Tag Archives: coffee cooperatives


I can’t help but be startled by the contrast.

I spent the better part of last week with colleagues and guests at the Nobel Peace Prize Forum in Minneapolis.  The annual gathering features recent Nobel Peace Prize laureates and many others whose passions are about peace-making.  In this year’s edition, Winds of Peace was invited to host a dialogue about the potential impact of cooperatives on post-conflict societies.  In the session, our colleague Rene Mendoza offered his research conclusions about what constitutes strong cooperatives, how all of the “actors” in the cooperative chain sometimes unknowingly contribute to a lack of fairness to the small producer, and how Fair Trade isn’t always fair.

Our session featured representatives from all quarters of the coffee cooperative chain: producers, buyers, roasters, funders, cooperative associations, consultants and even academics.   They came from Europe, Central America, South America, Canada and the U.S.  We sought as many perspectives as we could find to consider the research and join in the discussion about where and how improvements might be made on behalf of the small producer, and in the process contribute to better chances at creating more peaceful societies.  The gathering was an impressive one, made even more so because of the intensity that they brought to the Forum: these were people who were serious about the topic and, especially, to the notion of contributing to peace.

We heard stories from peasant farmers and the nature of perseverance.  We listened to the findings about premium payments in the Fair Trade and Organic markets and how that money often never reaches the farmers who grow the crops.  We heard stories of progress, for women, for peasant farmers, for struggling organizations attempting to fight the currents of political and monied interests.  We learned about the importance of transparency, of walking in another’s shoes, collaborative work, the importance of “the common good.”  And we felt the passionate undercurrent of an eclectic group of people seeking, in their own way, a means of peacemaking.

And then there was the news coverage this week at the U.N.

The President of the United States openly taunted the leader of North Korea, in front of the rest of the world, by referring to him as “rocket man.”  In the same breath, he stated flatly that, “we will have no choice but to totally destroy North Korea.”  Later in the week, the leader of the free world, in addressing African leaders, twice referred to the African nation “Nambia.”  Unfortunately, there is no such country.  The chief peacemaker in the world did not know the name of the country to which he referred.

In quoting the President I imply no judgment as to his intelligence or the soundness of his political strategies; all persons on the planet can judge for themselves the appropriateness of the President’s position. I only note the stark contrast between last week’s energies toward building peace, and this week’s headlines threatening an annihilation.

I can’t help but be startled by the contrast….


The Patient Is Ill

As one who has tended to be drawn to the Fair Trade (FT) label on a wide range of products, I have always been pleased that some of our cooperative partners in Nicaragua are part of that movement. Their participation has simply felt right, and just, as they have sought to connect with a consumer base around the world which has been eager to support the small producer effort. It has seemed a “win-win” circumstance about which both the end user and the producer could feel good. But there is a growing cause for doubt about both the fairness and the trade in FT, and reasons for all of us to take a closer look at the evolution this once- (and future?) empowering concept.

In a very well-researched and analytical article authored by researcher(and consultant to WPF) Dr. Rene Mendoza, he has undertaken a close look at cooperatives in Nicaragua and other  Latin American countries , to assess the effectiveness of the FT movement.  After studying the symptoms and complaints of the cooperative “patients,” he has also offered a detailed diagnosis of the ailments, including contextual  analysis of the pathology which is draining the energies from cooperatives and their members.  His conclusions should provide all parties interested in the FT ideals with both understanding of the disease and hope for its cures.

Dr. Mendoza attributes no blame for the spread of the unhealthiness, but does identify the complicity shared by all of the actors within the FT chain, from producer to consumer.  He identifies both the malady and its contagion points and has created a clinical treatise on where it leads if the disorder isn’t treated.

The best news is that Dr. Mendoza’s article includes several prescriptions for healing and recovery.  He does not offer a magic pill for immediate wellness.  And restoration of confidence  in a system that initially hoped to marry producers with well-intentioned consumers, in a win-win undertaking, will require serious treatment. Like any well-considered rehabilitation, the restoration to full health is likely to be slow and demanding.  It will require patience, discipline, a collaborative mindset and re-focus on values.  But full remission is possible.

For anyone who has ever purchased a product under the FT label, or sought to be supportive of small farmers in a small way by purchasing their goods, I encourage the reading of Dr. Mendoza’s work.  WPF has provided a link to this groundbreaking research on our website homepage, under the column with Dr. Mendoza’s photograph, and entitled, “Toward the Reinvention of Fair Trade.”

Read it.  It may change your thinking about that next cup of coffee, or that recent chocolate bar and the truth about how it may have reached your home….

Deja vu All Over Again

I traveled to Nicaragua last weekend to spend some time with colleagues there in planning for the second Certificate Program, to be underwritten by Winds of Peace Foundation.  It’s an opportunity to gather some 50 rural producers, technicians, coffee buyers, lenders and others and talk about the coffee process and how to make it work better for the small farmer.  There’s a great deal of planning and preparation put into these programs by Dr. Rene Mendoza and his team, and the chance to sit together and envision outcomes and opportunities is rich with possibilities.  The two days were time well-spent.

One of the results from those sessions was my own assignment: a series of presentations on the topic of open book management and organizational transparency.  I’ve presented the stories of my own experiences with the topic at Foldcraft Co., where we explored the boundaries of shared information in ways that most companies do not.  But this September will require preparation and teaching in a depth that I haven’t encountered since those corporate days more than ten years ago.

