VALUE CHAIN ANALYSES FOR SUSTAINABILITY IN THE HONDURAN COFFEE SECTOR Weston Stitt University of Florida, MDP Spring 2020 Committee members: Catherine Tucker, Claudia Romero, Shoana Humphries
Stitt 1 Table of Contents Acknowledgements ................................ ................................ ................................ ................................ .................... 2 Executive Summary ................................ ................................ ................................ ................................ .................... 2 1. Introduction ................................ ................................ ................................ ................................ ........................ 3 1.2 Coffee in Central America ................................ ................................ ................................ ................................ 8 1.2. 1 The International Coffee Agreements, Honduran Coffee Policies, and the Impacts on the Honduran Coffee Value Chain ................................ ................................ ................................ ................................ .............. 11 1.2.2 A Backgr ound on Certifications and Governance in the Honduran Coffee Sector ................................ ..... 17 1.2.3 Coffee Production Environments ................................ ................................ ................................ ................ 20 1.3 Value Chain Development a Nicaraguan Example ................................ ................................ ..................... 21 1.4 The Honduran Coffee Sector and Value Chain Analysis ................................ ................................ ............... 23 1.5 Justification and Ethical Grounding ................................ ................................ ................................ ............... 25 2. Methods ................................ ................................ ................................ ................................ ............................ 26 3. Green Value Tool for Financial Analysis ................................ ................................ ................................ ......... 32 4. Results ................................ ................................ ................................ ................................ ............................... 34 4.1 COCAFCAL ................................ ................................ ................................ ................................ ................... 34 4.1.1 Participant An alysis at COCAFCAL ................................ ................................ ................................ ....... 35 4.1.2 Appreciative Inquiry at COCAFCAL ................................ ................................ ................................ ...... 36 4.1.3 Needs Assessments ................................ ................................ ................................ ................................ .. 37 4.1.4 SWOC for COCAFCAL ................................ ................................ ................................ .......................... 38 4.1.5 Inte rview Data Analysis ................................ ................................ ................................ .......................... 41 4.1.6 Commercialization Plan ................................ ................................ ................................ .......................... 49 4.2 Umami Area Honduras ................................ ................................ ................................ ................................ ... 50 4.2.1 Key Stakeholders and Analysis of Participant Relationships ................................ ................................ .. 52 4.2.2 Online Survey Questionnaire Analysis ................................ ................................ ................................ .... 54 4.2.3 Financial Analysis ................................ ................................ ................................ ................................ ... 60 4.2.4 Strategic Plan ................................ ................................ ................................ ................................ ........... 61 5. Discussion ................................ ................................ ................................ ................................ ......................... 62 5.1 Pathways for Learning and Unexpected Lessons ................................ ................................ ........................... 64 5.2 Limitations, Setbacks, and Areas for Improvement ................................ ................................ ....................... 66 6. Conclusion ................................ ................................ ................................ ................................ ........................ 67 6.1 Recommendations ................................ ................................ ................................ ................................ .......... 68 7. Works Cited ................................ ................................ ................................ ................................ ...................... 69 Appendix A ................................ ................................ ................................ ................................ .............................. 74
Stitt 2 COCAFCAL Commercialization Plan (abbreviated) ................................ ................................ ........................... 74 Appendix B ................................ ................................ ................................ ................................ ............................... 84 Strategic Plan (abbrev iated) ................................ ................................ ................................ ................................ . 84 Umami Area Honduras Shareholder Survey Questionnaire ................................ ................................ ..................... 94 Combined Appendix References ................................ ................................ ................................ .............................. 98 Acknowledgements This project was made possible by the University of Florida and the College of Liberal Arts and Sciences, the Master of Sustainable Development Practice, the College of Latin American Studies, Tropical Conservation and Development (TCD), a University of Florida, and Shoana Humphries of Green Value . This project could not have been carried out if it were not for FundaciÃ³n ETEA, which is currently in the process of Boosting local competitiveness for poverty reduction in vulnerable populations through sustainable and inclusive value chains in western Honduras. receiving fi nancial support from the Spanish Agency for International Cooperation and Development (ACEID). In the framework of this project, FundaciÃ³n ETEA hired me as a consulting intern for the summer. Under the supervision of FundaciÃ³n ETEA, I carried out various p rojects with a private Honduran company, Umami Area Honduras, and a coffee cooperative in Western Honduras, CafÃ© Capucas (COCAFCAL). I would like to thank the people of Las Capucas, FundaciÃ³n ETEA, CESAL, CafÃ© Capucas, Umami Area Honduras, and the Universi ty of Florida for their help and support. Executive Summary The coffee sector is complex , with each stakeholder group in the value chain having varying impacts on the sustainability of the product. Since the disintegration of the quota system upheld by t he International Coffee Agreement (ICA) in 1989 , gaps in the equity of these stakeholder groups have grown wider as multinational corporations began controlling more of the production, trading, and distribution networks. The breakdown of the ICA jeopardize d the sustainability of the entire sector; however, the development of multi stakeholder processes inequities, especially in producing countries wher e human and financial forms of capital are limited. Through a project supported by the University of Florida and the development institute of Loyola University AndalucÃa, FundaciÃ³n ETEA, I performed value chain analyses as a foundation for the development of business plans for two different but associated coffee production organizations in Western Honduras a strategic plan for a private company, Umami Area Honduras and a commercialization plan for a coffee cooperative, CafÃ© Capucas (COCAFCAL). M ethods for these projects included participant observation, unstructured and semi structured interviews, an online questionnaire survey, and the piloting of a financial analysis tool, the Green Value Tool for Simplified Financial Analysis for improved financial literacy of coffee producers. The data provided information for needs assessments and fina l recommendations within the business plans. These business plans ultimately aim to provide an i mprovement in financial, social, and environmental capital for two coffee producing organizations and the communities they impact.
