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UNIDO PROJECT FOR IMPROVING THE SUSTAINABILITY AND

INCLUSIVENESS OF THE ETHIOPIAN COFFEE VALUE CHAIN THROUGH PRIVATE AND PUBLIC PARTNERSHIP

130144

Annual Progress Report March 2016 –March 2017

Public Private Partnership Project with Illycaffè S.p.A. and Ernesto Illy Foundation

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Acknowledgments UNIDO project team would like to express its appreciation and gratitude to the Ethiopian Institutions as well as Cooperative and Unions that are operating in the targeted coffee growing areas: Regional States of Oromia and of Southern Nations and Nationalities People (SNNP). Another special thank goes to all the regional representatives of the respective administrations and all other national and international stakeholders, which are providing their support and cooperation during the project implementation.

UNIDO wishes to thank the Italian Agency for Development Cooperation, for the support provided to the project not only as donor but also as project partner, illycaffè S.p.A. and Ernesto Illy Foundation, for their continuous technical support and for the scholarships provided to Ethiopian candidates for ensuring their participation in the six-month Master Course in Coffee Economics and Science held at the University of Coffee in Trieste.

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Table of Content

Acknowledgments ........................................................................................................................................ 2

Acronyms........................................................................................................................................................ 4

Chapter I – Executive Summary ............................................................................................................ 5

Chapter II – Introduction.......................................................................................................................... 7

2.1 Background ................................................................................................................................ 7

2.2 Objective of the project .......................................................................................................... 7

2.3 Expected outcomes .................................................................................................................. 7

2.4 ISID and the Programme for Country Partnership ..................................................... 8

2.5 UNIDO and the Public Private Partnerships .................................................................. 8

2.6 illycaffè and Ernesto Illy Foundation inputs.................................................................. 8

2.7 Italian Agency for Development Cooperation ............................................................... 9

2.8 Methodology .............................................................................................................................. 9

Chapter III – Project Implementation Phase Progress .............................................................. 13

3.1 Main activities conducted and achievements in the reporting period ............. 13

3.1.1 At Coffee Growing Area Level ................................................................................. 13

3.1.2 At the Institutional Level .......................................................................................... 22

3.1.3 At Value Chain Level ................................................................................................... 28

3.2 Activities implemented per Outputs of the Project LOGFrame ........................... 37

3.2.1 List of Activities conducted in Aletawondo Woreda ...................................... 37

3.2.2 Summary of trainings delivered in Aleta Wondo ............................................ 40

3.2.3 List of Activities conducted in Delo Mena Woreda ......................................... 41

3.2.4 Summary of trainings delivered so far in Delo Mena .................................... 44

3.2.5 List of Activities conducted in Addis Ababa ...................................................... 45

Chapter IV- Work Plan for the next six months (April –October 2017).............................. 46

ANNEX I: The Project Locations Maps ............................................................................................. 51

ANNEX II: ECTDMA Letter to UNIDO ................................................................................................ 52

ANNEX III: LOGFrame of the Project Intervention ...................................................................... 54

ANNEX IV: ToR of the Project Steering Committee ..................................................................... 59

ANNEX V: Report on Harvesting, Post-Harvest and Coffee Processing .............................. 63

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Acronyms AGP Agricultural Growth Program AICS Agenzia Italiana Cooperazione allo Sviluppo BoA Bureau of Agriculture at Regional State and Zone level BYCU Burka Yadot Cooperative Union COOPI Cooperazione Internazionale – COOPI CPO Cooperative Promotion Office CSDS Coffee Sector Development Strategy ECEA Ethiopian Coffee Exporters’ Association ECGPEA Ethiopian Coffee Growers, Producer And Exporters Association ECRA Ethiopian Coffee Roasters’ Association ECX Ethiopia Commodity Exchange ECTMDA Ethiopian Coffee and Tea Marketing and Development Authority EDRI Ethiopia Development Research Institute EU European Union GoE Government of the Federal Democratic Republic of Ethiopia GTP Growth and Transformation Plan IAIP Integrated Agro-Industrial Parks ICO International Coffee Organization illycaffè Illy Caffè S.p.A. ISID Inclusive and Sustainable Industrial Development MoI Ministry of Industry MoT Ministry of Trade NGO Non-Governmental Organization OCF Organized Coffee Forum OCFCU Oromia Coffee Farmers’ Cooperative Union PCP Program for Country Partnership PCU Project Coordinating Unit PPP Public Private Partnership PSC Project Steering Committee SCFCU Sidama Coffee Farmers’ Cooperative Union SNNPR Southern Nations, Nationalities and People Regional State TechnoServe NGO working in the coffee sector ToR Terms of reference UNIDO United Nations Industrial Development Organization WOARD Woreda Office of Agriculture and Rural Development YCFCU Yirgacheffe Coffee Farmers’ Cooperative Union

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Chapter I – Executive Summary

After the in-depth analysis undertaken during the Inception Phase, in the reporting period captured by the current report the following achievements could be mentioned under the Project Implementation Phase:

UNIDO has initiated the activities foreseen in the Action Plan with a general set-up of the operational framework of the project, i.e. the finalization of two subcontracts awarded to the NGOs selected for working in the coffee growing areas (both in Oromia and SNNP Regional States), with the Project Cooperation Agreements with selected stakeholders, such as the Ethiopian Coffee and Tea Marketing and Development Authority and the two Unions involved in the targeted coffee areas (Sidama Coffee Farmers Union in SNNPR and Burka Yadot Cooperative Union in Oromia).

The MILESTONES achieved are:

AT COFFEE GROWING AREA LEVEL

A. Preparation of the TORs for subcontracting activities in the 2 targeted coffee growing areas, launch of the call for proposal, evaluation of the proposals received and contract signing with the two assigned NGOs, i.e. Technoserve and COOPI;

B. Sub-Contract in SNNP Regional State with the NGO Technoserve for the implementation of the activities in the selected Aletawondo Woreda;

C. Sub-Contract in Oromia Regional State with the NGO COOPI for the implementation of the activities in the selected Delo Mena Woreda;

D. Reception and consolidation of the Project Inception Reports produced by the two sub-contractors and validation by the Project Manager;

E. Monitoring and supervision of the sub-contracted activities in SNNP Regional State with constant dialogue and 2 field missions in Aletawondo Woreda;

F. Monitoring and supervision of the sub-contracted activities in Oromia Regional State with constant dialogue and two UNIDO field missions in Delo Mena Woreda;

G. Coordination with zonal and Regional Institutions, development partners and coffee producers organized in cooperatives and unions, in a roundtable called PTC (Project Technical Committee), meant to be the governance body organized under the PSC (Project Steering Committee) in order to manage and deal with technical issues at growing coffee areas’ level.

AT INSTITUTIONAL LEVEL

A. Project Cooperation Agreement signed with the Ethiopian Coffee and Tea Marketing and Development Authority;

B. Networking with International Stakeholders active the Ethiopian coffee sector (International Coffee Organization (ICO), African finest Coffee Association (AFCA), international development partners, International Women’s Coffee Alliance (IWCA), Ethiopian Women in Coffee etc.);

C. Preparation of the new TORs of the Project Steering Committee to be called by mid – 2017.

D. Participation of two Ethiopian selected students in the six months Master's Course in Coffee Economics and Science held at the University of Coffee in Trieste, fully

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sponsored by illycaffè and Ernesto Illy Foundation as a component of the project partnership.

AT VALUE CHAIN LEVEL

A. Preparation of a Project Cooperation Agreement (PCA) with the SCFCU and BYCU, the two Unions selected by the project in order to secure an effective impact in quality and traceability throughout the coffee value chain, from the farmer production to the coffee export.

B. Preparation of a work-plan with the Ethiopian Coffee Roasters Association (ECRA) as a major player for the implementation of the initiative related to the improvements of the coffee roasting capacity.

C. Preparation of the Job Description and identification of a Coffee Roasting Consultant expected to provide advisory services and technical assistance to the partner organizations in the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union), the Ethiopian Coffee Roasters Association (ECRA) for improving the roasting capacity in Ethiopia.

D. Preparation of the Job Description for a Business and Credit Analyst Consultant expected to provide business advisory services, design and propose new market model and business plan for the partner organizations in the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union).

E. Data collection for the diversification of the coffee production (e.g. honey from coffee flowers) and preparation of job description for honey value chain development expert.

F. Collaboration established between the sub-contracted NGOs and with Positive Planet, a research platform which aims at creating a Coffee Value Chain Index via data collection and analysis.

G. Market access activities and set up of consistent relations with coffee foreign

buyers in order to attract them and establish a fidelity partnership for the coffee

value chain vertical integration.

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Chapter II – Introduction

2.1 Background

The Ethiopian coffee sector, is very important for the country and for its economic development due to the reasons that: (i) as a major source of cash income and provider of employment, it supports millions of farming families (for instance, those estimated as dependent on coffee production and marketing for livelihood are about 20 million) and, (ii) coffee is the first item in terms of revenue generated from export with a share of about 25 per cent. The coffee sector can contribute to the growth of the industrial sector share in the national GDP, owing to its high potential of creating industrial roasting capacity that, at present, is rather marginal.

Although the Ethiopian Government has implemented important reforms, such as the introduction of the Ethiopian Commodity Exchange for grading and auctioning, the problems of the sector need to be tackled through a “value chain” approach. In this regard, to Increase the social, environmental and economic sustainability of the coffee value chain and its export revenue requires an integrated yet modular value chain approach focusing on: (i) Increase in productivity and sustainability (cultivated area and yield), (ii) improvement of quality, (iii) increase export and, (iv) Recognition in international markets of the intrinsic qualities of the Ethiopian Arabica coffee. Increasing production is important, but the real asset of the Ethiopian coffee resides in its quality that, by obtaining premium prices, could allow avoiding the competition with the “coffee giant”, like Brazil and Vietnam.

Some activities with regard to the sustainability of this value chain will be performed in cooperation with illycaffè, as an example of PPP.

One important output of the Project will be the establishment of an “Organized Coffee Forum” that allows the participation of all the actors involved in the coffee value chain. The specific objective is to increase the coffee export revenue. This will help to reach the General Objective of raising the income of smallholder farmers. Poor smallholder farmers and their families, including women, will be the main beneficiaries of the Project.

2.2 Objective of the project

To increase the income of smallholder farmers deriving from sustainable production, processing and marketing of the Ethiopian coffee.

2.3 Expected outcomes

As a result of Projects implementation, the main expected outcomes will be:

1. The actors of the coffee value chain will operate in a coordinated manner and direct their efforts to the general interest of the country, resulting in an increased sustainability and inclusiveness of the smallholder farmers.

2. Furthermore, the project will contribute to increased value addition of exported Ethiopian coffee thus reducing the bulk sales of raw coffee as well as improving the international recognition of its quality.

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2.4 ISID and the Programme for Country Partnership

Within UNIDO strategy, known as Inclusive Sustainable Industrial Development (ISID), Ethiopia has been selected as pilot program for the implementation of a Programme for Country Partnership (PCP) with the aim at bringing together development partners, UN agencies, development finance institutions and the private sector - under the ownership of the national Government - to help achieve the goals set out in the country’s Industrial Development Strategy and Growth and Transformation Plan (GTP). In light of the above, this Project entitled: “Improving the Sustainability and Inclusiveness of the Ethiopian Coffee Value Chain through Private and Public Partnership” is aligned to the on-going development activities already implemented in the framework of the UNIDO PCP Ethiopia without any duplication of effort, rather complementing and scaling up. 2.5 UNIDO and the Public Private Partnerships

UNIDO, illycaffè and Ernesto Illy Foundation have joined their forces under the project “Improving the Sustainability and Inclusiveness of the Ethiopian Coffee Value Chain through Private and Public Partnership”.