In one sense, there’s a bit of anxiety as I organize my thoughts and endeavor to pick out the most salient messages in a topic that is brimming with leadership, organizational and individual motivations.  I hope that I can convey the rewards to be found and the potholes to be avoided.  At the same time, I find myself energized as I prepare to “teach” an audience that has shown an eagerness to embrace a methodology that is both perplexing and enticing.  I only get into a small number of classrooms during the course of a year, and this will be a large and important one.  I can feel the adrenaline already.  I wonder what I’m going to feel like  on September 5.

I’ve drawn upon many of the old materials that we used at Foldcraft, re-discovered many of the best lessons from the case of Springfield Remanufacturing Company (SRC) where the whole notion began.  I’ve gone back to re-read the books and the article and the papers that served as  our own lesson materials, and I recall now why this was such a big deal back in the 90’s when we first began opening our books, our operations and ourselves organizationally.  And once again, I’m pumped up because I know what these practices can mean to any organization, but especially one that is struggling with survival, as many of the small coops in northern Nicaragua do.

And slowly, as I paste together lessons and bits of wisdom and truths about the application of open books in a small U.S. company, I recognize once again the universality of its message.  This is just like preparing for a Foldcraft audience all those years ago.  It’s not a ploy or a trick or sleight of hand program to get people to work harder.  Transparency is not a magic elixir or medicine to cure whatever might ail an organization.  Information-sharing is not an altruistic activity designed to win the hearts of co-workers or to win accolades from management periodicals.

The process is simply an appeal to people’s better instincts, their innate feeling that they want to be a part of something bigger than themselves and successful for their lives.  They want to invest themselves in something they can believe in, that they can identify with, that gives them pride and accomplishment for the daily demand of work.  We all seek the same ends, and to ultimately be recognized and rewarded fairly for the investment of our time and our skills.  In a world where there are always those who seek to strip that away from others, to elevate themselves at the expense of others, there is strength in collaborative and informed work.

As they say at SRC and throughout the open book world, “It’s easy to stop one guy, but it’s pretty hard to stop 100.”  No matter that we spend so much of our time trying to distinguish ourselves from each other.  We are all pretty much alike, and looking for the same affirmations….


How Far Can You See?

IMG_4884Spend any time around an ocean beach or any huge body of water and sooner or later someone gazing out over the water will be asked, “How far can you see?”  It’s an inevitable question and one which the beachcomber invariably cannot answer.  How far is that horizon, anyway?  Can you see what’s there?

We humans can see about 3 miles into the distance, before the horizon disappears with the curvature of the earth.  We can also detect a galaxy 2.6 million light years away, to a time when the first galaxies formed.  With the barest of light, we can see in the dark.  Our eyesight is a remarkable sense, indeed.

There’s another category of sightedness that begs the same sort of question, “how far can you see?”  It’s the view forward, what we can see or anticipate for the future, and what that portends for our current circumstances.  Understandably, we tend to be less accomplished in this effort, because what we endeavor to see is not yet physically visible.  So we do our best to impute, deduce, and imagine.

Many entities try to see, with varying degrees of success.  Within the communities of Nicaragua, leaders often pretend to see bright opportunity for their constituents, when the real view is only one of self-aggrandizement or patriarchal gatekeeping.  For its part, the U.S. government is afflicted with a malady which prevents its elected representatives from seeing much beyond the end of the day; it virtually defines short-sightedness.  Some business leaders work very hard to see into the future, though for many their acuity dims after about one quarter on the calendar.  Fortune-tellers would have us believe that they can see the future with clarity, but I don’t think they do much better than the rest of us.   Unfortunately, too many of us simply hope that the future will be as we might wish it, without working to shape it.

The reality is that in order to “know” the future and create a means to it, we have to be pretty clear about what is happening at present.  That work is more difficult than it sounds, as we tend to fall prey to factors like misinformation, data that makes us look different than we actually are, shorter-term motives and even egos.  If we start from a point of obfuscation, the chances of shaping a realistic future direction are very slim.  But knowing the truth requires self-honesty and discipline, characteristics that are cultivated through courage and practice.

Unfortunately, most of us lack sufficient courage or practice  to express openly those shortcomings and mistakes that have impeded our sight.  Since it isn’t a comfortable or easy thing to do, we don’t practice it much.  And that lack of practice, in turn, renders us less courageous, less open to understanding our truths and being able to use them as the basis for where we’d like to go.  It’s a vicious circle that ever-lessens our ability to see what might be.  And without such vision, we limit where we can choose to go.  We simply can’t see that far.

Later this Spring, a certificate program for cooperatives will be taught in the rural reaches of Nicaragua.  The program will be more than a week in duration, as rural producers will come together to learn holistically about seeing a future of their own making, to create the conditions and circumstances which can better allow those visions to become reality, to open their eyes to their own truths.  Like staring into a bright light after an immersion in darkness, there will be discomfort, disorientation and maybe even even distress.  But like the gradual adjustment our eyes make to that bright light, the emerging views will become clear and free from the drowsy effects of the dark.  And the courage, the practice, the habit, of far-sightedness just may take root in people eager to see further than ever before.  (I’ll be sure to write about the process in April, after the workshop has been completed.)