Stitt 3 1. Introduction most coffee producers struggle to meet basic living standards (Jaffee, 2007; Ponte, 2002) . The social issues within the production sectors of the co ffee industry along with environmental concerns associated with agricultural expansion , have given rise to a characteriz ation of consumption p ractices and the development of ethical supply chains. Recently, an increase in c onsumer awareness of unsustainable expansion of agriculture at the expense of human rights are forcing government and public and private institutions to address supply chain inequities and develop ways they can establish multi stakeholder practices (Pacheco et al . 2017) . A 2018 survey organized by Accenture, a n Ireland based strategic consulting firm, looked at global consumer demand and purchasing patterns. The survey discovered that throughout the buying world t here is a shift occurring in consumer purchasing, where more consumers (72% of those surveyed) are willing to pay more for environmentally responsible products. Further, 81% expect to buy more ethically sourced products over the next five years (Accenture, 2019). Thi s shift in consumer demand is forcing t he private sector to invest in change as well , as more businesses become interested in sourcing sustainably or certifying their products. One way companies can institute better practices is through their supply chain. The attraction to increased supply cha in sustainability is more than pleasing consumers, as the pursuit of sustainability has been recognized as an effective strategy to deal with widespread challenged while enhancing competitiveness, improving financial performance, and generating greater cap ital for firms to mitigate the consequences of business risks (Giannakis & Papadopoulos , 2016; Wang & Sarkis, 2013; Godfrey et al., 2009). This growing demand has created momentum toward improving governance in global supply chains through a refined unders tanding of their mechanisms . In this paper, I explain how an analysis of two contrasting coffee businesses can potentially lead to more sustainable business. A value chain analysis use s practical tools or theoretical models to unpack the complexities of the relationships between different actors, and a conventional value chain analysis sees financial incentives as the
Stitt 4 driver of improved performance (Orr et al. 2013). This type of traditi onal analytical procedure often looks at the product flows through market channels where value can be calculated based on the costs and revenues of each stakeholder group (Orr et al. 2013). While private companies and government entities with access to fin ancial and human capital have automated this process for many commodity value chains, it often fails to capture the variable performance of value chains involving smallholders in developing countries who work in volatile commodity value chains , such as the Honduran coffee sector . The volatility of the global coffee sector disenfranchises smallholder farmers and farm workers more than any other stakeholder group within the value chain , as they are the stakeholders who receive the least economic revenue while having the least access to necessary forms of social, financial, and natural capital . To have a better understanding of the complexities of the coffee value chain, we must look deeper than the financial incentives that drive progress, and more broadly at the relationships between movement of a good from producers to consumers that focuses on the power relationships between different al. 2010, 258). In the summer of 2019, I conducted a two part study in Honduras (Map 1) with two distinct but associated organizations using value chain analysis to understand opportunities for the development of financial planning capacities and improving overall economic and social performance for coffee producers (Table 1) . The first project was for a private Honduran coffee company , Umami Area Honduras, which owns a coffee farm in the western department of San Pedro de Copan , near Las Capucas, Honduras (Map 1) . I analyzed the economic viability of the farm as the main asset of the company through a financial analysis tool . In the second project , I performed a needs assessment and stakeholder a nalysis for a coffee cooperative COCAFCAL seeking support for the development of a commercialization plan.
Stitt 5 While the two organizations work together in coffee education initiatives for community members, the projects were distinct for each one . For the private company , I used a financial analysis tool, the Green Value Tool for Simplified Financial Analysis (GVT ; https://www.green value.org/ ) and integrate d it with the standing financial accounting methods . The tool was incorporated and adapted for clearer and more organized cost analysis and figures on profits and returns. Generally, the tool provides farmers and businesses with a simplified desi gn of the financial costs of their operations and helps recognize the opportunity to determine where COCAFCAL Umami Area Honduras Description Coffee cooperative with ~ 900 members; Exports 95,000 kg of coffee annually; Buyers in 14 countries; Developed an annual coffee event, Te Van a Conocer Compa , where buyers (new and old) visit the cooperative For profit Honduran coffee company with internat ional shareholders; Exports 1,350 kg of coffee annually; Buyers in 3 countries; Main asset of the company is the experimental farm, Finca RÃo Colorado, which has its coffee processed by COCAFCAL Objective Aid the cooperative with their commercialization and marketing strategies Aid Umami with financial planning through piloting of a financial analysis tool (GVT) Stakeholders Producers, cooperative staff, cooperative management, exporting agents, buyers (importers), roasters, consultants Farm employees, Umami management, exporting agents, buyers, and roasters Methods Interviews with producers, cooperative assessment based on interviews; Value chain analysis Interviews with farmer and supply chain actors; Financial analysis of farm costs and sales; Online survey questionnaire for international shareholders Deliverable Commercialization Plan and recommendations for business improvements; Spanish English coffee terms guide Strategic Plan and re commendations for how to implement the financial analysis tool Table 1. Two Field Practicum Organizations, COCAFCAL & Umami Area Honduras.
Stitt 6 costs can be minimized. Importantly, the benefits of a financial analysis transcend levels. From the farm level to operational levels, there are opportunit ies for making informed decisions that increase productivity and therefore increase the profitability of the enterprise. For example, a transition from conventional to organic farming generally will increase costs, but if a farmer determines areas of poten tial cash reallocation over time, such as paying less in transportation costs for retrieval of a fertilizer and instead having it delivered in bulk less frequently, the costs of organic transition can be less immediate. Ultimately, understanding all costs allow for a farmer to make sound financial decisions that have positive impact across operational levels (Nebraska Farm Business, Inc. 2019). Furthermore, when considering profit growth, financial analysis benefits farmers by encouraging a competitive adva ntage in their micro sector. If a nearby operation records higher yield or higher quality coffee in the growing season, and therefore acquires more revenue in sales, improper financial analysis can prohibit that farmer from generating the highest return po ssible. Methods for development of the commercialization plan for COCAFCAL included unstructured and semi structured interviews with actors across the supply chain and participant observation . I performed a value chain analysis of the cooperative with attention to social projects for the local community, treatment and satisfaction of cooperative members, effectiveness and efficiency of its production and product distribution, as well as buyer or client satisfaction and commitment to transparent communication. R esults for COCAFCAL include value chain information indicat ing the direction for necessary adjustments and inte rnal improvements that align with the commercialization plan, and for Umami Area Honduras , a more detailed financial analysis that provides a foundation for a strategic plan for the private company. Through this project I wanted to attempt to answer two q uestions: how can the coffee value chain become more equitable in terms of its economic benefit sharing for actors involved in production, and how can coffee producers build the capacity to use best management practices for sustainable coffee operational a nd financial management ? I attempt to answer these questions through my data collection and analysis, then convey the
Stitt 7 significance of my findings through the deliverables each organization asked of me. The objective of these deliverables is to create more informed supply chains by provid ing a platform for developing direct buyer relationships for coffee producing organizations . The deliverables encourage the adoption of a serviceable instrument ( GVT for Umami Area Honduras and perhaps for COCAFCAL after it proves it can scale up for coffee businesses ) for application and adaptation, while also serving to create a sustainable demonstration model for coffee operations and business strategies that can improve livelihoods within the production sector of the value chain with emphasis on greater social and financial equity . Due to the impact the cooperative has on the community and surrounding areas in low income communities of western Honduras (Map 1) , this research approaches UN Sustainable Development Goals ( SDG ) 1, , 3, 5, 8, 11, and 12 by supporting work opportunities and financial sustainability, increasing opportunities for technical assistance and outreach for community members through the reallocation of profits, and incentivizing more sustainable agricultural business through increa sed transparency across the value chain. The alignment of Map 1: Field Practicum study sites, Western Honduras. Major sites include the location of COCAFCAL and Finca RÃo Colorado in Las Capucas, and Lago de Yojoa, where a training exe rcise for coffee farmers was held.