Illycaffè and Ernesto Illy Foundation have mobilized their sector’s core competencies (skills, know-how, networks, human and financial resources) for improving the quality and production capacity of small Ethiopian coffee growers and increase their income, advancing sustainable production, processing and international marketing. This public-private partnership seamlessly integrates into the Programme for Country Partnership for Ethiopia, established to bring together investors and specialists in support of the country's progress towards the GTP II objectives. 2.6 illycaffè and Ernesto Illy Foundation inputs

As the project is expected to support and train selected clusters of farmers and cooperatives aiming at improving quality and productivity through strengthening the

collection, storage, processing and marketing and distribution system, illycaffè and Ernesto Illy Foundation have already started to provide in-kind support with three technical advisory missions that have guided the project team in defining the detailed action plan, from agronomic level up to the processing phase. Moreover, two scholarships for the participation to the Master Course in Coffee Economics and Science in Trieste, Italy, have been

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awarded to selected Ethiopian coffee experts in 2016 and 1 scholar has been selected for the 2017 master course and he is currently in Trieste for the training. The selection of the candidates has been undertaken by a joint panel composed by the UNIDO project staff and Scientific Committee set up at University of Coffee in Trieste). Mr. Jaba Alemayehu, one of the 2016 Ethiopian scholars, has prepared his Master Thesis with the support of UNIDO project team and as a result of this very fruitful collaboration, he has been afterwards appointed as National Project Coordinator of the current initiative. During the project implementation, illy consultancies will be utilized for specific purposes where the competence of illycaffè and Ernesto Illy Foundation can play a valuable role for the Project implementation. 2.7 Italian Agency for Development Cooperation

The Italian Agency for Cooperation and Development (AICS) is one of key innovations established by the Italian law on international cooperation (Law No. 125/2014). The Agency began operating in January 2016, with the aim of aligning Italy with its principal European and global partners in the endeavour of development. The project closely worked with AICS office, taking advantage of its experience for the activities performed in the coffee sector especially in the Oromia Regional State. Joint missions in the field have been organized and conducted and a continuous consultation has been established with AICS, which is acting not only as a donor agency but as a project implementing partner.

2.8 Methodology

The methodology applied for the Implementation Phase of the project has focused on the following approaches:

Alignment with the Growth and Development Strategy of GoE (i.e. GTP II, AGP etc.);

Desk research on available literature;

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Coordination with the PCP secretariat;

Consultation with the donor and involvement of the AICS experts in the field operations;

Visits and direct observation of coffee growing areas, i.e. coffee farms, coffee plantations, natural forest areas, coffee research sites, pulping stations (wet and dry), certified coffee farms etc.;

Meetings with stakeholders at different level of the coffee value chain;

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Networking with private investors interested in providing the Ethiopian coffee market with the most innovative technologies for coffee production;

Consultation with the most relevant Institutions working both at Federal and Regional level;

Consultation with international buyers (illycaffé, Original Food, Belco, Karma Coffee, Equoqui etc.)

Identification of gaps at all the levels of the value chain;

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Coordination and consultation with research platform on coffee value chain index and specific collaboration with the research team of Positive Planet NGO; Active coordination with subcontracted NGO for maximising the impact at coffee growing area level;

Participation to major coffee events organized in Ethiopia like the World Coffee Conference by ICO (International Coffee Organization) and the AFCA (African Finest Coffee Association);

Coordination with donors and other stakeholders in platforms and participation to policy dialogue activities on coffee sector development1.

1 in particular UNIDO has played an active role in the Wild Coffee Roundtable for the promotion of the Harenna Forest Coffee

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Chapter III – Project Implementation Phase Progress

3.1 Main activities conducted and achievements in the reporting period

3.1.1 At Coffee Growing Area Level

For the implementation of the project activities, the UNIDO team is strictly following UNIDO value chain development approach.

A value-chain approach to development seeks to address the major constraints at each level of the supply chain, rather than concentrating on just one group (e.g. producers) or on one geographical location.

Following this strategy, the implementation period has been designed in order to carefully intervene on the different steps of the Ethiopian coffee value chain. The starting point of each value chain analysis is the supply side, thus the UNIDO team has focused his efforts in securing the quality of the coffee sourcing it in 2 different areas.

As extensively reported and detailed in the Inception Phase Report, the selection process of the coffee growing areas to be targeted by the project intervention has brought the project to concentrate its action in two woredas: Aletawondo Woreda, in SNNP Regional State and Delo Mena Woreda in Oromia Regional State.

The large majority of coffee produced in Aletawondo Woreda is washed coffee produced at smallholder level, while the coffee produced in Delo Mena Woreda is only sundried coffee wildly collected in the Harenna Forest.

The characteristics of the two selected locations, for what concerns the coffee sector, are very different and therefore require approaches partially different. This will help the Project in creating success cases in two coffee areas that require different approaches, increasing project impact and facilitating further promotion and replication of Project’s activities and interventions.

Figure 3.1.1.A factsheet of the two coffee producing Woredas targeted by the project

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In detail the following activities at growing coffee areas’ level have been implemented for a smooth achievement of the project objective: A. Preparation of TOR for sub-contracting activities in the 2 targeted coffee

growing areas, launch of the call for proposal, evaluation of the proposal received.

The general objective of the sub-contracts to NGOs in the coffee growing areas is to increase income, deriving from coffee production of smallholder farmers associated to 3 selected cooperatives (Homacho Waheno, Gerbicho Lela and Titira) in the Woreda of Aletawondo, Sidama Zone, SNNP Region and of smallholder farmers associated to 12 selected cooperatives (Erba, Wabero, Chiri, Oda Dima, Walte Igudina, Bobiya, Burkitu Darara, Ele Mekenisa, Magnete, Hububi, Biftu Kankicho, Bekelcha) in the Woreda of Delo Mena, Bale Zone, Oromia Region.

Location of the Aletawondo Woreda Location of the Delo Mena Woreda

Figure 3.1.1.B Location of the Selected Woredas for the Sub-contracts’ Implementation

The specific objective in SNNP Regional State is to increase value of coffee produced by the cooperatives in Aletawondo for export through an increase of yield and quality of the coffee and through the improved international recognition of Sidamo coffee quality.

Whereas the specific objective in Oromia Regional State is to increase value of coffee produced by the cooperatives in Delo Mena for export through an increase of yield and quality of the coffee and through the improved international recognition of Harenna Forest Coffee quality.

The sub-contracted NGOs are meant to work in close cooperation with UNIDO National Technical Advisor and National Project Coordinator, under the supervision of the Project Manager. All the activities carried out by the sub-contractor are directly supervised by UNIDO team and verified according to the indicators and the means of verification provided in the logical frameworks produced (enclosed in Annex III).

TORs for the call for proposal have been publicised, three proposals have been received and according to an independent evaluator, contracts have been signed with the two awarded NGOs, Technoserve and COOPI, upon verification of the adequacy of the technical proposals to satisfy the requirements set by the UNIDO team.

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According to the precise UNIDO instruction the subcontractors are expected to provide their services in order to reach the following outputs:

UNIDO value chain approach and

integration

OUTPUT in SNNP Regional State

OUTPUT in Oromia Regional State

1) Selected cooperatives in Aletawondo are capable to apply, to their organizations and wet mills operations, principles of sound and sustainable management.

1) Burka Yadot Cooperative Union increases its turnover, has a strategy (and starts relevant actions) to obtain an increased traceability of the Harenna wild forest coffee and is capable to provide support to the selected cooperatives.

2) Leaders of farmers’ groups are capable to apply and disseminate best agronomic practices at coffee farm level and the 3 selected cooperatives are capable to directly provide extensions services.

2a): WOARD and CPO are capable to provide proper extension services to the farmers of the selected cooperatives. 2b): Leaders of farmers’ groups are capable to apply and disseminate best harvesting and post-harvesting practices at coffee farm level.

3) Sidama Farmers Coffee Union is capable to provide a timely and effective support for managerial, financial and technical issues to the selected cooperatives.

3) The 12 selected cooperatives belonging to BYCU are capable to apply, to their organizations, principles of sound and sustainable management; they increase the percentage of their coffee sold to BYCU.

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cooperatives level

farmers level

unions level

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B. SNNP Regional State - NGO Technoserve for the implementation of the activities in the selected Aletawondo Woreda;

TechnoServe2 has presented his bid for working as subcontractor of UNIDO activities in SNNP Regional State and its offer has been assessed according to an independent evaluation. TechnoServe has been considered by UNIDO evaluation as fully compliant with all the requirement set in the call for proposal i.e. i) an established expertise in coffee sector management; ii) an established expertise in coffee wet mill operation; iii) an established expertise in cooperative organization; iv) at least 10 years of working experience in relevant field, in particular in coffee management, food engineering, with good understanding of technical, financial and managerial aspects of implementation of projects; v) Working experience on similar assignments in similar projects in the same project area.

C. Oromia Regional State - NGO COOPI for the implementation of the activities in the selected Delo Mena Woreda;

COOPI3 has presented his bid for working as subcontractor of UNIDO activities in Oromia Region and its offer has been assessed according to an independent evaluation.

In conclusion, COOPI has been considered as compliant with 3 out of the 5 requirements set by UNIDO in the call for proposal i.e. i) an established expertise in cooperative organization; ii) at least 10 years of working experience in relevant field, in particular in coffee management, food engineering, with good understanding of technical, financial and managerial aspects of implementation of projects; iii) Working experience on similar assignments in similar projects in the same project area.

2 Technoserve began working in Ethiopia in 2009. To date, they have supported more than 65,000 coffee farmers by helping them build 90 new wet mills and improving the efficiency of an additional 45 existing wet mills. In 2014, their wet mill clients in Ethiopia processed more than 40,175 metric tons of coffee cherry (worth over $10 million USD), which was marketed through cooperative unions to over 32 different international buyers. In 2012, they launched a comprehensive and rigorous agronomy program and currently train an average of 50,000 coffee farmers across Ethiopia each month. They are currently implementing three projects in Aletawondo woreda and are working with Sidama Union and all three of UNIDO’s target cooperatives. This experience provides a strong foundation upon which to launch UNIDO activities. The company, in its offer, illustrated mainly its experience in Ethiopia that covers a period of about 6 years from 2009 to day. Nevertheless, the company has been in business for about 46 years. TechnoServe has assisted 325 coffee wet mill businesses and improved the incomes of more than 210,000 smallholder farmers through technical assistance to coffee processing businesses, delivery of intensive, field-based agronomy training and provision of strategic guidance to improve sustainability practices across the supply chain. Their work also extends to crosscutting issues within the sector, including the facilitation of nearly $40 million in loans through partnerships with local banks and international financiers and integration of gender sensitization into program activities. Currently, TechnoServe is working in 31 countries in Africa, Latin America, the Caribbean and Asia. They have active coffee programs in five countries, the largest of which is Ethiopia.

3 In the sector of rural cooperatives, COOPI began working in Ethiopia in 2005 and they are still working with two projects in Oromia Regional State, in the Bale Zone. During the eleven years that COOPI spent in Ethiopia, they carried out 11 projects located, in addition to Bale Zone, in Somali, SNNPR and Amhara Regional States. In the same period, they created/reinforced about 60 rural cooperatives having a total of about 12,000 farmer members. COOPI did not provide major evidence of experience in the coffee sector, nevertheless they NGO has been proved to consolidate both farmers’ cooperatives and unions in their agro value chain development.

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D. Reception and consolidation of the Project Inception Reports produced by the two NGOs and its validation by the Project Manager;

As per project contract agreement made with UNIDO, the two NGOs have been obliged to prepare a separate inception report each for their respective implementation areas. Based on that, both of the NGOs have timely completed inception report and submitted to the UNIDO headquarter.

The inception report of COOPI has mainly covered the coffee sector performance in Bale area and focused on a detailed assessment on the supply chain actors engaged on natural coffee processing in the area of Harenna Forest. Similarly the report made by Technoserve has focused on the supply and value chain actors in Sidama area, more specifically in Aleta Wondo, where coffee is 95% washed. Both Inception Phase Reports have been conceived by following the ToRs prepared by UNIDO project team and have been integrated with some specific actions that are part of COOPI and Technoserve own methodologies in the field operations.

E. Monitoring and supervision of the subcontracted activities in SNNP Regional State with constant dialogue and 2 field missions in Aletawondo Woreda;

Two monitoring supervision missions have been implemented in Aleta Wondo area. This area has been subcontracted to Technoserve which has been already operating with coffee farmers’ cooperatives in the area since long time. The first mission was conducted in the month of December 2016, with the following objectives to be achieved:

a) To coordinate with partner subcontracted on coffee project-related activities; b) To meet with woreda and zone Government Offices to propose the establishment

of the Project Technical Committee; c) To discuss about the action plan implementation with the targeted cooperatives.