Meanwhile, I’ll do my best to keep asking the question of myself, “How far can you see?”  It’s one of those introspective probes that just might help me prepare myself for the future….





The gravitational force of ideas and the force at our feet?

“Business women? They are storefront owners, cookie makers, and beauticians, they are not business women,”stated the Mayor. The woman business leader responded, “If nacatamales do not work, they do tortillas filled with cheese, and if that doesn´t, they do something else, they search carefully, they are business women!

Note that the Mayor uses the concept of business to discriminate, and the woman leader to extol the storefront owners… but both read them and interpret them from a certain approach of what business is better, and boxed in by this concept alone they do not see the wealth of the activities and logics that the women can have with their businesses. What is the gravitational force that pulls us toward a certain understanding, preventing us from seeing other realities? In this article we discern the force of ideas, the irruption of new forms of organization, and the need to rethink even in opposition to the pull of gravity.

“There is no such thing as society, there are individual men and women, and there are families” said M. Thatcher in 1987, coinciding with the Reagan era, a time in which the world was marked with the “brand” of neoliberal ideas: the “invisible hand” of the market, that previously was only attributed to God, governed the economy, and democracy was derived from it. Private enteprises gave shape to that market. The “carrot” and the “stick”  backed these ideas that penetrated our minds. So those in the past who cried out against the IMF and the World Bank, now seek them out, and if they antagonized large private enterprise now they are eating together. It happens on all levels; for example, a good part of the cooperatives dream of looking like a company, seek to be a “cooperative enterprise”; the microfinance institutions that started so that the producer families excluded from the private banks might scale up, say that “there is no mission without (financial) sustainability.” All rivers lead to the sea: the organizations, whatever their origins and nature, seek to be an enterprise lowering their costs, seeking subsidies, seeing only individuals, and at any cost. This is the angle from which situations are seen, like the storefronts.

Another force is the “aid industry” or international aid, begun to provide a “human face” to the neoliberal policies. So the Rio Convention in 1992 or the Paris Declarion of 2005 put their “brand” on how to achieve development. Apart from the discourse, in practice they revived the theory of modernization: the developed countries are presented as the road that the rest should follow. From here they see that those of us from the south are “their past” which is why they now know what we should do. This road inverts the focus: the processors, the merchants and the consumers focus on the peasant product, while in the aid chain (aid agencies, intermediate and beneficiary organizations) their focus is outside, from where “the treasure” is coming. Consequently, the organizations and institutions adapt their discourse and talk about adaptation to climate change, gender, governance, food security – with the S of sovereignty if they are seeking resources from ALBA, and without the S with other international organizations.  So, while the size of the state was being reduced to the song of neoliberalism, the NGOs were emerging and the organizations were creating their technocratic “bureaucracy” based on engineers and college graduate experts in negotiating external resources.

Silently another wave is approaching, it is the approach of the solidarity social economy (SSE). It starts “swimming against the current.” Ethical banks, fair trade organizations, networks of small producers, self managed workshops, progressive churches, networks of solidarity economies, solidarity cooperatives, women entrepreneurs, associations, informal collectives, exchange clubs, rotating funds, communal banks, supra-family collectives, landless workers movement are emerging. They are moving into production, service provision, commercialization, finance, consumption, asset  use and exchanges. This movement seeks to reconceptualize business and the economy including self management, cooperation, solidarity, sustainability and community commitment. Also in the US, in reaction to the C type Corporations reduced to profit, and “trickle down” through “Corporate Social Responsibility”, B-corporations are emerging, B for benefits; they are businesses that recover a public purpose, of having financial profits and at the same time being vigilant that their decisions contribute to their workers, communities and the environment. The strength of this wave is now making SSE a part of the legislation in Latin America, and the B-corporations are already in the laws of 13 states in the USA.

Neoliberalism cast our minds in the mold of the economic element and an individualistic vision, so we lit a candle to business. “Aid” persuaded us to be governed by a technocracy, and we changed our focus without a future of our own. The SSE “shook the ground” beneath us. Not everything should be seen with the lens of “business”, nor from the “developed” box seats; B-corporation is a recreation of another “enterprise” with a public purpose. The economy moves in a social space – incrusted in society. More than individuals, there are networks that are “walking uphill.” Re-conceptualizing these processes is not on the official agenda, but it is the challenge, we feel it like when you walk into the ocean, while our eyes and hands are on the waves, another current of water is pulling at our feet. Maybe it is time to pay attention to our feet.

Attack the coffee rust or make the peasant economy viable?

René Mendoza V. and Edgar Fernández

With the collaboration of Wilber Martínez, Edmundo López, Yeris Lanzas, Hulda Miranda, Eliseo Miranda, Pablo Gurdián y Misael Gurdián

 I trusted my land, what I put into it, it gave back to me; for some years now it has become unreliable; now my coffee field is sick. It was sad to cut down the plants, now I am sad.