Stitt 8 m y work with the supports my experience in Honduras, as the achievement of development goals was a driving fo rce behind my interest in this project. 1.2 Coffee in Central America Similar to other economic systems shaped by agricultural exports, t o understand the current state of the coffee sector in Honduras, it is necessary to consider its history . This section lays out a brief exploration of as a coffee power and t he evolution of the continued effort toward escaping poverty in coffee communities. It is worth mentioning that the influence of the United States throughout Central America is undeniable, and there are fields of study dedicated to the impacts on culture a nd society . H owever, for the purposes of this report , I will not review the well Central America. contr inequities including coffee current challenges ( Library of Congress, 1995). E conomists and theorists of the 20 th century identified how the evolution of global economies shaped the divide between stakeholders in advancing (or developing) nations and those that became dependent on these advancing nations. This divide is articulated through World System Theory popularized by Immanuel Wallerstein, wh ich defines In general, the c o r e depend on. Wal lerstein chose the word depend carefully, extracting ideas from dependency theory, a neo Marxist explanation of development processes which is most associated with political and economic systems of Latin America (Martinez Vela, 2001). And while this the ory is well known in its analysis of social sciences and the dynamics of the capitalist world economy, it does have its contradictions, although its foundational explanations are pertinent for the evolution of the Honduran coffee environment ( Wallerstein, 199 8; Martinez Vela, 2001 ). As the gap between the in Latin America increasing control of international trade, so too did the productivity of their economies (MallorquÃn, 2007).
Stitt 9 The global advance of capitalism and the growing gap between the center and periphery carried serious implications on the social structures of the periphery nations, especially in areas that produced the raw materials that manufacturers in the center nations t urned the most profit on (Roseberry, 1991, 352). As coffee production throughout Latin America grew , extractive trade relationships between producing and consuming nations intensified. The growth of international market s resulted in booms and busts, and fo r producing nations dependent on exports , the busts were felt most severely (Roseberry, 1991, 354). While dependency on international markets is not as common now with the advancement of Latin American economies and the increase in export diversifications , the effects of extraction for gains by the center nations endure , perpetuating instabilities that exist across socioeconomic levels in Latin America. In coffee economies, these effects have arguably worsened as power has been shifting from producer to bu yer economies since the failure of the International Coffee Agreement (ICA) to reach an agreement in 1989 and the subsequent increase in world production (Sick, 2015) . T he evolution of coffee in Central American nations varies greatly. Honduras followed a unique path In Guatemala, u nder the rule of Justo Rufino Barrios in the late 1800s, the government instituted land expropriation policies essentially eliminating indigenous land rights across the country (Equal Exchange ) . The objective was to increase coffee production for export as a means of bolstering the economy, and by 1880, coffee accounted for The social unrest that was to come under dictatorships throughout the early a nd mid 1900s in Guatemala influence d social and economic policies and thus the coffee environment . to prominent national coffee production evolved differently. Fruit exports, namely bananas, dominated the Honduran export economy from the ear ly 1900 s through the 1950s (Zambrano 2020). By 1910, the national fruit corporations, such as the Cuyamel Fruit Company, had to begin competing with international companies within their own borders, in the form of the United Fruit Company, of the United St ates (Library of Congress, 1995) . A key difference between Honduras and Guatemala during this time was transportation infrastructure by 1912, there were less than twenty miles of railroad throughout the country (Williams, 1994). In 1913, United Fruit Com pany established the Tela Railroad and Trujillo Railroad
Stitt 10 Companies as a means of transporting bananas from interior parts of the country to the ports, and these companies received land subsidies by the Honduran government for each kilometer of track they c onstructed (Library of Congress, 1995). The Honduran government expected the railroad companies would build a national rail system as an exchange for the subsidies. Instead, they used the lands to establish new banana plantations , laying claim to some of t he most arable land across the northern coast (Library of Congress, 1995). The power of the fruit companies was evident. In 1917, World War I brought reduced revenues for the Honduran government through decreased trade; however, Standard Fruit reported ear nings of $2.5 million in the same year (Library of Congress). United States on Honduran private corporations , Honduras experienced relative peace from the 1930s to the 1950s . For example, the Honduran government invested more of its budget into education, the Honduran legislature passed an income tax law (though enforcement was limited), and restored the freedom of the press (Williams, 1994). And even though it signed a twenty five year contract with United Fruit in 1949, bananas lost their dominance and a diversity of crops were introduced (Zambrano, 2020) . The decline of the banana industry ultimately led to the emergence of the Honduran cof fee sector. In the 1960s, the H onduran government and foreign aid agencies began investing in coffee improvements namely through enhanced infrastructure projects for to increase ability to transport coffee from the interior to ports in the Caribbean (Reich man, 2013). Beginning in the 1970s, Honduras and neighboring countries began instituting a diverse set of individual national policies on land tenure and land grants for coffee farmers. These policies formed after the initiation of the International Coffee Agreement in 1962 (see section 1.2.2) (ICO, 2020). Broadly, policies tended to differ based on the types of coffee production systems , large holder or smallholder ( Williams, 1994 ). For example, Costa Rica, a country made up of mostly smallholder coffee fa rmers, created policies that supported smallholders, granted land titles for landholders with prior claim, and legitimized the right to organize and form farmer cooperatives . early adoption of cooperatives have had a major impact on production organizations and labor
Stitt 11 relations, and as of 2007, Costa Rica, cooperatives processed 40% of all coffee production . (Wollni, 2007 ; Tucker, 2017). With t hese policies that supported smallholders and existing social norms that took pride in coffee quality, labor did not have to be coerced . The outcome was high quality coffee that gained higher prices in the international market (Tucker, 2017). Unfortunately, the structures of labor in Costa Rican coffee production are unique , as other Central Ameri can countries are known more typically for their labor inequalities, mostly between landowning elites and marginalized laborers. Al have resulted in a socially unsustainable coffee trade (Pelupessy, 2007). In an effort to counteract the market arrangements that maintained coffee producers in poverty while buyers gained profits, socially conscious consumers collaborated with producers to develop alternative trade movements, such as fair trade, to transform the economic system to respect human rights and promote social justice (Pelupessy, 2007) . 1.2. 1 The International Coffee Agreements, Honduran Coffee Policies, and the Impacts on the Honduran Coffee Value Chain The International Coffee Agreement (ICA) was a contractual commodity agreement between coffee producing and coffee consuming nations that ai med to ease price instability and resolve the problem of overproduction in the world market by limiting the amount of coffee each nation could export (ICO History, 2018; Johnson, 2010). Overall, the agreement would benefit both parties. For producing natio ns, it could be used as a mechanism for securing a more stable price for growers, whereas consuming nations used it as a buffer from price escalation (Johnson, 2010). Eventually, a quota system was developed and administered by an International Coffee Orga nization (ICO) to stabilize prices by controlling excess amounts of coffee entering the market (ICO History, 2018). Several ICAs were enacted from 1962 to 1989, and overall, they were successful in limiting excess coffee production, mitigating price volati lity , and helping to avoid global coffee crises . The ICAs did not just help maintain stability for the governments of the producing nations, but they also helped the livelihoods of
Stitt 12 small holder producers through improved living standards and related interna tional and national investment in development and infrastructural projects (Tucker, 2017). The benefits of the ICAs had immediate impacts on the state of coffee production in Honduras . In 1970, the creation of the Honduran Coffee Institute (IHCAFE) led to significant increases in coffee production. IHCAFE and the national development bank started giving loans to coffee growers, and within a decade IHCAFE experienced a 40% increase in yields per acre (Williams, 1994). Furthermore, production saw and overall increase of more than 200% between 1970 and 1996 (Tucker, 2012). Table 2 lists important modernization policies enacted in Honduras from 1970 to 2002, and they include the 1982 Coffee Enterprise Protection Law that made all coffee lands exempt from the Agr arian Land Reform Law; the Decree 175 in 1987 created to provide annual subsidies to road improvements connected to the transportation of coffee; and a National Coffee Fund Law in 1992 for further improving infrastructure while also holding coffee exports during low prices to be sold later (Eakin et al., 2006; Tucker, 2008:139) (Table 2 ). These laws and policies served as the foundation for increasing yield and eventually, improving the quality of coffee over a nearly thirty year period of growth. Unfortuna tely, the consistency of coffee production and world markets would come undone with the dismantling of the ICAs. Further, this disbanding forced national agricultural ministries to reduce their roles in coffee production, and so Honduras and other countrie s dependent on coffee exports were forced to try and continue regulating production through state owned organizations, but now with less negotiating power (Bacon, 2004; Eakin et al.,2006).
