Across the world, you’ll find coffee being produced, processed, and sold in cooperatives. But what is a coffee cooperative? How does it work? And how can farmers produce traceable single origins while working together?
To find out the answers to these questions and more, I spoke to José Marcos Rafael Magalhães, the President of Minasul cooperative, and some of its farming members. Minasul has more than 6,000 members and covers four of the six regions of Minas Gerais in Brazil, which is the biggest coffee-producing state in the world. In fact, it produces more coffee than the entire country of Vietnam (and, given that Vietnam is the world’s second-largest producing country, this is no small matter).
Read on to discover what a cooperative really is and how it fits into the specialty coffee supply chain.
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Cooperate members attend a Minasul event. Credit: Minasul
What Is a Coffee Cooperative?
The clue is in the name. A coffee cooperative is a group of coffee producers cooperating to gain better access to resources, leverage better marketing and business opportunities, provide training, and more.
Members will typically pay a fee that is then reinvested into the coffee community, based on the logic that combined funds can achieve more than if spent individually. Additionally, many large cooperatives have full-time members of staff that work in administration, marketing, education, research, and more.
“A cooperative is a non-profit organization…” José Marcos tells me. “Participation is voluntary and our job is to facilitate access to the means of production, or supplies, for our members.”
He continues, “We understand as ‘supplies’ not only fertilizers and pesticides but also credit, information, technology… We have to work to provide inputs, logistics and, of course, also handle market issues and do the marketing for the producers.”
Young coffee trees grow at Fazenda do Lobo, Minas Gerais, Brazil. Credit: Andrea Nogueira Foresti
What Does a Coffee Cooperative Offer Producers?
Let’s look at what “facilitating access to the means of production” means for producers. Andreia Nogueira Foresti has been a member of Minasul cooperative for more than 35 years. Her farm, Fazenda do Lobo, lies in Três Corações, Minas Gerais, Brazil and she considers herself a medium-volume farmer.
“[Minasul’s] purpose is to put cooperative members’ products and services on the market, at more advantageous terms than we could achieve by ourselves… They provide a service to us,” she explains. “We have a technical department with a support team, an agronomist… There’s the agricultural supply store. There is a credit bank that facilitates financing for us at much better interest rates. So, we have full support there.”
There is in fact a wide range of projects that a cooperative might take on, including but not limited to:
- Providing supplies such as pesticides and fertilizers
- Providing technical assistance
- Providing loans at lower interest rates than banks
- Buying their members’ crops and selling them
- Connecting their members directly to buyers
- Facilitating certification
- Educational assistance
- Business advice and training
Natural and washed coffees dry on raised beds at Fazenda do Lobo. Credit: Andrea Nogueira Foresti
Different Farms, Different Needs
What’s more, a cooperative may find that different members need different types of support. Cooperatives should consider this when developing their programs.
José Marcos tells me, “The cooperative wants to work side-by-side with producers and to understand our members’ expectations. We research; we divide them into small, medium, and large. They all have the same importance but different needs. So, we try to meet each type of need.”
A large producer might need a harvester at a cost of US $300,000, he elaborates, while a smaller one will need a US $300 mãozinha – a hand-held harvester that shakes the branches with plastic “hands” to knock down loose, ripe cherries. It’s Minasul’s responsibility to make sure that they can support both producers with this.
Yet it’s not just about the size of the property. Producers may have different needs based on their climate. Different topography could limit what kind of machinery is appropriate. They might need educational programs for themselves, related to coffee processing or business management, or they might need education for their children. The list of needs is long and varied.
Wet mill facilities and drying patio in Minas Gerais. Credit: Minasul
Why Not Operate Independently?
Of course, coffee producers don’t have to work with a cooperative. They could work independently, with coffee traders, exporters, certification programs, and more. This can take many forms, from selling to local intermediaries to direct trade with roasters. So, what are the considerations for producers?
First, not all producers have the resources available to work independently. Smaller farmers may not produce enough volume to attract exporters and roasters, forcing them to sell specialty-grade coffee at commodity prices to intermediaries. They may also lack the resources to market themselves by setting up social media accounts, devoting time to meeting potential clients, and attending coffee events around the world.
Cupping specialty coffees produced by Minasul’s members. Credit: Minasul
On the other hand, the producers may wish to differentiate themselves or develop a direct trade relationship. It’s worth noting that, depending on the cooperative, the ability to do this may vary. My interviewees explain that, at Minasul, the cooperative will connect producers of high-quality coffee to interested third wave roasters so that the producer and roaster can begin their own direct trade relationship. In this way, the coffee remains a traceable single origin. In smaller cooperatives, however, the producers’ crops may be processed and sold together. By its nature, a cooperative focuses on the group – not the individual.
Another point worth considering is profit margins. As José Marcos tells me, a cooperative should be a non-profit organization. “The cooperative is focused on producers’ wellbeing,” he emphasizes. “It aims at producers’ development. That means the cooperative is only doing well if the producer is doing well.”
This is why cooperatives often sell fertilizer and supplies to members at reduced prices, provide low-interest loans, and more. They can buy products in bulk and sell them on, only aiming to cover the costs of running the cooperative and not to realize a profit.
Other organizations, however, may have a duty to shareholders to make a profit. And, since independent producers will typically be operating on smaller scales than cooperatives, the costs per transaction may be higher. This is because the price paid needs to not just cover the material costs (and a degree of profit) but also the administrative ones.
A drying patio at Fazenda do Lobo. Credit: Andrea Nogueira Foresti
Of course, not all cooperatives are the same. But generally speaking, a coffee cooperative is exactly what it sounds like: producers cooperating to improve their coffee quality and strengthen their position in the supply chain.
Coffee farming is a challenging industry – and, with global warming and fluctuating coffee prices, it’s unlikely to become easier any time soon. Cooperatives work together to support their members through these difficulties, via building infrastructure, providing training and financing, facilitating access to direct trade roasters or exporters, and more.
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Written by Ivan Petrich. All interviews conducted in Portuguese and translated into English by the author.
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