|
 |
| |
December 2023 |
|
|
 |
| Ssemakula Jude Taddeo is one of many farmers who benefit from immediate payment for his coffee, thanks to the credit facilitated by IFIL. |
Before IFIL’s intervention, it took NUCAFE about 120 days to pay farmers for their coffee. Now they get paid within two days! We have met Executive Director Deus Nuwagaba who explains how NUCAFE is revolutionizing the lives of smallholder farmers in Uganda, with support from IFIL. |
|
|
|
Nestled in the heart of Uganda, the National Union of Coffee Agribusinesses and Farm Enterprises Ltd (NUCAFE) is uniting close to 2 million smallholder farmers across 237 cooperatives.
Their primary goal is to enhance the livelihoods of these farmers through capacity building, market linkages, and implementing innovative projects within the coffee sector. Nonetheless, the journey is not without hurdles, and one major challenge lies in their limited access to capital – a problem that escalated, especially in the aftermath of the pandemic.
– Most commercial institutions were simply not interested in extending credit to NUCAFE post Covid, says Deus Nuwagaba.
Without credit and sufficient working capital, it became increasingly harder for NUCAFE to pay their members for the coffee they delivered which made farmers turn to middlemen, a situation that exposed them to exploitation through inadequate compensation, driven by low prices and inaccurate weighing scales.
– It took us about 120 days to pay farmers. But with the IFIL project and the credit line that we receive, we are now able to pay farmers within two days. |
|
 |
| Hear what Deus Nuwagaba has to say in the video clip above. |
Tailored Financial Solutions
One of the unique aspects of the IFIL project is its focus on tailoring financial solutions to meet the specific needs of farmer based organisations. Deus also highlights how the increased working capital has enabled farmers to invest in their farms and communities, add value and to explore new market opportunities:
– This flexibility has been instrumental in driving positive change, he says.
The innovative approach has not only accelerated the payment process, but has also allowed NUCAFE to increase their factory capacity utilization. Before the loan, they utilized only 8% of their factory capacity, but thanks to the loan, productivity has now surged to 28%. Looking forward, their goal is to reach 80-90% capacity within five years, if they continue to have access to working capital. |
|
|
Anna Maria Mata, Programme Manager/Adviser at Sida, who also participated in the field visit, especially emphasized the important partnership with Oikocredit and their innovative and flexible approach:
– When NUCAFE applied for this loan, an innovative model was presented to Oikocredit's Credit Committee. Originally, Oikocredit could only offer a loan of a smaller amount, but through collaborative efforts, NUCAFE managed to secure a 3 million dollar loan for working capital. It is great to see how these funds now directly benefit farmers, adding value at different stages throughout the entire coffee value chain. |
|
 |
Anna Maria Mata, Sida. |
|
|
NUCAFE has now maximized its approved credit limit, surpassing it by over 1.5 times within the initial year. In this period, former buyers have also come back to the business partnerships, and member cooperatives have re-established sales through the organization, resulting in improved income.
According to ongoing monitoring assessments by Oikocredit, NUCAFE has secured more coffee supply contracts than the current approved limit can accommodate. The existing loan already represents the highest limit within the IFIL program. Oikocredit is presently reviewing the request for an enhanced limit to support the upcoming crop calendar, indicating a positive trajectory for continued growth and impact. |
|
 |
| Listen to Ssemakula Jude Taddeo's testimony in the video clip above. |
|
Securing Livelihoods and Improving Lives
One of the many farmers who attributes the success of his enterprise to the support from NUCAFE, is Ssemakula Jude Taddeo. He appreciates NUCAFE's comprehensive approach and how they provide training, market opportunities, and increased income for his family.
– NUCAFE has provided a big market for us. This increases our income at the family level, and helps us stay in our garden (coffee farm) while still receiving income, says Ssemakula. |
|
 |
| Diversification is crucial for coffee farmers, providing resilience against market fluctuations and environmental uncertainties, as well as contributing to long-term sustainability. |
|
The Farmer Ownership Model
NUCAFE uses the Farmer Ownership Model (FOM), which ensures direct farmer participation across the entire value chain, from cultivation to marketing and sales.
Here's how it works: Farmers are organized into cooperatives, which increases their collective strength and voice. Together, they gain access to resources, market linkages, and modern agricultural practices and technology. NUCAFE ensures fair prices for their coffee, cutting out unnecessary intermediaries and ensures quick payments for farmers.
Through the FOM, farmers can sell their coffee based on established quality grades. This system ensures that farmers receive fair compensation for the quality of their coffee, but it also motivates them to develop better farming practices as superior quality directly translates into increased income. |
|
|
|