Stitt 13 The downfall of the ICA also led to power imbalances through shifts overall shares of the final retail price of coffee between value chain actors as the global market came under control of the buyers ( Ponte, 2002; Talbot, 2004). Talbot estimated that produ Figure 1). An undoing of the quota system and a transfer of producer stocks to private trading companies, and subsequently, to consuming nations (Tucker, 2017). Ponte 2002 provide s a representation of the shifts in market control through a graphic depicting the distribution of incomes along the coffee chain by key actors from the 1970s to the 1990s (Figure 1). Unfortunately, the distribution of power and wealth would continue to be nefit the large companies in the consuming nations. Namely, the multinational coffee roasters Nestle, Sara Lee, Philip Morris (of Kraft Foods), Proctor and Gamble, and Tchibo. In 1998, these five companies controlled 69% of the Table 2: Legislation related to coffee production 1970 2002. Tuc ker, 2008, 139.
Stitt 14 roasted and instant coffee market (Jaffee, 2007; Ponte, 2005; Eakin et al. 2006). Market liberalization in the coffee trade not only brought unstable prices and shifted power to multinational corporations in consuming countries, but also increased the vulnerability of rural farmers , leading to negatively affected livelihoods (Bacon, 2004). Ultimately, these changes helped shape the Honduran coffee sector, as they continue to impact coffee livelihoods today. IHCAFE has become one of the most influential bodies in the Honduran economy, and while it is technically an independent business, they act as a parastatal organization. When it was created in 1970, IHCAFE was deemed a semi autonomous institution, but in 2000, the government privatized IHCAFE as a non profit institution to increase efficiency (USD A Gain Report, 2018) . The coffee crisis in 1999 caused the price of coffee exports to drop, and as a result, the Honduran government provided loans and economic support to coffee Unfortunately, even with a loan pa yment period of twenty years, many producers and producer groups are still paying them off (USDA Gain Report, 2018). In 2003, the Hondu ran government initiated the Law of Financial Reactivation of the Coffee Production Sector in response to low coffee pric es. The purpose of the law was to prevent coffee producers from discontinuing their production and assist producers with high levels of debt (USDA Gain Report, 2018). The law also established a coffee producer savings fund a collection mechanism through Figure 1: Distribution of coffee income along the coffee chain (1971 80 to 1989 95) in percentage. (Ponte, 2002, 1106) .
Stitt 15 that currently deducts $13.25 per quintal (100 lbs.) through various fees on coffee that exporters purchase from producers (Table 3). Types of Deductions for Producer Savings Fund $ per Deduction Capitalization of the coffee trust fund, which includes the repayment of loans held by banks and financial institutions used by producers, the paying of IHCAFE loans for fertilizer s, inputs, and seeds sold to producers. IHCAFE returns the saved $9.00 to producers with no outstanding loans (or a lesser amount depending on the status of their repayment schedule)*. $9.00 Payment of outstanding loans received by coffee producers from 1999 2001. IHCAFE returns the $1 annually to producers who did not receive loans during that time. $1.00 Applied to repayment of the outstanding $20 million loan made in 2002. $0.50 Operation of IHCAF $1.17 To the National Coffee Fund (NCF)** which uses the resources to build and fix roads in coffee production regions as well as to buy equipment for coffee producers. $2.08 Total = $ 1 3.25 Overall, IHCAFE is the main conduit for all coffee in Honduras, as all exported coffee must go through IHCAFE . It supports many coffee organizations and producers through technical support, even though the organization is underfunded and underemployed ( IHCAFE, 201 7 ). The increase in production from 199 8 to 2018 , 2. 0 7 million 60 kg bags to 7.3 million 60 kg bags respectively, positioned Honduras as the top producer in Central America (IHCAFE, 2018). As Honduran coffee exports continue to increase, the coffee trade has become one of * Most coffee farmers experience some form of debt. In 2013, prior to an international coffee price crash, the Specialty Coffee Association stated 80% of Central American coffee producers experience financial insecurity (Tark, 2019). ** The NCF helps reduc e transportation costs for producers through road building . Each municipa lity receives an allocation of funds for road construction in proportion to its production Table 3. A description and price breakdown of the Honduran Producer Savings Fund, Source s : USDA Gain Report, 2018 ; IHC AFE, 2017 ).
Stitt 16 the main sources of income from agricultural exports for the country . Therefore, the government has sought to benefit from coffe e production and export, including NCF monies (C. Tucker, personal communication, March 31, 2020). Ultimately, there are many complexities within the Honduran coffee sector, and there are numerous coffee stakeholder groups that make up the Honduran coffee value chain . Exporters and intermediaries control the supply end of the chain since they are responsible for coordinating operations within the region. A total of 45 exporting companies receive, and subsequently sell, 81.44% of the coffee in Honduras, wit h CompaÃ±Ãa HondureÃ±a del CafÃ©, Beneficio de CafÃ© Montecristo, and Olam Honduras, S.A. De C.V . making up for nearly 49% of total coffee exports (HICAFE, 2013). In 2006, Fromm & Dubon estimated that 77% of the coffee these exporting companies receive comes f rom approximately 3,000 intermediaries with only 6% coming from cooperatives, farmer associations, or farmer unions (Fromm & Dubon, 2006). Intermediaries play a crucial role as the outlet for small farmers who do not have the physical or economic capital t o process or transport their coffee. In 201 7 , small and medium size farms made up for 8 6 % of all Honduran coffee production and many of the small farmers sell their unprocessed berries to intermediaries or larger local growers who have operations for processing ( IHCAFE, 2018; Eakin et al. 2006) . These small farmers lack leverage to negotiate with the intermediaries, who charge farmers based on the cost of their business (transport and consideration of competitors), supply and demand, an d the quality of the coffee when they received it (Wyeth, 1987). Cooperatives and farmer associations represent small producers and assist them with various aspects of production, processing, buyer contract negotiations, and trading. Each of these groups a re intertwined to some degree, and to understand the intricacies of the greater Honduran coffee chain, its necessary to consider all of them and their structural relationships. The size and influence of certain actors affects the power imbalances throughou t the international coffee value chain as well, although, this paper will not specifically explore this topic. This paper looks at two types of coffee businesses one that fits a traditional form of coffee producer group representation in Honduras, a coop erative, and another that is unique, a private business with international shareholder support.