Figure 3.1.1.C meeting with Technoserve Staff and Homacho Waeno Coopearative

staff at washing station

Figure 3.1.1.D UNIDO and Technoserve joint

supervision to coffee drying station during the harvesting and processing season

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The second mission was conducted in March 2017 and the agro-business and value chain consultant from IADC has joined the UNIDO team for allowing a set of monitoring activities from the donor side.

The main objectives of the second mission were:

a) To establish and conduct the first Project Technical Committee (PTC) in Sidama; b) To visit and monitor the progress of project implementation subcontracted to

TechnoServe; c) To jointly monitor, discuss and plan with stakeholders and IADC.

Figure 3.1.1.E UNIDO supervision to the demo-plot where trainings on best

agronomic practices have been delivered by Technoserve

Figure 3.1.1.F UNIDO, IADC and

Technoserve meeting with Gerbicho Lela Cooperative Management Board for

assessing the support provided so far by the project

The joint mission with the representative of the donor was successful and the performance of the activities implemented in Aleta Wondo at the coffee growing level is well progressing.

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Trainings on sustainability standards, quality controlling and cupping have been delivered, taking into account women participation. At farmers level practical coffee agronomic activities such as stumping is being undertaken at farmers demo plots and other farmers have started adopting.

F. Monitoring and supervision of the subcontracted activities in Oromia Regional State with constant dialogue and two UNIDO field missions in Delo Mena Woreda;

Likewise, two monitoring missions have been conducted to Delo Mena so far with similar objectives. The first mission was made in the month of December 2016, planned to achieve the following goals:

a) To coordinate with partner subcontracted for Delo Mena on coffee project-related activities;

b) To meet with Delo Mena woreda and Bale zone Government Offices to propose the establishment of the Project Technical Committee (assuming that the Federal Coffee Authority has given its endorsement to UNIDO initiative);

c) To discuss about the action plan implementation with COOPI.

SUCCESS STORY FROM THE FIELD:

Berhanu Demato is a 45 year old farmer in Gerbicho Lela village, he has 7 children, 6

male and 1 female. Berhanu is also a member of Gerbicho Lela cooperative which is

one of the three cooperatives supported by the UNIDO coffee project in Sidama, Aleta

Wondo woreda. Berhanu decided to prune some parts of his farm since the trees were

becoming old and unproductive after getting all the necessary agronomy trainings

from TNS experts. Consequently he has stumped 600 trees which counted for 8% of his

total coffee trees. With TNS guidance, he is planning to intercrop beans to compensate

the lost yield until the stumped trees will grow and start produce again (assumed to

happen in 2-3 years). Intercropping such has haricot bean can also improve the

productivity of soil. According to TNS’s agronomists a pruned coffee could increase

yield up to 250% if all the necessary agronomic best practices are applied.

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Figure 3.1.1.F UNIDO staff meets with the Delo Mena Agricultural Bureau

Figure 3.1.1.G visit to the COOPI project office

in Delo Mena

Similarly in March 2017 the second field mission was conducted jointly with representative from IADC. The main objectives of the second mission were:

a) To establish and conduct the first Project Technical Committee (PTC) in Bale; b) To visit and monitor the progress of project implementation subcontracted to

COOPI; c) To jointly monitor, discuss and plan with stakeholders and the representative

from IADC.

Figure 3.1.1.H UNIDO and IADC meet with Burka Yadot Coffee Farmers’ Union Board

Management

Figure 3.1.1.G UNIDO and IADC assess the field

operation and the purchased equipment for the activities implementation

UNIDO could assess that also the activity implementation in Bale is progressing very well. The cooperatives and the union in Bale are relatively weaker if compared to the ones in Sidama; the main reason of the lower level of empowerment is due to the very recent establishment of the coffee farmers’ union in Delo Mena, as well as to the lower quality grade usually given to the Harenna forest coffee, which doesn’t have international market like the highly promoted coffee brands from Sidamo, Harar or Yirgacheffe.

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However COOPI is delivering trainings on Union and Cooperative management, on farm level post-harvest and sustainable coffee production approaches. With this progress the direct traceable coffee market linkage of Harenna forest coffee with international market could be achieved.

G. Coordination with zonal and regional Institutions, development partners and coffee producers organized in cooperatives and unions, in a roundtable called PTC (Project Technical Committee), meant to be the governance body organized under the PSC (Project Steering Committee) in order to manage and deal with technical issues at growing coffee areas’ level.

Considering that the project is implemented through the sub-contracted NGO – COOPI and Technoserve - in close cooperation with cooperatives, unions, government organizations and other institutions active at growing coffee areas’ level, the PTC is conceived as a governance body organized under the Project Steering Committee with the aim of managing and dealing with technical issues. The PTC will be also responsible to coordinate and execute the planned activities in collaboration with interested stakeholders therefore this PTC will provide a technical guidance at local level, create an enabling environment for the project implementation, overcome challenges and explore opportunities for the Ethiopian Coffee Value Chain Development.

The implementation of the project activities is closely monitored and evaluated by UNIDO and is receiving guidance from the Institutions of the Federal Democratic Republic of Ethiopia related with coffee production, processing and marketing.

The major functions of the newly-established PTCs are the following:

To provide technical support and encourage innovation and best agronomic and processing practice in the coffee project implementation;

Review and assess the performance of the coffee project and create an enabling environment for smooth implementation of the activities foreseen in the current initiative;

Discuss and overcome problems and challenges that can be solved at Regional and Zonal level or address them to the Project Steering Committee (PSC) at the national level;

Organize a quarterly field day and visit project implementation progresses, discuss with beneficiaries and assess the project progress impact;

Conduct a quarterly short meetings and discuss the performance of the cooperatives;

Follow up and recommend best practices and coordinate project synergies with other development organizations involved in same areas;

Perform other related activities.

The structure of the PTC has been conceived as follows:

1. Zone Agriculture Development Office 2. Zone Cooperative and Marketing Office 3. COOPI and / or Technoserve 4. Woreda Agriculture Development Office

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5. Woreda Cooperative and Marketing Office 6. UNIDO representative and 7. Italian Agency for Development and Cooperation (IADC)

The committee will be chaired by Zone Agriculture Development Office (directly linked to the ECTDMA), co-chaired by UNIDO, while COOPI and / or Technoserve will serve as Secretariat of the PTC.

Up to date, two PTC meetings have been organized in fully compliance with the UNIDO work-plan.

Figure 3.1.1.H PTC meeting organized in Awassa the last 15th of March for the stakeholders in SNNP Regional State and Sidama Zone with active participation of the Zonal Offices Representatives, Technoserve officers, Woredas Agriculture and Cooperative and Marketing Representatives and the IADC Agri-Business & Value Chains Consultant

Figure 3.1.1.I PTC meeting organized in Goba the last 16th of march for the stakeholders in Oromia Regional State with active participation of the Zonal Offices COOPI officers, local Woredas Agriculture and Cooperative Marketing Representatives and the IADC Agri-Business & Value Chains Consultant

3.1.2 At the Institutional Level

The initial proposal of the current project initiative has been developed with the Ministry of Industry (MoI), that has the responsibility to supervise, regulate the Ethiopian Agro value chain and the specific activities where (secondary) processing takes place.

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Nevertheless, on 25 November 2015, the Council of Ministers of the Federal Democratic Republic of Ethiopia has issued the Proclamation No. 916/2015 for the Establishment of the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA).

The Authority has been established under the Ethiopian Ministry of Agriculture as an autonomous Federal Government Office and it represents the focal point for the development of the Ethiopian coffee value chain. In particular, the Authority has the objectives to:

1. strengthen participatory extension service delivery to ensure transformation of farmers and commercial growers of coffee, tea and spices by adopting research generated and proven technologies and improved agricultural practices to attain higher level of production and productivity;

2. establish quality-based, effective and efficient marketing system that benefits smallholder and commercial growers of coffee, tea and spices as well as traders by adding value and promoting Ethiopian specialty coffees, tea and spices in the world to generate better income to the country and the industry actors;

3. support, supervise and regulate in collaboration with relevant authorities the construction and commissioning of coffee, tea and spices processing industries and the construction of warehouses owned by farmers’ and private companies have the requisite capacities to ensure efficient marketing service, consistent supply of produce with competitive price and quality and modern stock management in compliance with environmental protection and sustainable development.

In light of the above, and following the indications received by the Ethiopian Prime Minister Office, the Authority has officially confirmed its intention to closely work with UNIDO for ensuring the project’s implementation as well as its effectiveness and sustainability4. In this context, the Authority has guaranteed to UNIDO the necessary coordination with other Ethiopian Government Institutions, such as the Ministry of Industry and the Ministry of Agriculture, as well as with other relevant stakeholders that are operating in the coffee value chain.

Furthermore, the ECTDMA Director General, Mr. Sani Redi has also appointed an internal focal point, Mr. Fikru Amenu, who will support UNIDO staff for a smooth implementation of the project’s activities. Finally, as proposed by Mr. Redi, he can co- chair the Project Steering Committee (PSC) with the Ministry of Industry which has a strategic role especially in the activities referred with the coffee roasting.

Additionally and complementary, a different range of activities have been realized at institutional level in the framework of the current coffee project initiative:

A. Project Cooperation Agreement signed with the Ethiopian Coffee and Tea Marketing and Development Authority;

A Project Cooperation Agreement has been signed between UNIDO and the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA) with the aim of regulating the cooperation between the two stakeholders in the framework of the

4 The Official Letter sent by the Director General of the ECTDMA to UNIDO can be found in Annex II.

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project implementation. The cooperation between ECTDMA and UNIDO relates to the overall governance of the project implementation as a one of the main stakeholder with a focus on the activities that are linked to the direct implementation at ECTDMA and in the selected coffee growing Regional States.

Figure 3.1.2.A and Figure 3.1.2.B related to the Project Cooperation Agreement

Signature Ceremony

The Project Cooperation Agreement has been prepared based on the MoU signed between UNIDO, Illy café and Italian Agency for Development Cooperation (IADC) in 2015 in Milan at the presence of MoI representing the Ethiopian government. Since the ECTDMA was not officially established at that time, it has become important to prepare an additional PCA to be signed between UNIDO and ECTDMA for regulating the project intervention at Federal and Regional level. Cooperation will be sought with MoI on the related to the increase of the coffee roasting capacity in the country.

B. Networking with International Stakeholders active in the Ethiopian Coffee Sector (International Coffee Organization –ICO-, African Finest Coffee Association –AFCA-, international development partners, International Women’s Coffee Alliance –IWCA- etc.);

International Coffee Organization

Last year, from 6-8 March 2016, the coffee community from Africa and all around the world gathered in the Ethiopian capital for engaging debate at the 4th World Coffee Conference, hosted by the Government of Ethiopia. The 77 Member Countries of the International Coffee Organization (ICO) and over 900 attendees, including coffee growers and representatives from government, the private sector, and international agencies participated in a range of discussions related to the theme of the Conference, ‘Nurturing coffee culture and diversity’. UNIDO and illycaffè have attended this very important event and have facilitated the participation

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of Mr. Andrea Illy, CEO of the coffee multinational company, to the panel “Towards A Diverse And Sustainable Coffee Culture”. Visibility has been given to the UNIDO initiative from the stage of the ICO conference with a particular emphasis on the importance of Public Private Partnership approach where private sector actors, development agents and policy makers can join hands for the inclusiveness of the coffee supply chain.

African Finest Coffee Association

AFCA is a regional non- profit, non- political member - driven association representing coffee sectors in 11 member countries namely Burundi, DR Congo, Ethiopia, Kenya, Malawi, Rwanda, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. AFCA

members include both private and public sector coffee stakeholders including producers, exporters, international importers, roasters, policy makers, transporters and trade representatives. UNIDO coffee project team has participated to the conference organized by AFCA in Addis Ababa last 17th of February 2017 in order to attend the session dedicated to smallholders’ Access to Finance called “Reshaping Access to Finance: Using technology tools to connect Coffee Producers and Impact Investors”; in particular a contact has been established with the local representatives of two initiatives, FAST Latin America & AXii (https://www.axiis.ca) and Bean Auction (http://www.beanauction.com ), two platforms created to ease connection and reduce middleman interference and costs between farmers’ organization and buyers in direct trade schemes. Accordingly, a very active follow up has been secured with the two Unions supported by the project for providing the two organizations with a facilitated access to credit.