Small producer from El Ojoche, San Juan del Río Coco

Different voices in the country are expressing their demands and proposals about the coffee rust problem. The principal demand is that the dimension of the damage be quantified, that inputs be provided, that the small-scale producers affected be compensated and be supported in the renovation of their coffee. The government has responded saying that even though they have not declared a state of emergency, they “are already working on the emergency.” (A. Bucardo, La Prensa, 2-3-13), and that “officials from various ministries are working on a national strategy to fight the coffee rust, so that in the coming weeks we will be obtaining solutions to this terrible plague that has affected the coffee fields.” (R. Murillo, La Prensa, 2-2-13). In other words, subsidies in chemical inputs to fight the rust are not coming, nor is the restructuring of bank debts nor subsidized financing for the renovation of coffee fields. This situation leads to the solutions being achieved in a rather shared form among the government, the cooperatives, the associations, the companies and the producer families, a consensus that could also be supported by international organizations as well, like the IADB, FAO, the European Union and organziations that work with coffee, like international fair trade and organic coffee certifiers. This article seeks to provide support for this scenario in a concrete way by discerning the dimension of the problem, explaining the very reductionist dominant vision, and providing clues for a vision that might respond to the majority of the producer families.

The coffee rust, and through that opportunistic door, antracnosis, is a reality difficult to ignore; the marriage of coffee rust-antracnosis is leaving the coffee trees standing dead upright. Nevertheless, its advance and effects are not generalized, they vary from one micro-territory to another. The more concentrated the areas of organic and conventional coffees, the poor management of the coffee farms (producers turned into “harvesters” without technical assistance), and weak social capital (prevalence of crop lien lenders, cooperatives removed from their members), the more affected they are. The families in these micro-territories are already feeling the reduction in their income, there is the risk that they will not honor their debts nor the coffee they have committed to turn in (under crop liens), which will weaken their cooperatives and financial institutions. This will restrict credit just when they most need it to restructure their farms (cut down bad plants, renovate, apply fungicides, fertilize, manage plant tissue) and to survive. Then the next cycle will come and – with or without renovation – they will harvest even less than now…and given that the damage of the coffee rust in Central America is being accompanied by coffee prices going down, in these micro-territories what is coming is high indebtedness, organic coffee converted into conventional coffees, possible change in variety that would affect the coffee quality that the country has obtained, cooperative bankruptcy, dispossession of land, and the possible arrival of impoverishment.

The dominant question for responding to this situation has been: How to attack the specific problem of the coffee rust and rescue the coffee fields? At first light this question presupposes a technocratic vision, hiding the causes that created it, making believe that things get resolved only with external resources; it is short term which ignores the consequences in the medium and long term, and is expressed in these times by both those who are demanding attention as well as by those who are announcing policies. Consequently, companies are offering chemical inputs as a panacea to the coffee rust, and some desperate producers are trying to acquire them, without it being the proper moment to apply them, and without thinking about what their coffee and their farm really needs. What is being talked about is the promise of the renovation of the coffee fields, which implies doing nurseries in three months starting now, receiving income for that recently renovated coffee in 3 years, and the worst is that these promises are tempting the producers “to wait” while the coffee rust-antracnosis marriage “is not waiting”, it is advancing like the spread of an oil spill. This medicine is unconvincing, the absence of shared solutions (not necessarily common) is losing time that is more valuable in the face of the coffee rust-antracnosis, and favors more a logic of the large companies – coffee growers and sellers of chemical inputs – deepening the culture of dependency, and ignores the fact that this situation is rather an indicator of an unequal model of coffee growing that has left the small producers without the proper conditions for restructuring their farms.

The question that we need to ask ourselves is: How to make the peasant economy viable, which is where the majority of the coffee producers are. This question assumes a more holistic vision that includes the technical, economic, environmental and social aspects; it is short term to the extent that it is also long term, and it is a thinking that expresses the peasant perspective. In what follows we will talk about 3 elements proposed under this framework.  First, we need to respond seeking a balance between the technical and economic aspects; the renovation should be with resistant varieties and mixed among varieties that provide a good cup (coffee quality); in renovating the coffee fields, the peasant families should plant beans, corn and plaintains in the corridors, which will generate income in the short term which they urgently need, and in the medium term establish the culture of crop association (coffee+basic grains+plaintains).

Secondly, the technical-economic approach needs to be combined with the environmental approach. The regulation of shade, complete pruning and renovation leaves the soil coverage unprotected in the face of the impact of the rain, so the solution mentioned of planting basic grains and plaintains in their corridors is also an environmental response, because it will help to protect the topsoil. With the regulation of shade (thinning because of high density, thinning for coffee renovation), INAFOR should apply their policies in a flexible manner to allow the peasant families to take advantage of the wood trees on their farms – that income will help them to honor their debts and to invest in their farms.

Organic coffee appears to be more vulnerable to the coffee rust and antracnosis, because a good part of that coffee is organic only because chemical inputs are not applied on it (fertilizers and insecticides), but nor are organic inputs applied, and because those coffee fields generally are farther away from the highways and in the hands of the poor strata of the population, who make their coffee profitable through extensive technology – “what I put into it, it gave back to me” said the producer from El Ojoche in the quote at the beginning of the article. It is important, then, that the cooperatives mobilize so that their members provide good management to their coffee plots, that their technicians really provide technical assistance, and try to get these certifiers to adapt their norms to the local conditions that the current situation deserves.