Stitt 17 COCAFCAL and Umami Area Honduras are required to provide $13.25 per quintal, just as all other legal coffee businesses do, but their specific value chains are distinct. COCAFCAL is a large (+900 member), reputable cooperative that produces specialty, certified coffees for more than thirty buyers in 15 countries. Their model is not unusual, and therefore, studying their value chain and analyzing the relationships between stakeholders by inferring from each group how to make improvements has potential for adaptation to other similar entities. Umami Area Honduras, on the other hand is peculiar in its position in the Honduran coffee sector. Rather than Finca RÃo Colo rado being individually owned by a landholder and that person (or family) a part of an association or member cooperative where resources and information are shared more democratically, an external group of coffee professionals with a commitment to sustaina Honduras (and therefore, Finca RÃo Colorado) is a member of COCAFCAL, the re is an entirely organizational structure of the management with a hierarchical governing body and shareholder involvement. Fu rthermore, t here is an extended network of buyers associated with the company, adding a layer of complexity to the Las Capucas and COCAFCAL communities through additional interests by individuals and organizations. The two organizations created an alliance due to the possibility of mutual benefits provided by each group COCAFCAL supplying the technical support and handling processing, and Umami Area Honduras connecting COCAFCAL to more European markets and buyers. 1.2. 2 A Background on Certifications and Governance in the Honduran Coffee Sector Pioneers of the fair trade movement began their education platforms in the mid 20 th century by forming alternative trade and social justice organizations . These organizations sup ported impoverished groups and individuals who sold various products (Jaffee, 2007). One such organization, Oxfam, purchased handmade goods and agricultural products from rural farmers in Latin America and sold them in their shops. Oxfam would market the p roducts and provide assistance and support to marginalized producers with insufficient access to profitable markets (WFTO, 2015). Proponents of fair trade opposed traditional neo liberal free trade principles that benefited economies with access to good ma rket information and limited the abilities of resource poor producers
Stitt 18 in developing countries (Tucker, 2017). Alternative and fair trade organizations provided an avenue for coffee growers to improve their incomes by receiving higher prices per pound for t heir product, acquire consistent buyers committed to social justice, and develop meaningful, transparent relationships. The evolution of fair trade and the ensuing certification process created positive strides in the struggles with fair and equal labor; h owever, fair trade is not a panacea , but it has a number of shortcomings. While fair trade and other certifications have benefited some coffee producers through services and added value for their product (Bacon 2005; Bacon et al. 2008; DeFries et al. 2017; Hospes et al. 2017) , a majority of fair trade certified producers and organizations do not find buyers willing to pay fair trade minimum prices (Fair t rade International, 2015). Nevertheless, many small producer communities suffer from assumpt ions that one size fits all measures like voluntary sustainability standards and certifications , will benefit everyone equally . Elinor Ostrom identifies the impact of falsely accepting panaceas . Her work Going Beyond Panaceas highlight s that many researc hers resource system or across a diverse set of resources, are similar enough to be represented by a small class of t by accepting varying situations as similar and plugging in a model for improved practices or management of a resource is a serious mistake , one made too often. It is the emergence of global civil regulation through non state institutions that address labor practices, overall environmental performance . The existence of human rights policies has increased the overall prominence of certifications in global value chains (Valkila et al 2010, 258). These c ertifications an d quality standards also allow for coffee and other similar commodities to , in theory, receive premiums added to the fixed market price, and they can be traded in specialty markets (USDA, 2016). Today, specialty markets provide for new sources of income th at have potential to reduce rural poverty. In the early stages of growth, the specialty commodities markets expanded quickly, but fair trade advocates became concerned that this was a result of a shifting emphasis for certifications to meet consumer demand s while increasing sales on the latter stages of the supply chain , which ultimately did not benefit smallholders, but satisfied consumers at the end of the chain (Tucker, 2017). This, along
Stitt 19 with powerful multinational roasting companies in the supply chain , perpetuate d the inequalities in a potentially sustainabl e value chain (Pelupessy, 2007). It is this type of power that led to greater control over the products cultivated and exported by the periphery nations . Also, market liberalization has benefited th e multinational roasters ultimately leading to the distancing of developmen t driven projects to globalization driven ones (Talbot, dismay, efforts to increase social justice and equity through fair trade certifications have often been distorted by global market arrangements to reproduce economic inequality between actors in the value chain . I nattention to environmental and social costs of trade were no different than how trade occurred during the extractive periods in decades prior (Donovan & Stoian, 2013, 8). There are cases that have experienced benefits from private certifications and transdisciplinary approaches for identifying sustainable pathways to production and trade ( Bacon 200 5 ; Bacon et al. 20 08 ; DeFries et al. 2017; Hospes et al. 2017; Haggar et al. 2017; Millard 2017) . H owever, there are issues of governance across the sector. A s with other global commod ities, social and economic inequities are abundant as the coffee value chain stretches across physical and structural boundaries, and while value chain issues are complex systems with seemingly unnavigable pathways, the aspect of good governance is a centr al concept to consider if we are to understand the inequities. If coffee production results in overall improved economic development in producer countries and, thus, supports the livelihoods of smallholders who rely on coffee as their main income source, w e can agree there is positive growth in the sector; however, the dilemma is the trade offs for this growth, as the distribution of power continues to sway toward the consumer country (Pacheco et al. 2018). In coffee producing countries, like Honduras, the state is often positioned with limited power to make long term, cross chain changes to improve the well being of coffee producers, and so, recently, multi stakeholder partnerships have assumed the role of improving sustainability through better governance (Oosterver, 2013). It is through such cross scale partnerships and through private standards via certification that global commodity chains are seeing improvements in governance (Nikoloyuk, 2010).
