Having Coffee in Bonga, Ethiopia

12-06-2024

Wijbrand Fabius, now Stakeholder Manager Sustainability at ABN AMRO, has a solid background in financing the international commodity trade, especially in coffee and cocoa. Wijbrand went to Ethiopia as an Agripool expert for Agriterra to review and assess the business plan and financing of the Kafa Forest Coffee Farmers' Cooperative Union.

Together with Dawit Setegn, the local Agriterra advisor, he travelled to Bonga, in the southwest of Ethiopia. Over the course of a week, they spoke with various members of the union, visited cooperatives, and met farmers in remote areas. Communication was sometimes challenging due to the different languages spoken. Nevertheless, much information was gathered on the relationship between cooperatives and the Union with the ultimate aim of enabling a partnership between the union and Agriterra.

A visit to the members of cooperative Tura

In Ethiopia, banks play a crucial role in the pre-financing system. "The Union has to pre-finance everything for the farmers who supply coffee to the cooperatives. This financing should mainly come from the banks, but unfortunately, the economic situation in Ethiopia is not stable," explains Wijbrand. Hence, a meeting with two banks was also scheduled.

 
Visiting the bank

Collaboration

The evening before their departure, Wijbrand and Dawit presented their findings in a presentation to the union. "What makes them vulnerable is their dependence on these local banks," Wijbrand explains. "One solution could be to ask buyers to provide pre-financing. These are large international, financially strong parties for whom these amounts are not very significant. They would like to have this particular coffee from Ethiopia, so that is a win-win situation. Until now, this union has very little contact with their buyers, so that presents opportunities to strengthen those relationships."

Wijbrand also believes that the union could do more in terms of marketing. "There is a very compelling story to tell. First of all, the - global - cradle of coffee is in the Kaffa region of Ethiopia, which is very special. Additionally, it is ‘Forest Coffee’, meaning you need forest to protect this coffee from sun and rain. So instead of deforestation, they actually want to plant more trees. Consumers are increasingly interested in the stories behind a product. With such a unique story, the advice is to make better use of that in their branding. This can be done, for example, by collaborating with local universities and employing marketing students."

Collaboration with various parties such as buyers, universities, and the local government is therefore very important. Exchange can also take place between different coffee unions. "Of course, you are each other’s competitor, but in many areas, you are also partners, so there is much to be gained. Agriterra could possibly play a role in exchanging information between the unions."

Another finding was that the union could improve financial processes by digitising more. Wijbrand himself experienced difficulties in understanding financial documents due to the use of the Julian/Ethiopian calendar, a different script, and communication problems. Despite this, he considers his role as an advisor valuable. "Although a local expert has more knowledge of the calendar and language, my experience in international trade, gained in various countries such as Vietnam, Ghana, Nicaragua, and Mexico, is an added value. I understand the flows of the coffee trade and know many of the involved parties. That adds something else."

 
General Manager Abebe Megnecto and Wijbrand are drinking coffee from original bamboo coffee cups 

Full of Potential

According to Wijbrand, the union can significantly grow and export more coffee than they currently do. Last year, only 40% of the harvest from member farmers was delivered to the union due to inadequate pre-financing. "With more pre-financing, from parties that are not dependent on Ethiopia’s economic situation, coffee production can be significantly increased. Additionally, they can expand their reach by involving more cooperatives." The growth of the union has a positive impact on the community. For individual farmers, better access to pre-financing means an improvement in their livelihoods, making it easier to pay for their children's school fees, for example.

Satisfaction

Wijbrand looks back on his trip enthusiastically. "I found it a great experience. We worked hard and I hope our findings can help the union in the future and serve as a guide for Agriterra in a potential collaboration."

Staying in Ethiopia also made him realise how well off we are in the Netherlands and that we should not take it for granted. "It was a week of going 'back to basics', back to nature, where hot water, electricity, and the internet are not a given. Many people there can barely read or write. It’s a completely different world. For me, it was an immensely enriching experience! If you get the chance, I would recommend doing an assessment for Agriterra as an Agripooler. Be well aware of what you’re getting into, because it’s not a pleasure trip. But for me, it’s a form of freedom and adventure, and it gives me great satisfaction that you can be really valuable by transferring expertise and experience. You can help a union move forward without immediately showing up with a big bag of money. And indirectly, this helps the individual farmers to develop. I think it's very nice that ABN Amro has this collaboration with Agriterra."

 Final presentation to the board and management of the Kafa Forest Coffee Farmers’ Cooperative Union