Organic coffee certainly requires attention. Those who stipulate the prohibitions on the use of chemical inputs are OCIA, Biolatina, Naturland, the European Union and the Government of the United States. Fair Trade/FLO cert prohibits the most toxic ones that have been internationally condemned. The cooperatives should coordinate with those certifiers to be flexible in their policies, permitting the low use of chemical inputs in the organic coffee fields, in order to effectively counteract the coffee rust and antracnosis. On the other hand, since April 2011 Fair Trade has demanded that at least US$5 of the social premium be used to increase the productivity of the farms; the cooperatives should seek to get most of the amount of the premium to be used to make the peasant economy viable, and that the technicians who are recording data for the certifiers would analyze the data jointly with the producers. Without greater flexibility in the policies and without effective accompanyment for the conversion of their farms, the organic coffee producers, in particular those who are fertilizing with organic fertilizer, will turn toward conventional coffee (and toward UTZ and Rainforest certifications, that are competing with Fair Trade), and if they obstinately persist in remaining organic, they as well as their farms will “look pathetic”.

Thirdly, in contrast to most of the Northern Atlantic Autonomous Region and the Southern Atlantic Autonomous Region, the central northern region of the country does not have any more agricultural frontier to expand into, which is why intensification of their agriculture is their only option, whose viability (the productivity of their land, labor and capital) depends on the producers expanding and generating knowledge. The land has become unreliable: the culture of extensive agriculture IS NO LONGER profitable. In the face of this reality, it requires technical assistance coordinated between producers, “barefoot” grassroots technicians (promoters) and experts, which should happen in the form of alliances between different organizations and structures for the generation of local knowledge which coincide in the specific micro-territories. This technical assistance should include financial education: instead of taking on debt with businesses like Gallo más Gallo and Verdugo over “luxury consumption”, learning to calculate costs, plan, prevent risks, save, and know how to invest; instead of alcoholism, that along with “luxury consumption” absorbed the income from coffee, organizing the members of the family with different roles to diversify their economies. The experience of NITLAPAN-UCA, and of the LDF microfinance institution, shows that the small producers appreciate the technical assistance when it helps them to increase their productivity and prevent diseases like coffee rust and antracnosis. This increase in productivity reduces their per quintal costs, and generates more income and knowledge for them. If technical assistance, credit and good markets are combined in specific territories, along with good organizations, the families improve their lives, the coffee rust flees, the culture of no payment recedess, and the peasant economy is made viable.

Supported by these points, a new type of producer can emerge, producers who observe and study the behavior of the coffee varieties on their farms, choose the most resistant plants to obtain seed from their own farm, mix it with what later makes the “cup”. They are producers that understand that the problem is not the variety of the coffee, nor whether it is organic or conventional, but the management of their farm and the social capital in their territory; do not restrict themselves to the State, but take risks and shedding aside their “sympathy” for their trees prunes them, cutting them off at the stem, renovating, reorganizing themselves from their families and localities, seeking technical assistance and implementing what is agreed upon with the technicians about what to do on their farm, and when they get credit and good income, feed their farms and feed the knowledge of their families, which are “the hen that is laying the golden eggs.”

These points should also be talked through and negotiated with the organizations and institutions. The state institutions should respond with clear policies (e.g. INAFOR with wood trees on farms) and be prepared with social compensation measures for the situations that are coming. Organizations like CONCAFE should coordinate with homologous organizations in Central America to obtain varieties of coffee that are resistant to diseases and at the same time provide a good cup (high quality scoring higher than 83 points), and thus avoid the risk that everyone in the country goes for the catimor variety that tends to cup below 81-82 points, because of its wooden task and its robusta origin. The grassroots cooperatives should be a space for looking for concrete and quick solutions in each micro-territory; the second tier cooperatives for negotiating – supported by the Coffee Network and the Latin American Coordinator of Fair Trade Coffee Producers (CLAC) – with the international fair trade organizations on being flexible with their policies, and for the promotion of  collaboration for more learning among certifiers, technicians and producers. The financial institutions, far from being frightened off, should enter into an alliance with organizations that are innovating in technical assistance and in participatory quick assessments, and with cooperatives that are located in those same territories. The traditional technical assistance (who have been turned into sellers of chemical inputs, messengers of the boards of directors, debt collectors and data collectors for the certifiers), need to turn into facilitators that co-create and trade knowledge with different actors (producers, cooperatives, microfinance organizations, institutions that do research and provide technical assistance, certifiers and fair trade organizations) that have an impact on the territories.

In pursuit of shared solutions within a framework of consensus among different actors, the challenge is mobilizing intentions, forces, and opening attitudes to work with the families of the small producers in specific micro-territories, as well as making a commitment to peasant viability: productive reorganization is a reality in which extensive agriculture is no longer profitable and intensive agriculture is the way – at least in the central region of the country where most of the coffee in the country is found.

Coffee rust: A challenge for rethinking agricultural production

René Mendoza V, René Gómez F., Marcelo Rodríguez, Manuel Bermúdez and Edgar Fernández

Coffee rust, a disease produced by the Hemileia vastatrix fungus, according to CONCAFE is going to affect 30% of the coffee area which is 172,000 manzanas, according to FUNICA the coffee harvest from this cycle will be 400,000-500,000 quintals smaller, and also due to the low coffee prices, APEN states that we are going to export US$ 70 million dollars less, and CETREX says it will be US$ 100 million less. In the face of this situation, different sectors are saying that they do not have credit, that their coffee is up to 40 years old, and they are demanding a program from the State: coffee renovation (CONCAFE talks about 65,000 manzanas, 38% of the total), support for fertilizers and chemical inputs, and training for technicians. In this article, before rushing into doing estimates, resorting to old technical prescriptions and sticking our hands out for resources, we invite people to study this case and seek real solutions.

