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Converting Export to Farm-Gate Price with Kata Maduga in Ethiopia

September 06, 2018
Category: in Ethiopia

 

 

2018 Kata Maduga Income, Cost and Profit Distribution (an example)

 
           
 

On average farmers in Africa only expect to capture 61% of export income. This is due to poor outturns, export inefficiencies and the number of middle-men small farmers required to get smallholder coffees to market. In Latin America the average capture is 87%, showing incredibly efficient export processes (13% cost and loss), and integration of farming up through value-added processing, sometimes all the way to export.

 
   
   
   
 

 

       
 

In search of better prices, a number of Western Ethiopian Cooperatives split off from the Oromia Union to represent themselves through the 'The Kata Maduga Cooperative Union'. Now in their second year of operation we took a look to see how they are doing. And we were not suprised to learn that this exceptional group is beating the pants off the stat-line.

 
   
   
   
 

 

       
 

If a pound is exported at $3.40 the cooperative will capture $2.64 (78%). Of this the farmer makes $2.15 while the cooperative takes $0.49 above costs. Costs include milling, transport, weight loss and financing.

 
   
           
   

Pound

Bag

Container

 
 

Kata Maduga Income

$ 3.47

$458.73

$146,795

 
 

Export Green (FOB Export @ 3.40 / lb)

$3.40

$449.75

$143,921

 
 

Local sales (7% undergrades, broken, chipped @ 97c /lb)

$0.97

$128.31

$2,874

 
           
 

Kata Maduga Costs

$2.40

$316.96

$101,427

 
 

Red Cherry Purchases (price paid to farmer)

$1.45

$191.81

$61,378

 
 

Cherry - Parchment Loss (20%)

$0.29

$38.36

$12,276

 
 

Wet Mill Processing (fuel, transport, workers)

$0.22

$29.10

$9,313

 
 

Parchment - Green Loss (2.5%)

$0.04

$5.52

$1,767

 
 

Export Expenses (jute bags, grain pro, transport, forwarding, insurance)

$0.17

$22.49

$7,196

 
 

Union Commission (5% of export sales)

$0.17

$22.49

$7,196

 
 

Working capital loan (15% against red cherry purchases at 1.38 over 4 months)

$0.05

$7.19

$2,302

 
           
 

Kata Maduga Profit

$1.07

$141.77

$45,368

 
 

 

       
 

Kata Maduga Profit-Distribution

       
 

Reserve Fund (30% of remainder)

$0.32

$42.53

$13,610

 
 

Member bonus by share (10% of remainder)

$0.11

$14.18

$4,537

 
 

Member bonus by cherry delivered (55% of remainder)

$0.59

$ 77.98

$24,952

 
 

Social Project (5% of remainder)

$0.05

$7.09

$2,268

 
           
 

Total Farmer Payment (w/ shares)

$2.15

$283.96

$90,867

 
 

% of FOB Export Price

63%

     
           
 

Total KM Benefit (Reserve + Commission)

$0.49

$65.02

$20,806

 
 

% of FOB Export Price

14%

     
           
 

Total Coop Capture of Export Value

$2.64

$348.98

$111,673

 
 

% of FOB Export Price

78%

     
           
 

* The above chart is an example based on information provided to Crop to Cup Coffee Importers from the 17/18 harvest

 
   
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