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From export to farm-gate in Ethiopia – the Keta Maduga pricing example

In 2016 a handful of successful smallholder cooperatives from the Jimma region broke off from the Oromia Union to form Ethiopia’s first new coffee farmers’ cooperative in generations – The Keta Maduga Cooperative Union. They thought they could do a better job marketing member coffees, run a more efficient organization and return more to members.

In 2018 we used average export numbers to develop a Profit and Loss style breakdown of how this has worked out. It’s a good example of how complicated it can be to trace export prices back to the farm – even in this case, when the coop itself acted as the exporter, lots were collected all at one price (as opposed to being assembled across multiple daily prices), and minimal middle-men were involved.

2018 Keta Maduga Income, Cost and Profit Distribution (an example)
 Pound Bag Container
Keta 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
Keta 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
Keta Maduga Profit  $1.07 $141.77  $45,368
Keta 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 Capture of Export Value  $2.64 $348.98  $111,673
78%