The International Cooperative Alliance (ICA) defines cooperatives as “autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprises“. For many years, cooperatives have operated as economic enterprises and as self-help organizations playing a meaningful role in uplifting the social economic conditions of their members and their local communities. Within the coffee production sector, and considering the volatility of coffee prices in the global market, small scale coffee producers show their interest in the cooperative movement and mobilise into cooperatives in an attempt to raise their voice in negotiations (bargaining power) based on the ideals, values and principles proved by the ICA. Likewise, the prospects of entering into trade agreements such as fair trade that would facilitate higher returns to their members through reduced transaction costs, increased profit margin through premiums and shortened supply chains stimulate the gathering of these small producers within organizations that would secure their aspirations of getting increased incomes, and therefore improve their social and economic status.
Through a comparative analysis within the cooperative movement, a colleague and myself have conducted a literature review on two coffee cooperatives: ‘Central Association in the Northern Regions’ (CECOCAFEN) in Nicaragua and ‘Oromia Coffee Farmers Cooperative Union’ (OCFCU) in Ethiopia, during the summer 2010. The study aimed at comparing and analyzing how these cooperatives manage to achieve the various social and economic goals of their members (comparative_analysis_coffee_cooperative). The study revealed that the increase in membership (single farmers and primary cooperatives) in both cooperatives is attributed to the opportunistic behaviour of coffee producers. In fact, cooperatives represent strategic arenas where allegiance and participation are driven by the expected individual and collective benefits the organizations can delivered. The hybrid nature of the cooperative governance model enabled the two cooperatives to meet both their economic and social objectives as reported on the increased profits and the levels of re-investment and support for social projects in their communities. Overall, cooperatives play a key role in mitigating some of the problems that smallholder coffee producers are facing in connecting local, national and international markets. Smallholder producers from the two cooperatives are able to reach specialty markets in developed countries through collective bargaining. For instance, many farmers have experienced substantial income increase thanks to the premium on organic coffee, as well as reduced transaction costs by avoiding intermediaries in the supply and trading networks. Both CECOCAFEN and OCFCU are well recognised in the global coffee market and are usually cited as success stories of how farmers care for their communities, join their efforts and assets, and organized themselves into cooperatives and into cluster of cooperatives through time to face agrarian and policy reforms, crisis and even natural disasters (drought, Hurricane), and to maintain and improve a livelihood and a quality of life for their families and coming generations.