Stitt 20 Given t he rich history of the certification movement and its connection to globalization in commodity trading, the coffee communities of Honduras did not experience a needed revival of smallholder rights through an acknowledgement of social and economic inequities. Unfortunately, even after the fail ure of Honduran state policies to address the situations of rural farmers, certification schemes largely failed to reach the demographics they intended impact. A combination of failed internal policies and ambitious external aid broadly added to this consi stent cycle. 1.2. 3 Coffee Production Environments Throughout the late 18 th and early 19 th centuries, elites across Central America dominated the industry, using their influence over unstable political systems to establish control of coffee lands (Topik 2 009). It was not until the 1960s and 70s, when L atin American coffee producers began introducing new methods and in the case of Nicaragua, farm ownership shifted to smallholders (Bacon et al. 2012 , 41 ). The spread of the Green Revolution in the Global Nor dominant monocultures (Bacon et al. 2012). While some government policies successfully encouraged landowners to shift to this type of system, most Central American coffee landscapes , including Honduras, remained unchanged because of their geographic location (rural) and the lack of access to credit or technical assistance. Arguably, the inability for governments to actively pursue widespread technology packages helped maintain valuable ecosystem diversit y, and currently, there is a greater effort in promoting sustainable agricultural practices and maintaining diverse ecosystems, especially within the specialty coffee sector . The expansion of tropical agriculture, such as coffee production , threat ens biodi versity (Haggar et al. 2017, 330). However, research suggests that promoting sustainable agricultural practices can help to preserve biodiversity , although the tradeoffs between agricultural intensification and biodiversity maintenance are not equal (Bacon et al. 2012; Haggar et al. 2017 ; Philpott et al. 2008 ). Many small to medium sized coffee production
Stitt 21 systems are maintained with various canopy shade trees , which not only create habitats for birds, bats, and insects, but also regulate temperature and moi sture levels (Mas & Diestch, 2004). In addition to shade trees, Central American coffee plantations are often managed with additional agricultural production mechanisms, such as fruit or nut trees, apiaries for honey, and other subsistence crops such as ma ize and beans. This type of environment is a type of diversified farming system landscapes that intentionally include functional biodiversity at multiple spatial and/or temporal scales in order to maintain ecosystem services that provide critical inputs to agriculture, such as soil fertility, pest and disease , 41 ). 1.3 Value Chain Development a Nicaraguan Example If a traditional coffee value chain is linear, where the various nodes that make up the links in the chain are responsible for adding (forward) economic value to the product until it reaches the final consumer, g reen value chains seek to recycle value backward, and thus creating a more circular process for how commodity chains operate (Valkila et al. 2012, 258 ; FAO FiBL 2014, 4). The circular process green value chains aim to promote derives from the circular economy flows of information, materials, energy, and labor so natural and social capitals can rebuild (Ellen McArthur Foundation 2013, 22). In coffee, as in other green value chains , it is possible to reintroduce value from the final nodes of the coffee value chain back into the previous nodes. The circular process of green value chains aligns with the emerging and ongoing state of consumer interest in sustainably sourced products (Whelan & Kronthal Sacco, 2019). C awareness regarding transparency in global trade is adding another dimension of commitment to accessing sustainably produced goods. The lack of transparency across the value chain has led institutions committed to sustainable development to begin acting on existing issues by addressing the needs of developing communities. A predominant focus on quality is expand ing to include a demand for fairer labor practices and equity in the value chain, resulting in initiatives by powerful sectors of the coffee market to invest in value chain development (VCD)
Stitt 22 a concept that has been adopted by development institutions and rural agricultural comm unities. Stakeholders now seek to promote VCD to reduce poverty and improve environmental and social performance , similar to the desired impacts of green value chains (Donovan & Stoian, 2013, 8).. To test the validity of this concept and assess its impact on poverty, researchers from The Tropical Research and Science Education Center ( CATIE ) carried out a case study comparison across smallholder agricultural and forest based businesses using livelihood analysis and assessing existing capital assets along th e five dimensions of capital physical capital, natural capital, human capital, cultural capital, and social capital (Bebbington, 1999) . Ultimately, researchers could understand the potential of VCD by measuring and observing changes in various assets man aged by the smallholder households and the enterprises in which they worked (Donovan & Stoian, 2012). The se researchers understood investment was being poured into VCD projects, but there was uncertainty about the validity of the underlying assumption that smallholders would be able to climb out of poverty when they organized and participated in VCD practices ( Stoian & Donovan, 2013, 7). Assessment of a Nicaraguan coffee cooperative , Soppexcca, looking at the effectiveness of asset building and subsequent outcomes, showed that preexisting asset endowments play the largest role in outcomes of VCD (Donovan , 2013). As Bacon (2005) explains, VCD can be successful for coffee cooperatives, but overall poverty reduction will be dependent upon existing household and business assets (Bacon 2005; Stoian & Donovan 2013). While VCD enabled the cooperative to focus on upgradi ng its capacities by improving physical capital through infrastructure projects for improving coffee quality (improving wet and dry mills and storage areas), natural capital through increased coffee planting via a reduction in common grains, and thus land cleared for new production, it also highlighted the significance of existing capital as a means for improvement ( Donovan, 2013) . The influence of external support from NGOs and buyers that led to advances in the construction of endowments in physical, hum an, and financial capital. Ultimately, the researchers at CATIE concluded that VCD is helpful for assessing coffee cooperatives and their value chains but this case study also exemplifie d the complexity of the various situations that small landholders expe rience. Practitioners can develop conceptual frameworks and make
Stitt 23 improvements in communications between stakeholders in the value chain, but for positive social and economic develop ment to occur, interventions government agencies, NGOs, 3, 15). 1.4 The Honduran Coffee Sector and Value Chain Analysis Many Central American coffee growing communities consist of resource poor farmers with little access to social and financial capital (Varangis et al. 2003) . A major goal is consistent quality of life. Unjust value chains prevent producers from achiev ing desired economic equity . Equity is a complicated term, but in this sense, it is when participants involved in the coffee value chain receiv e adequate compensation for their contributions. While coffee producers will not earn the same pay to actors across the supply chain, it is possible to ensure more appropriate recognition of the contribution of the producers through increased transparency . Such improvements in transparency include financial transparency between buyers and producers through more detailed information aside from contractual agreements and also between the cooperative and its members, including information on payment s to each producer in comparison to the cost of production . The more open relationships along the value c hains are, the better the chances of increased equity. I adopted value chain analysis in this project as the contextual assessment and subsequent method based approach of analysis of actors, relationships, and consistent prac tices associated with coffee production and trade (Valkila et al., 2010) . While the number of actors in coffee value chain s prohibit ed me from exploring each link, an analysis of the relationships in the production, processing, exportin g, and buying roles for the two contrasting actors on which I focused my analysis. These results enabled me to provide consultation based on my findings to the host organizations though my deliverables with members of these two organizations . The deliverab les shown in Table 1 are two levels of business plans a commercialization plan and a strategic plan. I formulated these plans with data that I collected and information from existing s literature. Below, I discuss the value chain analyses for COCAFCAL an d Umami Area Honduras,
Stitt 24 the associated business plan deliverables, and their association with sustainable development in a contextual conceptual framework (Figure 2 ). Often there is a need for an u pgrade of accessible capacities for smallholder farmers and the associated enterprises to meet the various requirements of downstream actors (Donovan & Stoian, 2013, 14). Accessible is defined as an achievable improvement through existing structures or rel ationships. These improvements can be difficult without appropriate resources, and the risks involved can be intimidating even if investing in upgrades lead s to an improved link of the chain. One way to mitigate these limitations and minimize risks is th rough the establishment of a n organization that aims to improve the capabilities of the community through cultivation and sale of a quality product and livelihood interests (i.e., a cooperative) , which has greater flexibility in the value chain. Figure 2 . Value Chain Analyses and Business Plan Management for two coffee organizations in western Honduras and their impact on