Let´s start by asking ourselves what is happening with the coffee rust. Coffee rust is a fungus that infects the coffee leaf, sprouts seeds (spores) that with the heat (temperatures of between 22-24 degrees centigrade) multiplies and grows on the leaf. This leaf gets filled with coffee rust, cannot breathe and gets sick, and the plant produces little coffee. The young leaves resist, while the old ones succumb. In other words, weak, malnourished coffee (with little or no fertilization) in a wet environment because of too much shade and weeds, without light and air, is appropriate terrain for coffee rust to propagate. The coffee fields under organic and more ecological management are suffering more than the “technical” fields with less shade, more plant density and more fertilizer. This situation of the coffee rust is happening now and not in previous years due to the high production of the past cycle (2011-2012) that left the coffee fields more weakened than in previous years Also in this cycle there was heavy rainfall because of climate change, which facilitated the propagation of the coffee rust spores, which we used to live with on a small scale in this country. The rainfall even changed the coffee rust cycle which went from 30 days to 22 days. On farms that are well managed and that have neighbors that also manage their farms well, coffee rust does not have an impact. Coffee rust makes us look under the covers to find other additional problems: 1) old coffee fields and low plant density, varieties with not much resistance to coffee rust; 2) technicians with a partial, non-systemic vision and not updated on factors like climate change, and even worse, now turned into coffee harvest collectors and loan granters-collectors; 3) lack of financing; 4) institutional incapacity for prevention; 5) weak local social capital.

Now let´s look at the technical part to expand our question. If coffee rust is propagated fundamentally by poor management, and management requires resources, we notice that in the last 6 years we had the best coffee prices in the last 30 years. Why was there no good management of the crop if there were resources? An easy answer inspired by liberal philosophy would be to say that “the producers individually were neglectful”; supported by neoliberalism we would say that “they did not allow the market to work”, whereby the large producers would have dispossessed more quickly the “neglectful” small producers of their coffee lands; and from the perspective of the paternalistic culture of the benefactor state and the donor culture, we would say that it is “because of lack of resources.” These versions are no longer convincing.

Do good prices mean better income for the producers? In a study published in the Revista Encuentro, 2012 (“¿Institución patrón-dependiente o indeterminación social? Genealogía crítica del sistema de habilitación en el café”)[1], Mendoza, Fernández and Kuhnekath estimate that 40% of the coffee producers are prisoners of the crop lien system, a century old institution, through which, regardless of the international price, they sell part or all of their coffee between May and July every year at US$ 45/quintal (15+15+15); in other words, the paradox is that coffee generates large amounts of resources, but not necessarily for the small coffee producers who are 90% of the coffee growers in the country. The study also shows that the cost of commercialization, including through the cooperatives, increased; for example, the dry milling at US$6/quintal from before 2000 to $9/quintal in the last 6 years; the manipulation of weight has gotten worse (14% per sack when it is wet) as well as the manipulation of coffee quality (3-4% per sack) to the detriment of the producers. In another study, Bastiaensen, Marchetti, Mendoza and Pérez (“After the Nicaraguan Non-Payment Crisis: Alternatives to Microfinance Narcissism”), presented in the “Microfinance and the New left in Latin America” conference in Belgium November 12-13, 2012, showed that the crisis of the microfinance institutions made agricultural credit drop drastically since 2009, something that surely contributed to the fact that the previously mentioned crop lien system expanded. The zones with the worst roads, non-legalized properties, less organized producers and those with the least presence of financial institutions are where there are more crop lien loans and where the usury is harshest.

In other cases the income was “diverted”. Some leaders, manipulating their organizations, bought coffee in the 2011-2012 cycle in an uncontrolled fashion seeking to obtain huge earnings, but they had problems selling the coffee, with warehouses of dry mills even in the months of August and September 2012 seen to be full of coffee; a consequence was that their members received little or no credit, thus making their coffee fields even more vulnerable. Other family members that had credit and received good income for the coffee, did not reinvest in their farms, used those resources for consumption (food, house improvements, purchase of vehicles).

This institutional dimension that is just beginning to be revealed had to do with the entire chain of the coffee actors, and with the different institutions (the State, aid agencies and producer organizations).  The formal “visits” and “monitoring” of just the plants, that end up with a “list to Santa Claus”, need to be replaced by studies that would include the small coffee producers, their organizations and communities. Because they are the ones who know in their own lives about the chain of “plagues” that have been affecting them for some time: coffee rust, “crop lien” loans, costs of intermediation, dispersed and prescriptive technical assistance from a supply side logic, external resources that are lost along the way, projects that exclude women.