International Women’s Coffee Alliance and Ethiopian Women in Coffee

IWCA is an organization aimed at empowering women in the international coffee community to achieve meaningful and sustainable lives and to encourage and recognize the participation of women in all aspects of the coffee industry. The IWCA, from its inception, has remained focused on promoting possibilities for women in coffee communities throughout the world. In Ethiopia they have a group of

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engaged women with whom the UNIDO project has already established valid contact and will collaborate for specific activities and events, in order to strengthen the organization and raise awareness for women in coffee.

EU Delegation in Ethiopia

Since the beginning of its Inception Phase, the UNIDO coffee project team has liaised with the EU Delegation in order to create strategic partnerships with the development agent that was trying to reshape the Ethiopian coffee sector through the Coffee Sector Development Strategy proposed to the GoE. In this regard, 15 million € Euro have been allocated by EU, as budget support, to the Coffee Authority in order to provide this new-established Institution, with the required capacity building and technical assistance in the field of production, productivity, quality, value addition and marketing. An important synergy between this project and the EU Delegation supported project is the establishment of an Organized Coffee Forum (OCF), representing one of the most ambitious objectives of UNIDO initiative. In this context, a cooperation and division of tasks have to be sought along the following axis: Inclusion of a very broad range stakeholders involved in

the Ethiopian Coffee Value Chain (both private and public actors);

Creation of several technical working groups (sub-committee) under the OCF such as for instance Agronomy, Marketing, Women, Forest Coffee and etc. that can provide input for the general discussion of the OCF.

The platform can shake the sleepy sector, government and can serve as a place where international coffee experts, researchers, business owners speak on.

The first activity has to start with stakeholder mapping in order to clearly identify the stakeholders keen to collaborate with the initiative.

GIZ DeveloPPP project

The collaboration with GIZ has initially started because the company Original Food, a German buyer of Kafa Forest

Coffee linked to the Kaffa Coffee Farmer Union (KCFU) through the GIZ DeveloPPP project, has found interesting to taste the sun-dried coffee produced in Harenna Forest in Delo Mena, in the area targeted by the UNIDO intervention (for more info: www.developpp.de/en/content/wild-coffee-ethiopia).

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The approach of the GIZ initiative is fully in line with UNIDO: the idea of strengthening PPP initiatives with the aim of integrating smallholders into the supply chains for certified organic wild coffee is also part of the UNIDO strategy in Oromia Regional State. A common ground and a mutual interest in the management of forest coffee value chain have brought GIZ and UNIDO to initiate a roundtable discussion with Governmental Institutions, with development partners, with private sector actors and both International and Local NGOs. So far three roundtable meetings on the Forest Coffee Management have been organized with an action plan for a constructive dialogue in coffee forest participatory management and for the creation of strategic partnerships. The major players of the current wild coffee roundtable are: GIZ and UNIDO, Farmafrica, McKinsey, Partnership for Forest.

CBI Dutch Centre for the Promotion of Import from DEV. Countries

The centre for the promotion of imports for developing countries contributes to sustainable and inclusive economic development in developing countries through

the expansion of exports from these countries to Europe. In CBI view, trade is a good means to stimulate economic growth and promote employment by supporting small and medium size enterprises. This is the reason why they are very active to promote in Ethiopia sustainable value chains related to agri-business sectors. Their engagement in coffee is linked to the promotion of specialty coffees and geographical indications. UNIDO has participated to a workshop organized by CBI 16 February 2017 in Addis Ababa about Specialty Coffee Sector Export Marketing Plan and a follow up for participating in joint initiatives (such as international coffee trade fairs sponsored by CBI) is currently on-going.

C. Preparation of the new TOR of the Project Steering Committee to be called by mid – 2017

According to the new institutional arrangement of UNIDO coffee initiative, updated ToRs of the Project Steering Committee (PSC) have been prepared and they are fully described in the Annex IV. The PSC will be chaired by the Director General of the Ethiopian Coffee and Tea Marketing and Development Authority, co-chaired by the State Minister of Industry in charge of Agro Value Chains and will include representatives of the major project stakeholders. The purpose of establishing the Steering Committee is to review the progress and obstacles encountered both at

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Federal and Regional level and ultimately suggest solutions. The main functions and responsibilities of the PSC will be to:

Provide the project with strategic direction in terms of implementation of project activities;

Ensure the effective coordination and cooperation between all involved stakeholders;

Monitor the progress towards achieving the planned outputs as well as to review and approve the annual work plans;

Solve complex matters arising from different level of the Project structure during its implementation;

Improve policy direction as deemed necessary by the Project; Ensure that the available resources are used to achieve outcomes and output

defined in the Project document; Monitor the application of the approved annual action plan of the Project.

The PSC will hold bi-annual meetings and it will meet within June 2017; the UNIDO Project Coordinating Unit (PCU) will act as the secretariat of the PSC and will provide all the supporting documentation needed by the PSC members for their actions and supervision.

3.1.3 At Value Chain Level

In the light of the considerations and the analysis thoroughly performed during the Project Inception Phase, all the activities planned by the project team at value chain level are conceived for overcoming the following two major problems: a) The first major problem is that there exists insufficient coordination among

actors of the coffee value chain. What is missing is a coordination forum specifically focused on the coffee value chain, where all the actors are represented i.e. farmers, plantation owners, processors, roasters, government institutions, suppliers of goods and services, research institutions, international/bilateral Donors and NGOs supporting the coffee sector, associations (exporters, roasters, growers), agents and brokers, banks and micro-finance institutions. In this regard UNIDO, in close collaboration of the ECTDMA and the EU Delegation, is working for the establishment of such forum, which aim should be to: (i) discuss the various problems and constraints of the sector within a “value chain approach”, (ii) elaborate a comprehensive strategy for the coffee sector aiming at the general interest of the country and having, as much as possible, the consensus of all actors, (iii) find harmonized and shared solutions to the various problems and, (iv) eliminate or minimize the possible conflicts among the various actors in view of the general and common interest.

b) The second major problem is the absence of a vertical integration of the coffee value chain with a holistic look at the coffee production, processing and trading phase in a manner that makes sure that all competitive advantages belonging to the country are captured.

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In this regard, UNIDO team is working to consolidate the internal linkages naturally established between coffee farmers, cooperatives and unions: considering the internal regulation of the coffee sector in Ethiopia, working with these particular and unique forms of associations is the only way to guarantee the traceability and the inclusiveness of the coffee value chain in the Country. Intervening at unions’ level, therefore, is the key of success for the project action because through the union management it will be possible to streamline and trickle down all the benefits deriving from the coffee production, processing and trading improvements to the grassroots level.

In detail the following activities have been implemented at value chain level, for a smooth achievement of the project objective:

A. Preparation of a Project Cooperation Agreement with the SCFCU and BYCU, the two Unions selected by the project in order to secure an effective impact in quality and traceability throughout the all coffee value chain, from the farmer production to the coffee export.

The project team prepared and established two PCAs with the Unions in order to create a mutual understanding for better project implementation activities undertaken at Delo Mena and at Burka Yadot Coffee Farmers’ Cooperative Union and at Aleta Wondo with the Sidama Coffee Farmers Union. The PCAs also cover the responsibilities and harmonization of the implementation process of each party.

According to the PCAs the two parties shall work together, but also have distinctive assignments and responsibilities. UNIDO will be responsible for overall coordinating of the project implementation undertaken by the subcontracted NGOs – COOPI and Technoserve - and local government offices to be implemented at cooperative and farm level. UNIDO will also be responsible in gap identifying, hiring local and international consultants for BYFCU’s and SCFU’s technical support in coffee export processes, cooperatives profile data base, website designing and establishments and etc.

On the other hand, BYFCU and SCFU shall be responsible in assigning a focal person for the project and participating in project technical committee at zonal level. BYFCU and SCFUs shall also provide a working space/office for consultants whenever needed in order to work on a close and daily base with their staff. In addition the BYFCU and SCFU shall create an enabling environment for the project implementations at Delo Mena and Aleta Wondo Woreda, coordinate between the affiliated cooperative, guarantee information and knowledge dissemination to member cooperative and farmers and also periodically submit progress and accomplishment reports to COOPI, Technoserve and UNIDO as needed.

B. Preparation of a work plan with the Ethiopian Coffee Roasters Association

(ECRA) as a major player for the implementation of the initiative related to the improvements of the coffee roasting capacity.

For the coffee roasting improvement, ECRA will remain the project strategic partner. During the inception phase 20 private coffee roasters companies associated to ECRA

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have been profiled for the assessment of the overall performance of the roasting industry in Ethiopia; the profiling has helped UNIDO project team in understanding the bottlenecks of roasted coffee sector and in planning supporting actions for this promising and raising industry in the country.

Up to day, UNIDO has been continued the consultation with the ECRA in order to support the association and its members, to improve the coffee roasting industry performances and get a higher value from the revenues of the roasted coffee.

The first action to be put in place in collaboration with ECRA will be the establishment of the Roasting Training Centre where the latest technologies related to roasting, packaging and marketing will be taught.

The international coffee roasting expert who will be starting his collaboration with ECRA in late April will also closely work with the associated members and develop a plan for the adoption of coffee roasting improvement measures; the work plan will be drafted in with close consultation of the ECTDMA and MoI with the aim of maximizing the utilization of the coffee roasting training school to the member of the ECRA.

Figure 3.1.3.A Visiting coffee roaster companies in Ethiopia The next action will be to finalize work plan and organize a general assembly meeting of ECRA to present and discuss the coffee value chain development progress and initiate members on the best methods and technologies aimed at increasing quality and volume of Ethiopian roasted coffee.

C. Preparation of the Job Description and identification of the Coffee Roasting Consultant expected to provide advisory services and technical assistance to the partner organizations in the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union), Ethiopian Coffee Roasters Association (ECRA) for improving the roasting capacity in Ethiopia.

Under the general supervision of the UNIDO HQ Project Manager, a Coffee Roasting Consultant is under recruitment with the aim of providing advisory services and technical assistance to the partner organizations of the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union), Ethiopian Coffee Roasters Association (ECRA) and the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA). The selection of the coffee roasting expert has been done in coordination with UNIDO counterpart in illycaffé: the selected expert has

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already been exposed to the most sophisticated technologies used in the Italian coffee roasting industry, therefore will also provide the necessary guidance and assistance to upgrade the Ethiopian coffee roasting capacity. In particular, the selected expert will be expected to:

a) Conduct capacity and need assessment for SCFCU and provide Technical Assistance for the installation of roasting facility to allow them go towards full traceable roasted coffee;

b) Provide TA to ECRA, conduct capacity and need assessment and recommend business model;

c) Conduct a feasibility study for the establishment of a Roasting Training Center in collaboration with ECTDMA, EFBPI, ECRA and other relevant private sector actors;

d) Provide TA for the establishment of a Roasting Training Center (including e.g.: Roasting, Packaging, Cupping, Marketing, promotion).

D. Preparation of the Job Description for the Business and Credit Analyst

Consultant expected to provide business advisory services, design and propose new market model and business plan for the partner organizations in the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union).

Under the general supervision of the UNIDO HQ Project Manager, a Business and Credit Analyst is under recruitment with the aim of providing advisory services for the partner organizations in the project, i.e. the SCFU (Sidama Coffee Farmers Union) and BYCU (Burka Yadot Cooperative Union). The national expert will also provide the necessary guidance and assistance to all international and national staff working in the project. In particular, the national expert will be expected to:

a) Assess the present situation of the organization (e.g. SWOT Analysis), future business perspectives and credit opportunities of the 2 Unions supported by the project, mainly focusing on the following areas:

Review financial performance of the Unions Evaluating credit data, financial statement and associated risks Evaluating the financial status by producing financial ratios Evaluate the degree of risk involved in receiving credit from potential lenders Assess cash flow and business turnover Formulate business model and develop management and supervisory system Conduct a feasibility study and propose action plan for guarantee fund scheme.

b) Design and propose new market model focusing on the following area:

Identifying business values of the two unions Identifying USP (Unique Selling Proposition) i.e. something that can differentiate

the unions’ product from others in the market Designing communication strategies (e.g. social media communications, email,

advertisement and etc.)

