Strengthening coffee cooperatives (CCH)

Evaluation covered the period 5/83-5/85 and was based on sample financial analyses, site visits, and interviews with farmers, co-op members and managers, and traders. PES includes findings from independent USAID/H assessments. The project fell short of expectations. CCH was not able to recruit the planned 5-member executive committee - only a project director and an accountant are on board; neither were trained sufficiently. Eight regional monitors were trained to provide management assistance to local co-ops, but have had only modest impacts; a 10/84 report showed unsatisfactory performance by half of the monitors. TA available from an ILO training expert was not fully exploited. Fundamental problems with the Pilot Center for Cooperative Coffee Exporting (CEPEC) critically affected the project. CEPEC construction, begun under project 5210083, is not yet finished and it is uncertain whether the Office of Promotion of Exportable Commodities (OPRODEX) will relinquish CEPEC title to CCH upon completion. Moreover, CEPEC experienced a large operating deficit in FY84 and was unable to distribute patronage rebates to CCH co-ops (FY85 rebates are also unlikely); co-op members are discontented, and some co-ops have withheld shipments from CEPEC (casting doubt on the viability of CCH exporting operations until CCH can assume CEPEC management). The CCH co-op loan program had a high rate of repayment in FY84, but management of the fund was less than optimal and only 83% of available funds were lent. Three assumptions have long shaped USAID/H"s strategies for the coffee sector - that coffee is profitable for farmers, the coffee sector is an inefficient oligopsony to be broken by a parallel co-op marketing system, and co-ops provide economic benefits to farmers. While recent events and analyses have called the first two of these into doubt, the third is supported by data from 6 co-ops (a 10% sample) showing their prices to be 9% higher than those offered by speculators; 3 of the co-ops showed operating profits even when subsidies were costed out. Unexpected project effects are that many co-ops, dominated by the rural elite, are viewed by non-member peasants as exploitative, and that some exporters have tried to drive co-ops out of business (it is not known how long co-ops can survive such onslaughts). Key lessons are that a follow-on should not be developed and approved until predecessor activities are operational, and that projects of this sort must be closely monitored. Action decisions enumerate 4 conditions precedent to disbursement for a follow-on phase.