Stitt 25 C offee c ooperatives are successful when they invest in production , processing, transportation, and trading. Rather than solely focusing on maximizing income generation for contributing members post harvest , some of the most successful cooperative businesses aim fo r sustainable growth. Most importantly, the ability to (i.e., land, labor, and capital) through access to credit, legal certainty regarding land, appropriate technology and training, and improv ing natural resource conservation methods (Macqueen & Bolin, 2018, 91). Additionally, the cooperative must maintain high levels of attention to all the contributing stakeholders in the chain, from small and medium producers who engage directly in coffee prod uction for the cooperative, and the administrators responsible for ensuring communication between the micro sectors of the cooperative, to the baristas working in the cooperative cafÃ© , the faces of the cooperative who market the business for the local and regional communit ies . Through this field practicum project, there is opportunity for sustainable development of coffee communities. Coffee cooperatives like COCAFCAL are examples of organizations that seek to help community members depend less on intermedi ary actors while creating positive relationships across borders with stakeholders committed to addressing the primary inequalities in the coffee supply chain. A value chain analysis through informative interviews with key coffee buyers is valuable for COCA FCAL as it seeks to facilitate the prospects for bottom up development. Furthermore, companies like Umami Area Honduras are not enabling the current coffee inequities, as they seek to educate stakeholders and implement sustainable practices across the supp ly chain. 1.5 Justification and Ethical Grounding As a professional in sustainable development practice, I find it essential to identify and acknowledge the moral and ethical ground that I conduct my research. I t would be naÃ¯ve to think that I kno w more than the people in Las Capucas , but as a professional hired to analyze potential issues and subsequently implement solutions or propose recommendations, I realized my presence was not insignificant. Wh ile engaging with unfamiliar groups of people and recognizing the potential impact s various actions may have in the future, decisions and
Stitt 26 recommendations must be presented thoughtfully. With this mindset, I conducted my research through a morally grounded len s, constantly seeking to hav e a positive or neutral impact. For th is situatio n , all I c ould do wa s reflect on and accept my positionality , as well as discover and respect community values . I did my best in communicating that my intentions were not driven b y self promotion. Ultimately, the stakeholders involved in the project agreed on the potential of the project to answer and therefore supported its execution. By addressing lacking forms of ca pital and identifying existing power gaps between stakeholders across the value chain, the deliverables of the project justify its investment. 2. Methods I collected data over a three month period in the summer of 2019. I refined the interview instruments i n the field, and I added methods to my original proposal . I layout below the methods I used for data collection and analysis . The first section includes interviews, participant observation, literature reviews, and an online survey questionnaire . The second section includes stakeholder analysis, financial analysis, appreciative inquiry, and SWOC analysis. Data Collection Methods 1. Interviews (Unstructured and Semi structured) a. Unstructured interviews the se informal conversations were vital to my understanding of power dynamics and internal relationships. I asses sed who was involved in what activities, who was responsible for certain projects, and who to go to for questions concerning coffee movement . Thes e conversations helped me gain trust and form relationships with community members and coffee industry people while receiving valuable information. b. Semi Structured interviews arguably the most significant data gathering source for my work , I conducted 34 interviews with coffee producers (10 interviews) , cooperative employees and
Stitt 27 administrators (8) , coffee business managers (2) , coffee exporters (2) , importers / buyers /roasters ( 10 ) , coffee consultants (2) . i. For COCAFCAL, I spoke with producers (aka , members) of the cooperative, employees involved in producer coordination, client interaction and quality control, and buyers (aka, clients) of the cooperative coffee, as well as buyers of single producer coffee. Single producer coffee is coffee that is ke pt separate and sold to an individual buyer, and it compares to In the global coffee supply chain, coffee buyers are made up of importers (aka, traders), roasters, and brokers . Coffee importers buy and sell (trade) green coffee to coffee roasters. Coffee importers are common in the global coffee trade because of their ability to coordinate logistics of trade, thus many roasters who focus on sales and retail of their final product seek to use importers for efficiency. In the specialty coff ee trade, however, a coffee roaster can buy coffee directly from their sourcing partners. COCAFCAL produces and sells specialty and certified coffees. Therefore, a portion of their buyers do not use importers, buying it directly through the cooperative. Of the ten buyers, seven companies are in the United States, one in Italy, one in the United Kingdom, and another in Russia. ii. For Umami Area Honduras (Umami) , this method was specifically used with one farmer and workers on a farm Umami own s , the project managers (3) who work for companies that carry out initiatives at the farm, accountants (2) , and with buyers (3) o f Umami coffee . Umami current market is restricted to coffee buyers in Italy and Germany. 2. Participant Observation a. Participant Observ ation is an ethnographic research method where an individual wants to observe a group to which they do not belong without altering the behavior of the group and observes daily activities and interactions (ISU, 2020; Tacchi et al. 2007) . Participant o bserva tion was useful fo r understand ing more about the relationships of the people in the community, but also within the
Stitt 28 business setting. I acquired information by interactions and by listening to what they discussed when referring to partnering organizations, business clients, or potential competitors. This method was useful when I visited various organizations that also specialized in coffee production or processing. For example, when touring a cooperative in Marcal a, a coffee growing region southwest of Las Capucas, I noticed structural differences in business models and overall philosophical differences, but there were also interesting differences in the dynamics between the employees in the dry processing facility namely a genuine commitment to environmental responsibility via strict recycling and energy efficiency guidelines. Through observation, I could begin to unpack the aspects that organizations prioritized or wanted to market compared to others . Afterward, I could assess which of these practices could help, hinder, or impact their business. 3. Literature Reviews a. COCAFCAL Research for writing and developing a commercialization plan was required. I planned to engage in helping write some type of business plan , but I did not know that I would be focusing on improving the commercialization of the cooperative until I arrived in Honduras . I therefore reviewed literature on the foundations of commercialization plan ning , such as market analysis (of the product, comp tactical approaches for increasing exposure and improving products, implementation of measures, and financial checkpoints (Dolan, 1997 ; IPIRA 2018); Global N ewswire, 2019; SBIR; 2018 ) . b. Umami for the private company, I wrote a strategic plan. G uidance from my supervisor and online research enabled me to create, organize, and execute a proper strategic plan. We wanted to assess the accuracy of the goals and objectives in relation to shareholder values while also ensuring the document was interesting to decision makers so they can make evaluations to the plan annually. Key aspects of the plan included the de velop ment a company mission and vision , defin ing priorities
Stitt 29 within the company based on previous projects, identifying and defining key stakeholders, and gather ing and analyz ing reactions and responses from shareholders and managers. 4. Online Questionnaire S urvey An online survey distributed to Umami Area Honduras shareholders gathered information for the reorganization, reprioritization, and articulation of company goals and objectives. The president of the company emailed a questionnaire survey to sharehold ers across the globe. The survey was translated from English into Spanish, Italian, and German, and it was organized into three distinct parts. The first section inquired basic background and information of respondents, the second section asked shareholder s questions related to positive aspects and strengths of the company, and the final section asked for shareholders to provide suggestions for improvement. I used an appreciative inquiry approach in the survey, inviting shareholders to disclose positive in formation that could help them provide constructive suggestions as they completed the questions. For example, after asking shareholders to provide demographic information such as their country of origin, their role in the coffee sector, and the number of y ears working in their roles, I asked questions inviting shareholders to reflect on their decisions 7 Results, Figure 8 8 coordinators and 9 ), among other questions. Analysis Methods 1. Analysis of Actor Relationships Personal relationships are important across disciplines, but in the specialty coffee industry, producers often rely on relationships with their buyers for consistent income through contract negotiations even in a volatile coffee market and unpredictable na tural environment. Understanding the relationships between producers and