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Analysing brand essence and propose to the unions’ management Establishing easy, marketable and representative business logo Advise and technically support on the design and establishment/ reforming of the

two unions websites.

c) Propose an action plan for an effective marketable diversified new product development (e.g. roasted coffee) and diversification of income (e.g. coffee tourism) for both cooperatives and unions.

d) Propose an action plan for the credit and guarantee fund access and pre-financing opportunities to union and cooperatives.

e) Develop and propose a new business model that suits the Unions and prepare 2 business plan documents accordingly

f) Identify research topics and determine the technical assistance to be provided to the company.

g) Prepare a report based on the assessment conducted on the identified actual performance of financial and credit access and potential gaps.

E. Data collection for the diversification of the coffee production (e.g. Honey from

coffee flora) and preparation of Job Description for Honey Value Chain Development Expert

In order to develop the capacities in value adding activities, the coffee initiative is also oriented at providing support to the farmers for the diversification of their production (e.g. of honey with improved technology providing training and traditional, transitional or modern beehives to some cooperatives members) in order to increase their income with eco-friendly activities.

Therefore under the general supervision of the UNIDO HQ Project Manager, the Honey Value Chain Development expert will give advisory services on Apiculture to the coffee cooperatives that are affiliated to BYCU (Burka Yadot Cooperative Union) in Delo Mena in order to create a side business as a means of product and income diversification. The expert will also provide the necessary guidance and assistance to all international and national staff working in the project. In particular, the expert will be expected to:

a) Assess the collected baseline data, and assess the Ethiopia Honey Value Chain and define Key Project Indicators with detailed LOGFRAME;

Conduct feasibility study for Honey Value Chain business as diversified income for coffee farmers cooperatives in Delo Mena woreda

Review the Honey production capacity of the area and capabilities of farmers and conduct need of assessment

Identify the key functions of the Honey chain actors at different levels (i.e. producers, input suppliers, processors, marketers, service providers and etc.)

Develop a model for improvement of production and productivity of Apiculture enhancing quality to export standard

Identify constraints and opportunities of Apiculture business in relation with forest based cooperatives in Delo Mena woreda

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Formulate business model and develop management and supervisory system for Honey value Chain business in Delo Mena woreda;

Conduct a feasibility study and propose action plan and design practicality of the business.

b) Analyse the Honey Strategy, policy at National and regional levels in detail. c) Study the complementarity of Honey and Coffee production, processing and

marketing businesses to increase income of farmers and propose best practice model

d) Identify Honey related research topics and determine the technical assistance to be provided to the cooperatives and Burka Yadot Farmers’ Cooperative Union (BYFCU).

e) Develop and propose a new business model that suits the Unions and prepare business plan documents for the Honey business as a diversified means of product and income for both cooperatives and the BYFCU.

F. Collaboration established between the subcontracted NGOs and with Positive

Planet, a research platform which aims at creating a coffee value chain index for data collection and analysis.

In the month of August 2016, the foundation Ernesto Illy mandated Positive Planet NGO5 to implement a Positive Coffee observatory in 3 coffee producing Countries, i.e. Ethiopia, Guatemala and India. This Positive Coffee Observatory aims to assess the “positivity” of the coffee value chain in the main producing countries and identify projects which can be implemented to improve the coffee value chain.

To do so, thanks to the Illy connection, UNIDO coffee project team has partnered with Positive Planet in order to conduct surveys in the Ethiopian coffee areas targeted by the project and assess the main issues and needs of producers in the coffee value chain at different farm level, household level and local buyers level.

5 Positive Planet is French based NGO; it was created out of the evolution of PlaNet Finance, whose initial mandate since 1998, was to fight poverty through the development of microfinance. Over the last 20 years, financial inclusion has evolved considerably http://www.positiveplanet.ngo/en/

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Figure 3.1.3. Set of indicators taken into account by the Coffee Value Chain Index

Positive planet and UNIDO have expressly agreed to work in collaboration to carry out the survey and to cover the study in Ethiopia; accordingly Positive Planet has prepared questionnaire guidelines, whereas UNIDO has conducted field studies in the 2 project sites, Delo Mena and Aleta Wondo woredas.

The ultimate goal of the UNIDO collaboration with Positive Planet is to provide a transparent, communicable and operational positive value chain index for the coffee producing communities involved into the project in Ethiopia. Accordingly a set of indicators have been identified for the Ethiopian case and a data collection following a precise methodology has been pursued. The Research Platform is currently analysing the data collected in Ethiopia and, in comparison with the figures from the other producing pilot countries, will present the result of the assessment within the mid of 2017 in a formal event hosted by the Foundation Ernesto Illy.

G. Market access activities and set up of consistent relations with coffee foreign

buyers in order to attract them and establish a fidelity partnership for the coffee value chain vertical integration

UNIDO project team had continuous and fruitful consultation with international coffee buyers interested in directly sourcing Ethiopian coffee from the cooperatives supported by the project intervention.

The selection of coffee buyers is also crucial for UNIDO because they have become more discerning and willing to pay for quality, environmentally-friendly and origin-specific commodities; additionally, international buyers demand transparency and accountability within supply chains, so as to ensure the quality, consistency and safety of their products. These requirements will guide the project action in addressing quality in a way that the project will become demand driven and economically sustainable. The list of buyers contacted by the UNIDO team in order to liaise directly the cooperatives with the international coffee roasters can be summarized as follows

COFFEE

VALUE

CHAIN

INDEX

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ILLYCAFFÈ

PPP project partner Technical assistance

provided through field mission and remote support

Coffee sample test Advice, recommendation,

literature on coffee international market trends

BELCO

Coffee sample tested from Harenna Forest

Recommendation about quality improvement measures provided to BYCU

Fruitful collaboration led to a joint training on Harvesting, Post-Harvest Handling and Coffee Processing Methods, detailed in Annex V

KARMA COFFEE

Willingness to collaborate in equipping the input provision centres at cooperative level in Sidama

BOOT COFFEE

Readiness to taste and buy the coffee grade 1 and grade 2 from Sidama

Collaboration in Aletawondo where Boot Coffee in collaboration with Common River project manage a coffee nursery centre that can benefit the Cooperatives associated to SCFU

ORIGINAL FOOD

Coffee sample tested from Harenna Forest

Recommendation about quality improvement measures provided to BYCU

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TWIN COFFEE

Readiness to collaborate in facilitating access to international buyers interested in fair trade certified coffee

ALBERO DEL CAFFÈ

Readiness to collaborate in facilitating access to international buyers interested in organic certified coffee

MOKAFÈ

Readiness to collaborate in facilitating access to international buyers interested in organic and wild collected certified coffee

CORSINI

Readiness to keep collaborating with BYCU from which the Company has sourced forest coffee and has developed a specific mono-origin blend sold as specialty coffee

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3.2 Activities implemented per Outputs of the Project LOGFrame

Starting from March 2015 until March 2016, the following activities have been implemented in the three areas of competence of UNIDO outlined in the Project Inception Phase Report, i.e. activities in Aletawondo Woreda, Delo Mena Woreda and Addis Ababa. The following section will therefore track all the progress achieved in these three areas of the project interventions according to the outputs foreseen in the three project LOGFrames. 6 3.2.1 List of Activities conducted in Aletawondo Woreda

6 The three LOGFrames are enclosed in Annex III

OUTPUTS 1) Selected cooperatives in Aletawondo are capable to apply, to their organizations and wet mill operations, principles of sound and sustainable management.

Client assistant agreement has been made between the implementing NGO (TechnoServe) and the three cooperatives

The first cupping and quality orientation were conducted at each cooperative namely Homecho Waeno, Gerbicho Lela and Titira. A total of 196 farmers have participated to trainings, samples of coffee have been collected and evaluated by TNS quality experts, hereafter, the experts have delivered proper feedback on the coffees quality statuses and advised the wet mill staff and cooperative management on how to improve.

Figure 3.2.1.A and B Cupping session at Titira and at Gerbicho Lela cooperative

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training material modules for Business plan, gender mainstreaming, cooperative

management, financial management and stock management are under preparation Training on coffee quality control [i.e. how to fill Coffee Processing Quality Index (CPQI) form]

was delivered to 32 wet mill staffs composed from the 3 cooperatives. A training on Sustainability standards that consists Environmental responsibility; Social

Responsibility and Ethics; Occupational Health and Safety were delivered to 103 cooperative leaders and wet mill workers of the three cooperatives of Gerbicho Lela, Homecho Waeno and Titira. Sustainability refreshment trainings could help the cooperatives to comply with international certifications such as Fair-trade, rainforest Alliance and etc.

2) Leaders of farmers’ groups are capable to apply & disseminate the best agronomic practices at coffee farm level and the 3 selected cooperatives are capable to directly provide extension services.

The selection of farmers’ group (leader farmers) is completed, hence the selection targets and prioritizes those farmers who haven’t been received any agronomic training yet through the existing farm college of TNS.

Farmer’s introductory meeting was conducted for 6861 farmers in 9 Kebeles. 2 agronomy business advisors, 1 wet mill business advisor and 18 farmers trainers were

internally assigned and recruited for agronomy activity implementations In order to assist data administration of the project, 18 tablets were purchased by TNS to be

used by Famer Trainers (FTs) for such as data collection and monitoring purpose Training on Rejuvenation and pruning is delivered at 9 Kebeles for 252 farmers Focus Group

(FFG), 6613 farmers were participated. Now FTs are continued working on rejuvenation & pruning.

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Figure 3.2.1.C An adoption site of stumped coffee trees

Figure 3.2.1.D visiting agronomy activities with team from UNIDO, IADC, TNS

Organizing youth/ women for nursery site establishment is under good progress with cooperatives and government office. This helps to meet the objective of mainstreaming gender in the project.

3) Sidama Coffee Farmers Union is capable to provide a timely and effective support for managerial, financial and technical issues to the selected cooperatives.

A Project Cooperation Agreement document has been prepared and the Sidama Coffee Farmers Union (SCFU) management has been agreed, hence the document will be signed between SCFU and UNIDO in the month of April 2017.

Location for establishment of cupping centre at Aleta Wondo woreda were proposed, the management of lab will be under the Sidama Coffee Farmers’ Cooperative Union and they are agreed with the concept. TNS quality team will assess and observe suitability of the rooms and provide feedback for necessary adjustment.

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3.2.2 Summary of trainings delivered in Aleta Wondo

Topics Male Female Total Females participation

Sustainability Standards (full package)

95 8 103 8%

Farmers introductory meeting

4184 2677 6861 39%

Rejuvenation and pruning

4076 2537 6613 38%

Coffee quality and cupping training

99 97 196 49%

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3.2.3 List of Activities conducted in Delo Mena Woreda

OUTPUTS 1) Burka Yadot Cooperative Union increases its turnover, has a strategy (and starts relevant actions) to obtain an increased traceability of the Harenna wild forest coffee representing a concrete alternative to the OCFCU convenient for the cooperatives and is capable to provide support to the selected cooperatives.

Basic needs of assessment was conducted at BYCU Election of board was conducted and most of the long served board members were

renewed to start the project with fresh enthusiastic Preparation for TA and training on merchandize lending to enhance the purchasing

capacity of BYCU is completed and the training will be delivered by the end of January 2017.

BYCU started to have a proper and well organized structure, also COOPI is pushing the Bale zone cooperative promotion office to fasten the recruitment of Manager;

BYCU receives credit for its working capital from Cooperative Bank of Oromia Delivery of support for the member cooperatives started by the Union TA and Training on Union management was delivered to BYCU managerial staff

2) The 12 selected cooperatives in Delo Mena are capable to apply, to their organizations, principles of sound and sustainable management; they

Basic needs of assessment for cooperatives were conducted in collaboration with BOARD and CPO

Training module for cooperative management training for the 12 selected cooperatives is completed

The targeted cooperatives start to apply principles of sound and sustainable management practices at their cooperative level

Three days consecutive training was delivered to the 12 cooperatives on cooperative management

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increase the percentage of their coffee sold to BYCU.

Financial auditing of 9 cooperatives has been completed in collaboration with zone and woreda Cooperative Promotion Office (CPO), the other 3 cooperatives are in progress

Activity implementation for harvest quality improvement at 12 cooperatives through selected member farmers were conducted in collaboration with WOARD and WCPO during the 2016/17 coffee production season

3) WOARD and CPO are capable to provide proper extension services to the farmers of the selected cooperatives. Leaders of farmers’ groups are capable to apply and disseminate best harvesting and post-harvesting practices at coffee farm level.

