quality improvement (VND 750 mil) including investment in wet processing factory, training on organic coffee production etc.  ii) invest in community’s social welfare systems such as lights along local roads (VND 40 mil), charity houses (VND 45 mil), local cemented road (VND 80 mil), etc. The Cooperative Director Board ensures the transparency of the cooperative, including price, contract, payments, tax and use of premium fund. Farmers are happy as their income is increased and they can also contribute to the community.

 

The model has made great changes and impact on : i) improved livelihoods of members and community, ii) change attitude and practice of local authority and farmers in cooperative model that practice collective , democratic and transparent in decision making; iii) increase social responsibility of the members to their communities; (iv) improve the sustainable coffee production, environmental protection,.

 

Contact: info@greenfairtrade.com, info@cdivietnam.org 

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