It is also necessary to study innovative experiences, two examples of them are mentioned here. One refers to the combination of technical assistance and financing, between the NITLAPAN institute of the Central American University (UCA) and the micofinance agency the Local Development Fund (FDL). Given the situation of the coffee rust, a quick assessment was done of 40% of the 2,424 clients (coffee producers in the northern part of the country) whose loans will come due between December 2012 and March 2013. 92% of them said that they did not have problems with the payment of the loan nor with the coffee rust, they are producers with good management of their coffee and their farms, some achieving up to 80 quintals/manzana. The plantations that are damaged are those with the oldest plants, without appropriate management, and those of organic coffee. What explains these good results? It is the articulation of three actors, NITLAPAN-UCA, the FDL and the small producers, combining credit, technical assistance and family organization around the renovation of coffee, management of the tissue and the incorporation of trees with multiple services, the opportune use of fertilizers and chemical inputs, management of the pulp and honey waters for the use of biofertilizer and organic fertilizers, that restore the nutrients extracted in the harvest and prevent disease in the plants, investments in wet mills and depulpers. These prudent practices at the family level and in groups have been producing a new type of producer capable of investing in their farms and families, and constitutes an outlook that it is possible to improve their standard of living.

Other innovative experiences are found in first tier cooperatives with less than 60 members and that have credit and technical assistance services, and that sell their coffee either through other second tier cooperatives or directly, particularly when a good part of the credit capital of these organizations comes from the contributions of their members. This type of organization, the minority in reality, have members with better management of their coffee fields, greater investment in the renovation of their coffee, and their members are concentrated in micro-territories. For example, the Solidaridad Cooperative of Matagalpa does not have coffee rust in the fields of their members, because in the last 3 years they have combined technical assistance and the purchase-application of timely inputs, a policy of pruning 20% of their total coffee each year, even overcoming in this way the myth of the bi-annual nature of the coffee harvest (one year a good harvest, and the next a bad harvest); and because they are concentrated in a micro-territory (the community of Aranjuez, Matagalpa). We also find groups of producers whose coffee farms were not affected by the coffee rust, due to the fact that their good management of the coffee is mediated by good family organization (distribution of tasks) and the extended family in micro-territories, a spirit of savings, ongoing investment in their farms, and taking the most advantage of any project (e.g. technical assistance).

Coffee rust is part of a chain of scourges. It challenges us to understand coffee growing, the producer families and their social networks, the chain of actors connected to the agricultural production, the complex and historical institutionality, the micro-territories with farm management that generate positive externalities, and also challenges us to look at the good experiences. This even allows us to reflect on them in terms of development models; on the one hand we have a model of extraction from nature (also characterized as low productivity by Núñez, 2012, “the crucial battle for agricultural yields”,  Revista Correo No. 20), with a logic of harvesting without investing nor taking care of the farm on the part of the actors, including on the part of the poor workers with low pay, and therefore little motivation to take care of the farms; an unequal model, short term, unsustainable and fragile in the face of any adversity like the current coffee rust. And on the other hand we have a more sustainable growth model, even environmentally more sustainable, that reinvests in fertility, with remunerated producers and with social family density in micro-territories, and supported by human and financial capacity for managing their farms.

If the government ignores this reality, does not distinguish between these models, and rather is dragged along by a short term political agenda, then it runs the risk of proposing a solution similar to the CONARCA Plan that affected the ecology and peasant viability in the 80s, to the coffee renovation program of the Chamorro administration that only benefitted the business coffee growers in the 90s, or to the program under the Bolaños administration of restructuring the debts of the coffee producers with the commercial banks and the microfinance institutions, without taking advantage of the moment of the crisis in the coffee prices to launch a program for the transformation of national coffee growting and provide resistance to the periodic price and infestation crises  like the coffee rust. CONARCA and the program under the Chamorro administration had in common the direct intervention of the State to promote the adoption of standardized technological packages, while the Bolaños administration thought that the State should not directly intervene, and that it should be left to market forces. A current solution of the massive renovation of coffee fields with a standardized technological package, with subsidized interest rates and organized in a centralized fashion, would benefit the coffee growing business of coffee monocropping that is highly dependent on chemical inputs, and would distort the most interesting cooperative movement, it would affect innovative experiences like those mentioned, and consequently – in harmony with the neoliberal models of the past – would strengthen the old crop lien system and the “motley” intermediation that works against the peasant farmer viability and facilitates the reproduction of “plagues” like coffee rust.

The current situation is an opportune time for a new model of more sustainable growth, as the mentioned innovative experiences indicate, a framework in which it is important to work on a short and long term proposal. The most urgent thing is to identify the zones contaminated by the coffee rust (e.g. zones of San Juan del Río Coco), and, to prevent it from continuing to spread, declare them emergency zones (“quarantined”) and provide them with holistic treatment of the infected coffee farms: direct treatment of the fungus with copper and other fungicides, regulation of the shade and management of the tissue (pruning and new branch sprouts depending on the plants and areas damaged), fertilization (chemical or organic) of the plants that will be left weaker due to the regulation of shade, and economic reasoning of the technical measures; this support should include policies that would keep the small scale producers from a drastic drop in income, for getting over indebted or falling once again into the claws of the crop lien system, because that would mean the expansion of the coffee rust and the impoverishment of the small producers.

Parallel to these urgent measures, the following policies are fundamental. First, renovation of the coffee, taking into consideration in decision making varieties that have better prices (e.g. caturra), but that require more investment to resist coffee rust, and varieties that are resistant to coffee rust (e.g.  the timor or catimor hybrid), but that get a lower price, are more productive and more demanding of fertilizer. Secondly, a combination of credit (for renovation), technical assistance, markets, and organization of the producers; this should include incentive policies (for example, financial awards) to producers that take decisive steps in good coffee management and incentives for efficient and transparent organizations, measures that would roll back the crop lien system. Third, policies that have an impact on calibrating scales, and on making the quality control of coffee transparent as well as the pricing for the different levels of quality. Fourth, financial education so that the chain of actors save and invest with a perspective of ongoing learning.