100 (87 male and 13 female) lead farmers who will follow up on 30 other farmers under them were selected in collaboration with WOARD

Technical assistance on harvesting and post harvesting activities were delivered to cooperative committee members and selected lead farmers

A ToT training on “Environmental friendly coffee production and best agronomic practice” was first delivered to the selected staff of WOARD and CPO to build their capacity, accordingly the same training was delivered to the lead farmers and selected cooperative leaders to over 100 farmers.

Figure 3.2.1.E and F: Provision of trainings in Delo Mena Woreda with BYCU associated farmers

5 all road usable and high fuel efficient motorbikes were purchased and were distributed to stakeholder offices, hence 2 for WCTDMA, 2 WCPO and 1 for WOARD. The motorbikes are labeled by logos of UNIDO, IADC and COOPI

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12 development agents of WOARD and CPO are trained as trainers on sustainable and environment-friendly coffee production and on best agronomic practices.

A practical implementation of best agronomic practices is going on to reach the remaining 90% of farmers’ group.

A follow up methodology for the dissemination of best agronomic is going on to reach the remaining 90% of farmers’ group.

5100m2 of coffee farm were stamped for trial on lead farmers coffee farm in collaboration with WCTDMA

Figure 3.2.1.G and H Stamped old coffee trees of lead farmers in Delo Mena

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3.2.4 Summary of trainings delivered so far in Delo Mena

Topics

Male Female Total Female participation

Union management and leadership: a training delivered to improve the newly elected BYFU board members

8 0 8 0%

Cooperative management: Training delivered to the 12 cooperative committee members to improve cooperative administration

61 4 65 6%

ToT on environment-friendly coffee production and best agronomic practices

10 2 12 17%

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3.2.5 List of Activities conducted in Addis Ababa

OUTPUTS 1) The coordination among the coffee value chain actors is improved

A discussion on the establishing process and structure of Organized Coffee Forum (OCF) with the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA) has been initiated with the joint support and participation of the EU Delegation experts;

A Job Description for a Management and Strategy Consultant to be hired by UNIDO for the coordination and elaboration of the ToR of the OCF has been drafted and presented to ECTDMA for comment.

UNIDO is look for synergies with development organizations who are interested in

creation of coffee platform in Ethiopia, hence started cooperation with the EU delegation office as well as with GIZ for the thematic roundtable on Forest Coffee management.

2) The basis for an increase of the volume of roasted exported coffee are put in place

A Coffee roasting consultant is under recruitment and he is expected to start his work next 24th of April. Together with the project team it will be conducted a capacity and need assessment for SCFCU and provide Technical Assistance for the installation of roasting facility to allow them go towards full traceable roasted coffee; likewise a capacity and need assessment will be performed for the ECRA.

Specification for the establishment of a Roasting Training Centre (including e.g.: Roasting, Packaging, Cupping, Marketing, promotion) in collaboration with ECTDMA, EFBPI, ECRA and other relevant private sector actors are under preparation.

Sidama Coffee Farmers’ Cooperative Union (SCFCU) has agreed to invest in the very first

traceable farmers owned roasted coffee business in Ethiopia; assessment, decision making process and planning with the SCFCU management are ongoing for the implementation of the coffee roasting plant.

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Chapter IV- Work Plan for the next six months (April –October 2017)

The completion of the Project Inception Phase and of the 1st year of implementation calls now for the 1st Project Steering Committee (PSC), the higher level of the Project governance structure composed by representatives of federal and regional government’s organizations, the Italian Development Cooperation as Project donor, UNIDO and the involved organizations of the private sector.

Due to the establishment of the Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA) last 25th of November 2015 and due to the intensive inter-institutional dialogue among the former Ministries of competence on coffee value chain, the PSC meeting has not yet taken place due to the time needed by the Authority to settle down and fully enter in the Institutional scenario of the Federal Democratic Republic of Ethiopia with its law enforcement capacity.

The PSC will be chaired by the Director General of the ECTDMA and co-chaired by the Minister of Industry with competence on the roasting part of the project; the PSC will include representatives of the stakeholders as per TOR attached in Annex IV. PSC will provide the project with strategic direction in terms of implementation of project activities and ensure the effective coordination and cooperation between all involved stakeholders.

The PSC will supervise and monitor the progress towards achieving the planned outputs as well as to review and approve the annual work plans of the UNIDO initiative mainly concentrated in the 2 coffee growing areas targeted by the project intervention, as well as the activities foreseen in Addis Ababa for the establishment of the Organized Coffee Forum and the Roasting Training Centre.

The progresses of the project will be tracked according to the following timeline.

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ACTIVITIES SUBJECT

MONTHS

DO

NE

1

2

3

4

5

6

ACTIVITIES IN ALETAWONDO Activities in Aletawondo to be subcontracted relevant to cooperatives (Output 1) 1) Provision of 2 trainings on cooperative management to the 3 cooperatives’ managerial staff and follow up (with due attention to the gender mainstreaming)

Training

Follow-up 2) Provision of 2 trainings on governance and financial management to the 3 cooperatives’ managerial staff and follow up;

Training Follow-up

3) Assistance to the cooperatives for strengthening the capacity for data recording TA 4) Assistance to the cooperatives’ managerial staff to develop a business plan TA 5) Preparation of a feasibility study aimed at renovating the wet mills in at least 1 washing station per cooperative and coaching of the cooperatives’ technical staff in feasibility study preparation;

TA

6) Assistance to the industry managers of each cooperative in planning and implementing new wet mill arrangements that are eco-friendly, efficient and quality oriented;

TA

7) Provision of 2 trainings on cupping and introduction of monthly cupping practices at cooperative level for the wet mill management teams.

Training Follow-up

Activities in Aletawondo to be subcontracted relevant to farmers (Output 2)

1) Identification of natural leaders amongst the farmers’ groups that can host demonstration plots in their farms where) best agronomic practices in coffee farm management are put in place and follow up activities are carried out; establishment of a sufficient number of demonstration plots.

Establishment of demo plots

Follow up

2) Provision of 2 awareness training on sustainable and environment-friendly coffee production that will benefit the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members);

Training

Follow up

3) Provision of 6 trainings on best agronomic practices that will benefit the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members)

Training

Follow up

4) Implementation of the practical exercises related to the “Coffee Farm Training Programme” that will benefit the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members) on a weekly basis.

Exercises

Follow up

5) Implementation of a follow up methodology that aims at verifying the dissemination by the leaders Follow up

6) Establishment of 3 cooperative provision centers for agronomic inputs delivery Establishment

7) Preparation of a feasibility study for the inclusion in the cooperative organizational chart the function of the extension service provider.

Study preparation

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Activities in Aletawondo to be subcontracted relevant to Sidama Union (Output 3) 1) Provision of credit to the 3 cooperatives for the improvement of their wet mills; TA 2) Analysis of the possibility for the Union to apply for a credit guarantee scheme; TA

3) Provision of 2 trainings and technical assistance to the Sidama Union in order to apply for a credit guarantee scheme;

Training TA

4) Provision of 2 trainings and TA to the Sidama Union aimed at establishing a specialized and standardized agronomy support programme for all the associated cooperatives aimed at quality control;

Training

TA

5) Support to the Sidama Union with IT tools to guarantee an efficient monitoring of the primary cooperatives’ operations

IT tools TA

Supervision activities in Aletawondo to be carried out by UNIDO (Output 1, 2, 3)

1) Supervision of the subcontracted activities by international experts and by local experts TA

International

TA Local 2) Preparation for washing equipment purchase (specifications etc.) TA

3) Purchase of equipment for coffee grading (cupping etc.) for the 3 selected cooperatives and TA Purchase

TA ACTIVITIES IN DELO MENA Activities in Delo Mena to be subcontracted relevant to BYCU (Output 1) 1) Provision of TA and training on Union management to BYCU managerial staff and follow up (with due attention to the gender mainstreaming).

TA Training

2) TA for the design of the BYCU strategy and business plan to obtain an increased traceability of the Harenna forest coffee and follow up with starting of actions.

TA Follow up

3) TA to BYCU for optimization of its organization and for the improvement of its capability on finance, accounting, data recording and data analysis

TA

4) TA to BYCU to explore the proper ways to obtain credit (including “merchandise lending”) in order to increase the quantity of coffee purchased by the Union.

TA

5) TA to BYCU to prepare applications and obtain loans. TA 6) TA and training to introduce the grading and cupping practice at BYCU level and purchase of relevant equipment.

TA; training

Activities in Delo Mena to be subcontracted relevant to cooperatives (Output 2)

1) Provision of training on cooperative management to the 12 cooperatives’ managerial staff and follow up (with due attention to the gender mainstreaming in the cooperatives).

Training

Follow up

2) Provision of training on governance and financial management to the 12 cooperatives’ managerial staff and Training

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follow up. Follow up

3) TA to the 12 cooperatives’ technical staff for profiling cooperative members, strengthening the capacity for data recording system and for analyzing the data

TA

Follow up

4) TA to the cooperatives’ managerial staff to develop an updated cooperative business plan TA

Follow up

5) TA to the 12 cooperatives in planning and implementing coordination with WOARD and CPO for assistance to farmers for improvement of harvesting practices.

TA

6) Provision of training to the cooperatives on the utilization of grading and cupping facilities at Union level and follow up.

Training

Follow up

Activities in Delo Mena to be subcontracted relevant to farmers (Outputs 3a, 3b)

1) TA to WOARD for identification of natural leaders amongst the farmers’ groups that can disseminate best agronomic practices in coffee farm management.

TA

2) Training of trainers of the WOARD and CPO to provide training to the leaders Training

3) Purchase of 5 all-road motorcycles for the development agents of WOARD Purchase

4) Provision, by the development agents of WOARD and CPO trained under previous activity 2, of 2 awareness trainings on sustainable and environment-friendly coffee production to the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members) with TA from subcontractor.

Training

TA

5) Provision of 6 trainings, by the development agents of WOARD and CPO trained under previous activity 2, on best agronomic practices to the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members); the training course will be delivered with TA from subcontractor

Training

TA

6) Implementation of the practical exercises related to the training course of previous activity 5 that will benefit the leaders of the farmers’ groups (corresponding at least to the 10 % of the total cooperative members) on a weekly basis.

Practical Exercises

7) Implementation of a follow up methodology that aims at verifying that the leaders disseminate the knowledge acquired under activities 4, 5 and 6 to the farmers’ members of their groups.

Follow up

8) Establishment of cooperative provision centers for agronomic inputs Establishment of 12 Centres

Supervision activities in Delo Mena to be carried out by UNIDO (Output 1, 2, 3) 1) Supervision of the subcontracted activities TA

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3) Purchase of equipment for coffee grading (cupping etc.) to be used by the selected cooperatives and TA Purchase

TA ACTIVITIES IN ADDIS ABABA Activities related to the Coffee Authority and the OCF 1) Preparation of a strategic plan for a collaboration with the CA under the facilitation of the EU Delegation TA 2) Assessment of the CA needs of assistance, capacity building as well as the organization of specific study tours for relevant local stakeholders

TA

3) Provision of TA to the CA TA 4) Assessment of the possibility to establish a collaboration between the FBPI and the CA TA

5) Provision of assistance to the FBPI especially in terms of capacity building (training and TA) TA

Training 6) Identification of the stakeholders all across the Ethiopian coffee value chain that can participate to a study tour in Colombia or Costa Rica under the facilitation of PPP partner Illycaffè

TA

7) Preparation of the study tour in Colombia under the facilitation of PPP partner Illycaffè Follow up

8) Implementation of a study tour in Colombia under the facilitation of PPP partner Illycaffè Training

9) Preparation of a draft document on the purpose, composition, operating principles of the Organized Coffee Forum

TA

10) Presentation and discussion of the OCF draft document with all direct and supporting actors, starting with CA, other GoE institutions and EU Delegation

TA

11) Organization of the first OCF meeting in collaboration with the CA and the EU Delegation TA Activities related to roasting 1) Development of a strategic plan for the ECRA TA 2) Assistance for the implementation of the ECRA strategic plan TA 3) Supporting ECRA members’ participation in exhibitions, conferences, study tours and training abroad Contribution 4) Provision of training to ECRA members to strengthen their capacity TA 5) Verification of the status of the FBPI in terms of professional skill and infrastructures (e.g. laboratories and other facilities) in view of collaboration with the CA and with ECRA

TA

6) Preparation of a feasibility study for the establishment of a Roasting Training Center in FBPI premises in collaboration with ECRA and other relevant private sector actors

TA

7) Establishment of a Roasting Training Center in FBPI (including e.g.: Roasting, Packaging, Cupping, Marketing, Promotion)

Purchase

8) Provision of training to members of ECRA and FBPI to strengthen their capacity in managing the Roasting Training Centre

Training

9) Establishment of a Roasting Training Programme (including e.g.: Roasting, Packaging, Cupping, Marketing, Promotion)

TA Training

10) Provision of TA to the SCFU to allow them to go towards a full traceable roasted coffee TA

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ANNEX I: The Project Locations Maps7

7 In order to enable the definition of more limited areas where to carry out site surveys, thanks to the collaboration of Technoserve experts, it has been possible to prepare a project map

identifying the following: a) the different coffee growing areas; b) the borders of the Regions; c) the borders of the Woredas; d) the areas of intervention of AGP II. This tool together with

the Map on coffee Growing Areas in Ethiopia issued by Technoserve has been utilized during all the field missions of the project inception phase.

