Diversification helps spreads the load for coffee farmers in Peru

Oro Verde previously depended on coffee for their income.

New machinery for processing coffee has helped them get more value from their coffee.

Diversifying into products like cocoa has helped the organization become more stable.

The majority of the members are of the Quechua Lamista indigenous group.

03 July 2013

When we talk about Oro Verde – or green gold – at Fairtrade, we usually refer to coffee. But the Oro Verde Cooperative in Peru has branched out beyond their staple coffee crop to bring stability to the entire organization.

Peru’s thriving Amazon region – home to the Oro Verde coffee and cocoa co-op – is a much different place now than it was just 15 years ago. Back then many farmers in the region dealt in a much different commodity – coca, which is used to produce cocaine.

Coca cultivation and the accompanying narcotics trafficking brought violence to the area. It was a prosperous business, but laden with risk. A crackdown on the narcotics trade in the late 1990s drastically reduced the practice in Peru, but the unintended consequence was a loss of livelihood for many small farmers.

Branching out

It was the perfect opportunity to bring another valuable Peruvian commodity – coffee – to the forefront. In 1999, a group of 56 producers came together and formed a cooperative for the country’s green gold – the Oro Verde Coffee Cooperative.

The move has paid off several times over: there are now over a thousand members of Oro Verde, which became Fairtrade certified in 2003. Over half of the members are descendants of the local Quechua Lamista indigenous group. Through the co-op, they maintain many elements of their culture, including traditional clothing and the Quechua language. In 2012, the group took a big step toward their long-standing goal of direct commercialization by acquiring a own coffee processing plant.

Oro Verde’s success can be attributed to a large extent to their excellent coffee, but their ability to diversify their products and markets has also been critical. In recent years, cocoa has become an important addition to the cooperative’s international Fairtrade exports, while honey, panella, Sanchi Inchi oil, and chocolate have targeted domestic markets.

By branching out into different commodities, business at Oro Verde has been able to thrive even when coffee markets enter rough waters – which happens frequently (as of July 1, coffee prices are at $1.21/pound, less than half of what they were in 2011).

“Thanks to the diversification of our products and markets we have succeeded in generating more income for our producer families," said Tomas Cordova Marchena, President of Oro Verde's Education Board and Vice president of Board of Directors . "Plus a larger range of products makes the cooperative more competitive in the market and helps us to find new clients.”

A successful balancing act

A case in point is leaf rust, a devastating fungus that has dramatically affected many coffee producer organizations in Latin America during the 2012-13 harvest. Oro Verde was affected too, but has been able to weather the storm relatively well.

“If we had not developed our cocoa branch we wouldn’t have much revenue this year. Thanks to cocoa production we are strong enough to support those coffee farmers who suffer from the rust. We already acquired rust resistant seeds and invested in biological means for rust mitigation," said Cordova.

Oro Verde is moving now to combat leaf rust next year if it continues to be an issue. Farmers are being trained in using organic fertilizer and pesticides to combat the disease.

A result of the leaf rust crisis has been that cocoa now has a much bigger role at Oro Verde.

“Sharing the risks makes the producer families and the cooperative as such less vulnerable. In times of trouble on both the market and the production side we always have various feet to stand on. That makes the organization more stable and balanced,” said Cordova.

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