MAKING A DIFFERENCE IN THE LIFE OF THE CAFETERO. National Federation of Coffee Growers of Colombia

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1 Luis F. Samper

2 MAKING A DIFFERENCE IN THE LIFE OF THE CAFETERO National Federation of Coffee Growers of Colombia Washington, June 26, 2002

3 Agenda 1. Background of Colombia s coffee industry 2. Coffee producers and their Federation 3. Colombian Federation services to the coffee communities 4. Two Projects and Examples 4.1: Rural Workshop Program 4.2: Specialty Coffee Program

4 Background of Colombia s coffee industry!coffee: an industry vital for the Colombian economy "Country s Economic Growth "Industry s Development "Urban Center Development "Communications "Financial Sector "International Trade

5 Coffee Related Indicators Coffee - Growing Towns: 559 towns Country s total: Permanent Population: 4 million 10% of the population Coffee - Growing Farms: 551,000 Coffee Growing Area : Farm s Average Size: 3.6 million hectares = 9 million acres (3% of the territory ) 6.5 hectares = acres Plantation s Average Size: 1.5 hectares = 3.75 acres

6 Coffee Related Indicators Production (60 Kg bags): Exports (60 Kg bags): million (12% of world s total) 10 million (14% of world s total) Exports Value: US$ billion (14-18% of world s export value) Agricultural Employment: people (35% of total agricultural employment) Total Employment: 1 million people (8% of country s total)

7 Coffee is an essential part of our history!generates employment.!improves income distribution!promotes regional development!supported by strong institutions: "National Federation Of Coffee Growers of Colombia "National Coffee Fund.

8 Coffee producers and their Federation National Federation of Coffee Growers of Colombia!Founded in June 27, 1927!Is a private, non-profit organization, established by growers - NGO!Its mission is to improve the standard of living of the more than 500,000 Colombian coffee growers.

9 Coffee producers and their Federation Organizational Structure National Committee 10 Provincial Committees 180 Local Committees Participating Coffee Growers

10 Coffee producers and their Federation Commitments of elected representatives!to defend and represent the interests of the coffee growers.!to maintain a dialogue with coffee growers and communicate their concerns!to coordinate actions dealing with the industry.!to design and implement services and programs that benefit the coffee regions.

11 Colombian Federation services to coffee communities The Federation as an NGO! Target population: "Growers and their families "Grower community "Coffee region! Decentralized decision making: "Priorities dictated by local community! Funded by: "Grower contributions, donations, international, government

12 Federation s services to coffee communities! Economic and Agronomic: "Research and development "Direct technical support to growers "Environmental programs "Product diversification! Social: "Education "Infrastructure "Employment & supplemental income "Health "Social security

13 Infrastructure Investment: Coffee Committees 1998 Infrastructure Investments. Improvement Quality of Life 10% Aquaducts & River basins 20% Housing & Ecological 8% Other 11% Rural Electrification 14% Aprox US$ Million Roads & Bridges 37%

14 Infrastructure Projects financed by the Federation:!Policy: to work in association with government entities.!communities also contribute providing labor or other resources.!the Federation does not profit directly for the operation or investment on infraestructure.!the project is administrated directly by the local community.

15 Infrastructure Projects Summary AQUEDUCTS ELECTRIFIC. EDUCATION NUMBER NUMBER WASTE PIPE COMMITTEE INFRAEST. BENEFIC. HOUSING CLASSRO. TEACHERS SYSTEMS ANTIOQUIA BOYACA CALDAS CAQUETA CASANARE CAUCA CESAR CUNDINAMARCA HUILA MAGDALENA META NARIÑO NTE. SANTANDER QUINDIO RISARALDA SANTANDER TOLIMA VALLE TOTAL Source: Regional Committees of Coffee Growers Production and Social Development Division

16 Infrastructure Projects (cont) Coffee Committee Road investment (km) Bridges Built Built Improved Vehicles Pedestrians ANTIOQUIA BOYACA CALDAS CAQUETA CASANARE CAUCA CESAR CUNDINAMARCA HUILA MAGDALENA META NARIÑO NTE. SANTANDER QUINDIO RISARALDA SANTANDER TOLIMA VALLE TOTAL FUENTE: Comités Departamentales de Cafeteros División de Producción y Desarrollo Social

17 Diversification Efforts: Rural Workshop Program!Prime example: Industrias Integradas company: "Created in 1974 "Diversifies and stabilizes coffee grower / household income "Produces clothing, footwear and lingerie.

18 Dagua Venecia CALI Versalles La Tulia El Villar Argelia Ulloa Caicedonia Salonica San Antonio La Ma rina Potrerillo Rural Workshop Program El Villar Argelia Ulloa Versalles La Tulia Venecia Caicedonia Salonica San Antonio Dagua La Marina Potrerillo CALI 12 plants in rural areas of Valle province

19 Rural Workshop Program! Prime example: Industrias Integradas company (continued): "Achievements: # 850 associates, mostly women, who have a worthy job that is permanently compensated # 12 workshops located at the rural zones # Average compensation: minimum wage plus all social security benefits. # Own lingerie line. # Sales to domestic and international markets

20 Rural Workshop Program! Industrias Integradas US$ Sales Year Assembling Own Lines Total Sales Services

21 Rural Workshop Program! Industrias Integradas Scaling up bottle necks # Market Access, Market Access, Market Access 2000: CBTPA (Caribbean Basin Trade Preference Act). Result: US Customers cut prices in up to 24% for our services. 2001: ATPA (Andean Trade Preference Act). Similar to CBI treaty. Not approved yet by US Congress 2005: China s access to the WTO and the elimination of their quotas is the biggest challenge ahead. # To Scale Up: Maintain and enhance Quality Standards and Productivity. Growing own lines overcoming distribution and branding challenges and reduce dependency on few customers.

22 Rural Workshop Program! Industrias Integradas Challenges Ahead # Maintain and enhance Quality Standards and Productivity. Growing own lines overcoming distribution and branding challenges and reduce dependency on few customers. # Colombian Conflict. It has kept international customers from coming. The company is a social company and has never had problems with armed groups, but Colombia s image complicates doing business. # New Markets. Opening new export markets is a crucial challenge, particularly for owned brand (Symphony)

23 Coffee Income Generation: Specialty Coffee Program! Prime example: La Vereda company: "Community organized in1995 "Brand created in 1996 "Success : Quality, but also on Marketing "Bundles Coffee and Information. "FOCUS: Capture and maintain Value Added to Growers Certification marks and Trademarks

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37 Specialty Coffee Program! Scaling up bottle necks - # Marketing Funds to build brand identity Access # Trademark Protection Easy to Register, Difficult to Protect # Market Size Much smaller than it appears # Roasters and Importers not in favor of Grower Empowerment Love Blends # Vast Majority of Specialty Roasters not really committed to pay higher prices # Vast Majority of Specialty consumers not interested?

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