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ANNEX II: ECTDMA Letter to UNIDO

53

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ANNEX III: LOGFrame of the Project Intervention

LOGFrame of the Intervention in Aletawondo Woreda

INTERVENTION LOGIC INDICATORS MEANS OF VERIFICATION

GENERAL OBJECTIVE

To increase income, deriving from coffee production, of smallholder farmers associated to 3 selected cooperatives (Homacho Waheno, Gerbicho Lela and Titira) in the Woreda of Aletawondo, Sidama Zone, SNNP Regional State.

20% increase of income of more than 8,000 coffee growers associated to the selected cooperatives (the total number of beneficiaries, including famer household members is estimated at more than 40,000).

Reports from the cooperatives and the Sidama Coffee Farmers’ Cooperative Union (SCFCU);

Interviews with farmers and household members made by UNIDO supervisors.

SPECIFIC OBJECTIVE

To increase value of coffee produced by the selected cooperatives for export caused by an increase of yield and quality of the coffee and by the improved international recognition of Sidamo coffee quality.

20% increase of the amount paid by the Union to the selected cooperatives;

The grade received at ECX should be at least 3 and above.

Reports from cooperatives and the SCFCU;

Interviews with farmers and household members made by UNIDO supervisors;

Certification received at ECX.

OUTPUTS 4) Selected cooperatives in Aletawondo are capable to apply, to their organizations and wet mill operations, principles of sound and sustainable management.

Data collected by the cooperatives are complete and relevant;

3 business plans (1 per each cooperative) are prepared and approved by the cooperatives’ general assemblies;

At least 3 wet mill new management plans (1 per each cooperative) are designed and approved by the cooperatives’ general assemblies.

Cooperatives’ records and books; Business Plan documents; Wet mill management documents.

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5) Leaders of farmers’ groups are capable to apply and disseminate best agronomic practices at coffee farm level and the 3 selected cooperatives are capable to directly provide extension services.

90% of the demonstration plots are managed according to the best agronomic practices;

10% of the total cooperative members (corresponding to the leaders of the farmers’ groups) are trained on coffee quality control management;

A follow up methodology for the dissemination of best agronomic practices reaches the remaining 90% of farmers’ group;

3 cooperative provision centres for agronomic inputs delivery are established for coffee farmers;

3 feasibility studies, aimed at including in the organizational chart of the cooperatives the function of the extension service provider, are undertaken.

Demonstration plot inspections; Attendance sheets of the Coffee

Farm Training Programme; Random Inspections in coffee

farming plots; Input provision centres’ inspection

and verification of their profitability; Feasibility study documents.

6) Sidama Farmers Coffee Union is capable to provide a timely and effective support for managerial, financial and technical issues to the selected cooperatives.

Credit for new wet mill machineries is provided and/or credit scheme application is presented to financial institutions/ international donors;

A guarantee scheme acquisition is facilitated for the Union;

Specialized agronomy support programme and quality/marketing team are established at Union level;

A monitoring system on primary cooperatives’ operations is put in place;

Gender baseline data are collected.

New wet mills inspection and assessment;

Application forms for credit scheme; Verification of the coffee flow; Reports of the Union on

cooperatives’ support programme; Reports of the Union on

cooperatives’ operation management;

Gender analysis report.

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LOGFrame of the intervention in Delo Mena Woreda

INTERVENTION LOGIC INDICATORS MEANS OF VERIFICATION

GENERAL OBJECTIVE

To increase income, deriving from coffee production, of smallholder farmers associated to the 12 cooperatives based in the Delo Mena Woreda of Bale Zone, Oromia Regional State

20% increase of income of more than 1,400 wild coffee farmers associated to the selected cooperatives (the total number of beneficiaries, including famers’ household members is estimated at more than 7,000).

Reports from cooperatives and from the Burka Yadot Cooperative Union (BYCU).

Interviews with farmers and household members made by UNIDO supervisors.

SPECIFIC OBJECTIVE

To increase value of coffee produced by the selected cooperatives for export caused by an increase of the quality of the coffee and by an acquired international recognition of the Harenna forest wild coffee quality.

20% increase of the amount paid by the Unions to the selected cooperatives.

The grade received at ECX should be at least 3 and above.

Reports from cooperatives and from the BYCU.

Interviews with farmers and household members made by UNIDO supervisors.

Certification received at ECX.

OUTPUTS 4) Burka Yadot Cooperative Union increases its turnover, has a strategy (and starts relevant actions) to obtain an increased traceability of the Harenna wild forest coffee representing a concrete alternative to the OCFCU convenient for the cooperatives and is capable to provide support to the selected cooperatives.

BYCU has a proper organization; BYCU has a sound financial and accounting

capability. BYCU receives sufficient credit for its working

capital. Quantity of coffee purchased by BYCU from

cooperatives increases at least to 300 t/y. A strategy for BYCU to export directly the coffee

is put in place. A monitoring system on primary cooperatives’

operations is put in place.

Organogram of BYCU. Books and financial records of BYCU. Documentation on loans received by

BYCU. Documents on BYCU strategy to

export directly coffee; Verification of the traceable coffee

flow. Reports of the Union on its

monitoring on primary cooperatives’ operations.

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5) The 12 selected cooperatives in Delo Mena are capable to apply, to their organizations, principles of sound and sustainable management; they increase the percentage of their coffee sold to BYCU.

Data collected by the cooperatives are complete and relevant.

12 business plans (1 per each cooperative) are prepared and approved by the cooperatives’ general assembly.

Cooperatives’ data on coffee sold to BYCU, to OCFCU and to akrabis.

Cooperatives’ records and books. Business Plan documents. Records of cooperatives on sales.

6) WOARD and CPO are capable to provide proper extension services to the farmers of the selected cooperatives. Leaders of farmers’ groups are capable to apply and disseminate best harvesting and post-harvesting practices at coffee farm level.

All the development agents of WOARD and CPO are trained as trainers on sustainable and environment-friendly coffee production and on best agronomic practices.

WOARD is provided with 5 all-road motorcycles.

2 trainings on sustainable and environment-friendly coffee production and 6 trainings on best agronomic practices are provided to 10% of the total cooperative members (corresponding to the leaders of the farmers’ groups).

A follow up methodology for the dissemination of best agronomic practices reaches the remaining 90% of farmers’ group.

12 cooperative provision centres for agronomic inputs delivery are established for coffee farmers.

Attendance sheets to the trainings of the Coffee Farm Training Programme.

Random inspections in coffee farming plots.

Input provision centres’ inspection and verification of their utilization by farmers.

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LOGFrame of the intervention in Addis Ababa

INTERVENTION LOGIC INDICATORS MEANS OF VERIFICATION

GENERAL OBJECTIVE

To increase income of smallholder farmers deriving from coffee

Percentage of increase of income of farmers Reports from cooperatives and Unions.

Interviews with private collectors and farmers

SPECIFIC OBJECTIVE

Increased value addition of exported Ethiopian coffee

Percentage of increase of value added to exported Ethiopian coffee

Reports from MoT and MOI Reports from ECEA

OUTPUTS 3) The coordination among the coffee value chain actors is improved

First OCF meeting is organized OCF meeting report

4) The basis for an increase of the volume of roasted exported coffee are put in place

Number of new investors in coffee roasting/grinding/packing

Surveys and reports from MOI and ECRA

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ANNEX IV: ToR of the Project Steering Committee

“Improving the Sustainability and Inclusiveness of the Ethiopian Coffee Value Chain through Private and Public

Partnership”

TERMS OF REFERENCE FOR THE STEERING COMMITTEE

1. Background Information

The Ethiopian coffee sector, is very important for the country and for its economic development due to the reasons that: (i) as a major source of cash income and provider of employment, it supports millions of farming families (for instance, those estimated as dependent on coffee production and marketing for livelihood are about 20 million) and, (ii) coffee is the first item in terms of revenue generated from export with a share of about 25 per cent. The coffee sector can contribute to the growth of the industrial sector share in the national GDP, owing to its high potential of creating industrial roasting capacity that, at present, is rather marginal.

Although the Ethiopian Government has implemented important reforms, such as the introduction of the Ethiopian Commodity Exchange for grading and auctioning, the problems of the sector need to be tackled through a “value chain” approach. In this regard, to Increase the social, environmental and economic sustainability of the coffee value chain and its export revenue requires an integrated yet modular value chain approach focusing on: (i) Increase in productivity and sustainability (cultivated area and yield), (ii) improvement of quality, (iii) increase export and, (iv) Recognition in international markets of the intrinsic qualities of the Ethiopian Arabica coffee. Increasing production is important, but the real asset of the Ethiopian coffee resides in its quality that, by obtaining premium prices, could allow avoiding the competition with the “coffee giant”, like Brazil and Vietnam.

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Some activities with regard to the sustainability of this value chain will be performed in cooperation with illycaffè as an example of PPP. One important output of the Project will be the establishment of an “Organized Coffee Forum” that allows the participation of all the actors involved in the coffee value chain. The specific objective is to increase the coffee export revenue. This will help to reach the General Objective of raising the income of smallholder farmers. Poor smallholder farmers and their families, including women, will be the main beneficiaries of the Project.

2. Purpose of Establishing the Project Steering Committee

The Project Steering Committee (PSC) is the higher level of the Project governance structure composed by representatives of federal and regional government’s organizations, development donor organization, UNIDO and the involved organizations of the private sector etc. It will be chaired by the Director General of the Ethiopian Coffee and Tea Marketing and Development Authority and will include representatives of the major project stakeholders. The purpose of establishing the Steering Committee is to review the progress and obstacles encountered and ultimately suggest solutions. The main functions and responsibilities of the PSC will be to:

Provide the project with strategic direction in terms of implementation of project activities;

Ensure the effective coordination and cooperation between all involved stakeholders;

Monitor the progress towards achieving the planned outputs as well as to review and approve the annual work plans;

Solve complex matters arising from different level of the Project structure during its implementation;

Improve policy direction as deemed necessary by the Project; Ensure that the available resources are used to achieve outcomes and output

defined in the Project document; Monitor the application of the approved annual action plan of the Project.

The PSC will hold bi-annual meetings: the Project Coordinating Unit (PCU) will act as the secretariat of the PSC

3. Specific Activities of the PSC

The PSC will receive a detailed progress report of the Project every 6 months, depending on the intensity of implementation as well as on a need to discuss urgent matters, which could affect the Project’s life. The UNIDO project team, in cooperation with the Project Manager, will prepare the report. This report will include:

A description of the activities planned to take place in the reporting period, as well during project implementation;

A description of the results achieved;

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Explanations on possible deviations or delays for activities, which were planned and could not take place, or had to be postponed;

A description of all activities planned for the following 6 months, including a projection of results to be achieved, as well as their effect on the overall implementation of the project;

A presentation of bottlenecks and problems, which need to be brought to the attention of the donor country and the Government of Ethiopia.

The PCU secretariat will distribute an agenda of the meeting prior to the scheduled meeting, (at least 15 days before), as well as other relevant documentation.