To make these policies viable requires a state much more willing to create a consensus around their policies toward coffee growing and the coffee growers, not just at the level of the chain, but also at the territorial level. Only in this way will public policy be able to respond in the best way to the agro-ecological, social and economic diversity of the productive contexts of coffee growing. The territory can become the privileged space for articulation among the sector policies and the actors and their local initiatives. This orientation in favor of territorial development means a new role for the State that has to combine a function of normative regulation, of support for investment (infrastructure, etc.) as well as being a catalyst for negotiated processes. Specifically linked to this last point, it would try to ensure that the small producers and those that are most impoverished, as well as their organizations, count and their proposals are heard.

[1] See translation called “Path Dependency  and the Crop Lien System in Coffee” at http://peacewinds.org/rural-development/path-dependent-institution

The Cooperatives need to reinvent themselves

By René Mendoza and Edgar Fernández

“ We are supporting a family that is a member of a milk cooperative; the cooperative has enormous capital earnings but it has members in extreme poverty”, said an aid worker. This type of paradoxes also occur in coffee, transportation, savings and loan cooperatives. Reviewing the experiences of cooperatives in the world, we find that the first consumer cooperatives of England (working consumers who put their salaries together for better food consumption), that evolved to importing products and having plantations in the colonies and food factories, failed because they produced a managerial elite, and the economic success became an end in itself. Digging into cooperatives in Nicaragua, some have disappeared, trapped by corruption, others remain in the above mentioned paradox, and others persist as interesting cooperatives.

In general the cooperatives were injected with neoliberalism, a logic that reduced the focus on the economic aspect and on individualism, and with the “aid industry”, a dependency on external resources and a technocracy that took the place of the leadership structure itself. The meaning of organization itself got distorted: “If you do not have an office and management, then you do not have organization,” say some international organizations, to leave implicit: “I reach agreements with management and in an office.” In other words, one thing is the cooperative model under the principles of Rochedale (equality, voluntary, one vote per person and participation in decisions, autonomy, education, cooperation among cooperatives, and community commitment), and another thing is its implementation. Rather than reflect on the causes that distort the cooperative movement, I note three elements needed for the cooperative movement to turn itself into learning organizations and redirect its purpose in coherence with its principles.

First element: rethink the organizational structure. It is common for us to find that the cooperatives only have one or two assemblies a year; that the oversight boards focus on the finances and even have difficulties doing so; that the administrative council is almost only the president, and they are immovable (“the same leader but in different positions”); and that many times the managers are the real power. In addition to the formalities established in the statutes and in the law of cooperatives, what can make them work?

  • The assembly should meet every month and be the body that selects the auditing firm on the basis of a slate presented by the Oversight Board. This would break with the custom of seeking auditors that reach conclusions that the management and/or president want them to reach.
  • The Oversight Board watches over the finances, compliance with agreements of the Assembly, and the rotation of leaders to prevent “the same leader” appearing in each election. In the cooperatives that have the fair trade seal, the oversight boards and the fair trade organizations should coordinate so that the financial and social audits (rotation of leaders and respect for the rules)  are transparent and prevent covering up irregularities.
  • The Administrative Council has a strategic role, while the management has an operational role. When the first tier cooperative are the ones that develop different services, the administrative council of the first and second tier play a strategic role; when the second tier cooperatives concentrate the different services, the manager takes on the strategic role and the leaders a decorative role; the territorial logic allows the cooperative movement to recover the strategic role for their leaders.
  • The management posts should be rotated every two years: cooperative development management, commercialization, processing, administration  and finance.

Second element: relations of counter-balancing power, both from below and from above. An administrative council needs a counterbalancing power from below: that the commissions and the oversight board function, e.g. the credit committee is the only body that approves or rejects credit requests, and that the assembly play a  more active role.  The counterbalancing power from above when the role of the State, aid agencies and the fair trade organizations contribute to the first element mentioned above, complying with the financial and social audits, and making sure that the assembly considers the results. The first tier cooperatives  exercise the role of counterbalancing power from below for the second tier cooperatives, and these in turn act as counterbalancing power from above.

Third element: turning attention to the innovation processes. Instead of being intermediating organizations, administering services, the cooperatives need to be incubators of social and technological innovation processes, with policies that would increasingly include women and youth – women for their virtues and multifunctional role, and youth for their increasingly better educational background – and being an “open book” (information on finance, credit, commercialization costs, project beneficiaries gets posted on the walls of the office). This dynamic would make the leaders and technical-administrative staff focus on the member families and on their communities.

The first and second element make the cooperative become learning organizations; the third gives them back their sense or perspective and innovation. The three are mediated by power relations; none one wants to be controlled, leaders and managers tend to perpetuate themselves, second tier organizations want to be the magnet for resources, aid agencies look for the managers, governments are looking for controlable leaders. Only a strong cooperative can turn the cooptation into an institutionality that would contribute to the lives of the members families and their communities.