Ethiopia’s rich, well-drained, and mainly volcanic soils, along with its highland tropical climate, are perfect for coffee growing.

The smallholder farmers cultivate their coffee on plots that are usually only a few hectares large and are intercropped with food and other tree varieties. They all have unique and distinct flavour profiles, reflecting the regional variation not only in the land and climate but also in the coffee plant itself. The other benefit that smallholder farmers in this area have is being part of a cooperative.

Dejene Dadi, general manager of the Oromia Coffee Farmers’ Cooperative Union (OCFCU) in Ethiopia, said co-op membership is especially important when it comes to facing the challenges in the coffee industry.

Today, the OCFCU is made up of 413 co-ops with a total of 557,186 members, and about 20% of the co-ops are Fairtrade certified. The OCFCU members come from across the Oromia Regional State, which accounts for 65% of Ethiopia’s total coffee-growing land. The OCFCU is one of the biggest producers of Fairtrade coffee in the country.

“We know that unity makes synergy and that together we are stronger,” said Dadi, whose Fairtrade-certified co-ops sell their coffee in Asia, Australia, Europe, and the USA. 

Alehegn Tiba, project manager at Yirgacheffe Coffee Farmers’ Cooperative Union (YCFCU) in the Gedeo zone of Ethiopia, put it this way: farmers can either sit alone at a table trying to negotiate a fair deal and comprehend new exporting requirements, or they can be a part of a co-operative and have easier access to funding and share resources with a community of coffee colleagues. 

“We are doing our best to give co-operatives information and know-how so that together we can all better face the uncertainty in the coffee industry,” said Tiba, who noted that all 28 of the YCFCU’s co-operatives are organic and Fairtrade certified.     

Coffee-producing countries like Ethiopia are working to understand how to comply with a new regulatory landscape that puts increasing responsibilities on farmers to prevent and combat adverse social and environmental impacts. Plus, they are facing a slew of production challenges due to climate events, such as rising temperatures and shifting precipitation. These supply constraints have coincided with a robust global demand, creating a significant market imbalance.

Dadi explained that having central collective funding is important for coffee farmers, and that’s where the Fairtrade Premium comes in. The Fairtrade Premium is an extra sum of money paid on top of the selling price that co-operatives and their members can use for business or community-related projects. A portion of it also goes towards improving coffee production or quality. 

For example, Choche Guda, a certified primary co-operative under OCFCU, developed and implemented several projects financed by the Fairtrade Premium. These include supporting farmers with training on sustainable farming methods, as well as improving drinking water quality and the construction of classrooms at the local school.  

In 2023, Fairtrade-certified coffee co-operatives in Ethiopia earned more than €1.6m in Premium.  

The YCFCU has used its Fairtrade Premium for social projects, but also to improve the quality, productivity, and sustainability of its coffee. They have focused on Good Agricultural Practices from seed selection to harvest, internal management/control systems, compost preparation using coffee by-products, and coffee waste management. 

This year, 2025, is the International Year of the Cooperatives, and Fairtrade, along with the International Cooperative Alliance (ICA), recognise that the co-operative model is critical in today’s challenging market. Co-operatives help to balance the imbalances in trade. They deliver more services, negotiate better prices, earn more profit for their members, and attract more capital support. 

This year’s theme, “Co-operatives Build a Better World,” puts a spotlight on how the co-operative model is an essential solution to overcome many global challenges and how it continues to play an important role in accelerating efforts to implement the Sustainable Development Goals (SDGs) by 2030. 

“I’ve tried to change the business case with corporates for over three decades,” said ICA director general, Jeroen Douglas. “They own legislation through the purchase of policy. They leave the business case for smallholder farmers out of dignity. The glue between government and corporates is so tight that only through co-operative enterprise organisations can we build a better world with prosperity for all.”

For Fairtrade, certified farmers’ co-operatives represent the pillars of the community: they distribute, share, and multiply local expertise and resources while also contributing to skill development and education to improve the health and living standards of their communities.   

Plus, from an economic development perspective, Fairtrade co-operatives focus on: 

Enabling farmers to obtain higher returns. They support members by providing training, tools, and resources. 

Promoting collaborative entrepreneurship and economic growth. They reduce individual risk in business and create a culture of shared productivity, decision-making, and creative problem-solving. 

Creating competition within local markets. Since services come at a cost to members, pricing adjustments occur to benefit members and impact other organisations in order to compete at the same efficiency. 

Accessing finance. They make them eligible for loans, grants, and other financing options. The allocation of funds can go towards building needed community infrastructure projects and financing other small businesses that help local economies grow.

“It’s a verified strength to be a part of co-operative, to be able to improve farm practices, to come up solutions and to learn how to comply with international standards,” said Marike Runneboom de Peña, a board member at Fairtrade International, adding that co-operatives help bring farmers’ voices to the forefront.

Story originally featured on Co-op news