4. Composition of the Steering Committee

It is proposed that the Steering Committee be composed of representative of the following institutions and organizations:

Ethiopian Coffee and Tea Marketing and Development Authority (ECTDMA) Ministry of Industry European Union Delegation Oromia Region Bureau of Agriculture SNNP Region Bureau of Agriculture Italian Agency for Development and Cooperation Programme for Country Partnership (PCP) illycaffè and Ernesto Illy Foundation Sidama Coffee Farmer Union Burka Yadot Union Ethiopian Coffee Roasters Association UNIDO Project Team

Observers: UNIDO Representative and Director of the Regional Office or a representative from this office

The Chairperson of the Steering Committee will be the Director-General of the ECTDMA and co-chaired by State Minister, MoI.

The Steering Committee will have one secretary, i.e. the National Project Coordinator or alternately National Technical Coordinator based on their availability.

5. Meeting Schedule of the Steering Committee

The Steering Committee will meet every 6 months in Addis Ababa at the premises of the ECTDMA, upon availability of its members. The duration of the meeting will depend on the volume of matters to be discussed, but for a maximum of 3 hours. The meeting can be called earlier of the 6-month timeframe if it is deemed necessary by any of the Committee members.

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6. Language

The working language of the Meeting will be English.

7. Financial and administrative arrangements

For participants coming from Oromia and SNNP Regional States, financial and administrative arrangements will be made in accordance with UNIDO’s rules and regulations: a Daily Subsistence Allowance (DSA) at the prevailing UN rate of Birr per day will be paid to the participants from Oromia and SNNP Regional States at the venue. The DSA will cover taxi rent, lodging, and incidentals for the period of attendance, thus for a maximum of two days.

UNIDO will not assume responsibility for the following expenditures:

Cost incurred by the participants with respect to travel insurance, accidental insurance, medical bills and hospitalization fees in connection with their attendance of the meeting,

Compensation in the event of illness of the participants in connection with their attendance of the meeting,

Loss or damage of personal property of the participants while attending the meeting,

Purchase of personal belongings and compensations in the event of damage caused by them, by climatic or other conditions,

Travel and any other costs incurred by dependents who might accompany the participants.

Participants coming from Oromia and SNNP Regional States are free to make their own hotel reservation

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ANNEX V: Report on Harvesting, Post-Harvest and Coffee Processing

IMPROVING THE SUSTAINABILITY AND INCLUSIVENESS OF THE

ETHIOPIAN COFFEE VALUE CHAIN THROUGH PRIVATE AND PUBLIC PARTNERSHIP

Report on

Harvesting, Post-Harvest Handling and Coffee Processing Methods

Addis Ababa

November 2016

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1. Introduction and Background

Ethiopia is one of the major coffee producing countries in the world, unlike many other countries the coffee production system in Ethiopia follow four different systems these are (i) the garden coffee, this is production system in which coffee are planted close to farmers houses and organic fertilizers such as manure are widely used, (ii) the plantation coffee which are mostly commercial coffee farms owned by investors and entrepreneurs, (iii) the semi-forest coffee these are coffee that are planted with optimum shade trees and finally (iv) the forest coffee which are a wild and naturally planted coffee under rainforests of Ethiopian highlands. The garden and semi-forest coffee are the dominant production system in Ethiopia covering more than 80% of the total production. Ethiopia is the only country consist more than 10,000 genetically differentiated cultivars in the wild coffee forest. Regarding the processing methods the natural (sundried) and the washed (wet) are the two prevailing processing methods in Ethiopia.

2. Rational for the training

Even though Ethiopia has been producing and processing coffee for several centuries, the low quality has been one of the main remaining challenges which have been lowering the revenue that could be generated from coffee. Post- harvest handling and processing method are key for the value creation of coffee and as well as for marketing. For Ethiopia, it might be impossible or takes very long time to be a big player in volume considering such as Brazil and Vietnam which are already far away in production and productivity, however it’s still feasible for Ethiopia to be a leader in quality. Currently the quality of coffee produced in Ethiopia is not to its highest possible, though its natural intrinsic quality were an opportunity, this is mainly because of poor processing system, for instance processing system such has the “honey” method are not in even practice. The two most prevailing coffee processing methods in Ethiopia are the natural (sundried) and the wet (washed) processing. However there are also other processing methods known as semi-washed and honey that have also demand on the international coffee markets.

In addition small producers which are the majority in Ethiopia are very fragmented, the only means to access direct international market is through joining cooperatives, however most of this cooperative do not have proper quality control system at the ground and they mostly know the quality of their coffee on the arrival at the ECX at which coffee quality grades are determined, but at this stage it is already too late to take processing corrections in order to improve the quality, hence the producers receive price that matched their quality, but this would better if cupping facilities could be established at the local levels and proper quality controlling system of post-harvesting and processing protocols are regularly maintained to producers level. Thus the training was organized by BELCO coffee, UNIDO and The Italian Agency for Development Cooperation (IADC) in viewing that it can reduce this quality of coffee processing gaps.

3. Objective of the training

The overall collective objective of the training is aimed at supporting Ethiopian coffee farmers to produce a better quality for a better price and sustainable market, through providing training on how to enhance the quality of coffee processing methods that covers the value addition process starting from harvesting and post-harvesting process through storage before exporting. Moreover, the training is also aimed at introducing the processing methods which are not very common in Ethiopia such as the “honey’ processing methods. Last but not least it is also to increase the relationship between international coffee buyers and local coffee producers in a Public - Private Partnership approach (PPP).

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4. Methodology of the training

The training document was primarily prepared by international coffee expert and consultant working for BELCO (a coffee buyer company). The document was prepared in English and also translated to a local language (Afaan Oromo) for better communication and understanding of the farmers.

The training was given in a classroom with full interactions and discussions. The participants being called from different coffee producing Regional State in Ethiopia, has given the opportunity for the participants to share experience from each other. The initial plan was to include practical exercise at coffee farming areas but due to the current security condition in Ethiopia it wasn’t possible to freely travel so that the training was conducted in Addis Ababa at the regional office of BELCO coffee.

5. Major contents of the training

Harvesting: Coffee processing quality starts at the harvesting stage. Only the red cherries have to be picked. This is important because the cherries become ready to be harvested once they only get red as they accumulate the necessary flavors and become heavier in weight when compared to the unripe or overripe cherries which are lighter with less contents, this also help the producers to gain advantage of getting higher price for its quality and as well as its weight.

The training introduced them the necessity to collect or to buy cherries with a red cherries grading system in order to pay a weight and a quality. This is a crucial point for all the players in the Ethiopian coffee value chain.

Natural (sundried) coffee processing method: this is a processing method in which coffee cherries are properly harvested from trees and dried on raised beds (African bed)until it reaches its standard and proper moisture content. Such processed coffee acquires higher body in cup test.

Fully washed (wet) coffee processing method: this method is a process in which coffee is fully washed using water, in which the cherries are first harvested and delivered to the washing station within 8 hours or before and then pulped to remove the red outer skin and then soaked for fermentation process for about 36 -72 hours (depending on the temperature) this helps to fully remove the mucilage from the coffee bean. Finally the beans will be washed and rinsed using clean water and spread over raised beds to be dried. Such coffee is characterized as higher acidity, cleaner cup and balanced body.

Semi-washed coffee processing method: the semi-washed coffee start with similar procedure with the fully washed ones at the initial stage but the only difference is that the beans are not washed or rest in water after the mucilage is removed, instead it will be directly dried on raised beds once the mucilage is removed using the de-mucilage machine.

In Ethiopia, most of the semi-washed station washes the parchment after removing the mucilage mechanically which damage the quality exposing the parchment too much to water. Their goal is to give the same physical looking as the fully washed coffee. But in fact, by doing this, they damage the quality and the coffee beans will lose their flavor faster within four or five months. The goal of this part of the training was to question the process and to precise all the steps to produce a semi-washed and to aware the cooperative that they can’t get a Fully Washed as far as they remove the mucilage mechanically. The aspect is nothing to determine if it is a Fully Washed or a Semi-Washed. The idea was to inform them that there is equally market for a good semi-washed having a specific profile.

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Honey coffee processing method: this process is called honey because the mucilage (the sugary part that surrounds the coffee bean) will be dried altogether with the coffee beans, after removing only red skin part and directly dried on raised bed. Such coffee is characterized as sweet because of their sugar contents of the mucilage.

Drying: drying is the crucial part of coffee processing; it contributes highly to the quality of coffee. There are different standards of drying based on the processing methods followed, however the common best practice for all processing systems are that is should be dried on a raised bed without direct contact with soil, evenly spread over the bed so that air can move freely and the beans could dry evenly. Drying need a regular movement of beans using wooden rakes to allow the bean to be dried uniformly until it reaches standard moisture content.

Storing: the final stage of coffee processing is the storage, the warehouse has to be clean and free of any contaminations, well dried bean (11.5% of moisture) should be put in plastic bags or jute bags and placed over wooden pallets, this help the bean not to gain or lose its original moisture while seated in the store until finally exported.

6. Output of the training

Outputs of the training are;

The participants gained knowledge of all the coffee processing methods that involves the entire activities of the post-harvest and will disseminate the knowledge to their member farmers,

The producers will start processing of new methods other than the traditionally known such as the “honey” processing system for product diversification.

Enhance direct relationship of producers and international coffee buyers and help to exchange business ideas

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7. List of Participants

There were 11 participants on the training coming from major coffee producing Regional State in Ethiopia which are Jimma, Wollega and Bale. Even though the participants have common background as coffee producers but they have also different tradition of processing methods which is for instance the Bale area (which is also the intervention area of UNIDO) produces natural wild coffee from the Harenna forest, while Jimma provide both washed and sundried and whereas Wollega dominantly process sundried coffee. Such process diversification has helped the participants to share their background and experience. The participants are representative of coffee farmers’ cooperatives, small scale individual coffee plantation owners and also representative of development organizations.

From the UNIDO side, two people were participated namely Alyie Ebrahim, the manager of the Burka Yadot Coffee Farmers’ Cooperative Union and Yared Gutama the team leader and a focal person of COOPI (subcontracted NGO for the UNIDO coffee project).

From Belco side, coffee farmers from cooperative or private sector came from Jimma Zone and Qellem Wallagga Zone.

Name of participants

Organizations they Represent Address

Jihaad Hassen Hunda Oli Primary Cooperative Gommaa woreda Jimma Zone

Amino Abakeno Hunda Oli Primary Cooperative Gommaa woreda Jimma Zone

Abdulaxif Mahmed Duromiina Primary Cooperative Gommaa woreda Jimma Zone

Misebaru Abjabal Duromiina Primary Cooperative Gommaa woreda Jimma Zone

Musxafa Muhammed Jimma Zone

Alyie Ebrahim Jaldo Burka Yadot Cooperative Dalo Mana Bale Zone

Yared Gutama COOPI, NGO Dalo Mana Bale Zone

Mehari Berhanu Torban Anfilloo Cooperative Anfilloo woreda Qellem Wallagga Zone

Hussen Abamacaa Woreda Cooperative Office Agaro Jimma Zone

Muusa Ablulesa Private Farm Jimma Zone

Mustafa Ablulesa Private Farm Jimma Zone

8. The way forward

The partnership of BELCO8, IADC, and UNIDO for such training facilitation to be delivered to coffee farmers will continue in the future with the scaling up approach in the framework of Private – Public Partnership Program (PPP). The next step will be preparation of a common training manual to be prepared both in English and other local languages for the use of coffee

8 Profile of the trainer: Marjorie is currently working at Belco as a technical coffee consultant; she trains coffee farmers who supply Belco in Central, South-America and in Africa (Ethiopia and Cameroun). Moreover she has experience in small and medium coffee producers both in practical and theoretical coffee processing methods. Marjorie has also received a Master’s degree in Coffee Economics and Science from University Udine in collaboration with the Ernesto Illy foundation in 2013 in Trieste, Italy. She was in Ethiopia in October and November 2016 to train Belco’s supplier in Wallagga and in Addis Ababa.

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value chain actors in Ethiopia in view of standardizing and modernizing the coffee processing methods by means of harmonization with the existing traditional practices using local experts at the project intervention level and also introducing and promoting market driven product differentiation strategies.

The responsibilities of each organizations and budget allocation for this forthcoming partnership will be determined in due course.