Stitt 30 buyers and the interactions between all other actors across the value chain is necessary to make assessments . A detailed graphic organizes these actors and explained their involvement within the projects at COCAFCAL (Figure 3) . 2. Financial Analysis a. The Green Value Tool for Simplified Financial Analysis ( GVT ; www.green value.org ) was used in the project for Umami Area Honduras. The computer based tool uses pre formatted worksheets formul as in Excel to organize and analyze costs and incomes by activities that are associated with agricultural and forest products over a production period (in the case of coffee production in Las Capucas from October to March) . H istorical (coffee seasons 2017 to 2018 and 2018 to 2019) and current financial data were entered into the tool to assess the financial status of the company , most notably, the coffee farm . T he company will continue to use the tool in the future as they seek to real locate cash flow to ward other activities as they determine how costs compare over time and how to limit unnecessary spending. I provide a detailed description of the GVT Part 3 below . b. Upon finishing the field projects, FundaciÃ³n ETEA determined the Green V alue Tool for Simplified Financial Analysis (GVT) could be useful for other coffee growing communities, and for agricultural communities that depend on similar products. The expansion of the tool to these communities c ould provide small producer organizati ons the capacity to increase social and financial capital. Currently, ETEA is developing strategies for implementing the tool through training programs. A s part of this initiative, I wrote a proposal for ETEA laying out the structure, methodologies, and im plementation practices for how best to incorporate the Green Value Tool for Simplified Financial Analysis (GVT) into practice. I recommended a Training of Trainers project through which coffee organizations could improve their capacity to adopt the tool into their financial management strategies . 3. Appreciative Inquiry
Stitt 31 Successful communities and organizations have a positive vision for shaping their images that so they can lead to action (Encompass, 2018). Appreciative Inquiry (AI) is an approach used in sustainable development practice that has proven to be a powerful w ay to establish the self confidence and self reliance of rural people. It s use also stimulate s creative and innovative strategies, motivate s active rather than nominal participation, and has helped sustain participatory and efficient processes of community development (Yuliani et al. 2014). Applying AI within COCAFCAL and Umami Area Honduras has the potential to foster more sustainable, community based conservation. The organizations in Las Capucas use AI already. In 2018, the cooperative began educating cooperative members on e cosystem functions and conservation through training sessions and by highlighting existing farmer practices that promote conservation . W hen community members express their pride for the success of innovative practices, sel f motivation has the potential to occur in a sustainable loop (Yuliani et al. 2014) . These practices include alternative incomes through the introduction and management of new products on farms , such as honey, cacao, or ornamental plants. My interviews wit h COCAFCAL members, employees, and clients were framed with an AI approach where questions that inquired about weaknesses tended to follow up with an assessment of positive ways to implement improvements. Furthermore, the online questionnaire survey for Um ami Area Honduras shareholders used an AI approach as well. Questions were framed to encourage shareholders to provide constructive responses to areas of potential improvement. In Las Capucas, AI led to the formation of local institutions and collective so cial action, as well as an increased appreciation for natural resources. 4. SWO C To develop a plan for evaluating qualitative data as it relates to recommending potential improvements for A needs assessment required information on strengths, weakn esses, opportunities, and challenges (SWOC). By asking questions specifically related to these four categories , I could interpret the qualitative data and make recommendations via the commercialization plan and provide succinct updates to my supervisor on what was working or what needed to
Stitt 32 be addressed. I applied AI to the SWOC analysis, and I framed questions related to existing weaknesses, positively, rather than pointing out difficult problems and how best to solve them . 3. Green Value Tool for Finan cial Analysis The Green Value Tool for Simplified Financial Analysis (GVT) looks at all costs associated with forest or agricultural products, and in this case coffee production at a coffee farm , and compares them to incomes through coffee sales, training courses, and other various activities for company income (Humphries & Holmes, 2016). The analysis requires costs be separated by major field activities such as administrative activities or field preparation for the harvest or shade regulation (i.e., culling trees and understory plants competing with the coffee trees). Costs are then divided per activity by the type of cost involved labor, a material (e.g., purchase of fertilizer or gasoli ne) or service (e.g., soil analysis), or machinery and equipment (chainsaw, irrigation system, vehicles) . Finally, administrative costs like taxes or insurance are separated by type of cost . The tool then runs an analysis for the user and provides a summar y of costs by activity as well as a rate of return (based on the sales data). The tool serves as a replicable method to organize, understand, and present financial information for making informed and transparent decisions while also allowing the farm or in itiative to measure results against objectives and compare them over time (Humphries, 2018: 5). Through its continued use the tool could help compare annual changes in company costs in production, renovation, preparation, and labor as sales increase and ef ficiencies become more available while aiming to become more profitable. The purpose of the Green Value Tool for Simplified Financial Analysis ( GVT ) is to help agricultural initiatives understand the steps required for monitoring and analyzing their fina ncial costs and returns for improvement of financial decision making and planning (Humphries & Holmes, 2014: 10). A series of inter linked, pre formatted Excel spreadsheets allow users to record and analyze cost and income data, but the success of the tool depends on the timeliness and accuracy of the data entered in the spreadsheets. In the case of functioning coffee farms planillas , facturas , and bank statements, along with regular conversations and updates
Stitt 33 with the main accountant and farm owner will be some of the main sources of data entered into the tool for analysis. One of the main benefits of this tool as compared to other cost benefit analyses is that users are encouraged to include all forms of production costs, even subsidized services, like tech nical assistance and expensive machinery and equipment. The most noteworthy aspect of the tool is its simplicity. The tool comes equipped with six steps for carrying out data entry and analysis. The six principle steps of the Green Value Tool for Simplified Financial Analysis (GVT) are: (1) plan, (2) collect data on costs and sales revenue, (3) enter data in worksheets, ( 4) compile data collected over time, (5) analyze the data, and (6) discuss the results. These six steps are summarized in Table 4 , and each step has a specific worksheet (or set of worksheets) associated with it. Table 4. Six Steps of the Green Value Tool for Simplified Financial Analysis (GVT). Steps Description Step 1. Plan Enter general information about the product, the producer, the period of time to be monitored, and the responsibilities for monitoring. Also note any assumptions used in the financial analysis. Step 2. Collect Collect cost and income data and record it in written form using printed worksheets for each type of input (labor, materials and services, and machinery and equipment). This step can be combined with Step 3. Step 3. Enter Enter the collected data in digital form in worksheets using a computer. Step 4. Compile Calculate subtotals per type of input and per activity. Step 5. Analyze Present the costs per activity and per input type, and calculate total income, net incomes, and rate of return. Illustrate results using graphs and charts. Explore changes in financial indicators under different scenarios with sensitivity analysis. Step 6. Discuss Register the main points from the discussion of the results.
Stitt 34 4. Results 4. 1 COCAFCAL Cooperativa Cafetalera Capucas Ltda. (COCAFCAL) was founded in 1999 by Omar Rodriguez, a third generation coffee farmer. At the time of its founding, Omar wanted to share his knowledge of coffee production and commercialization with his family members, and also with o ther members of the Capuc as community. Within ten years, many small producers join ed seeking to gain access to a new market . These producers also wanted to share information and experiences with each other on the various aspects of production and marketing techniques , adding more to the non monetary value of the cooperative (COCAFCAL, 2015). At the time of this study , the cooperative ha d 9 11 members. Altogether, the producers have over 5,000 hectares of coffee production that produce 9,300,000 kg in annual production , with 99% of the production exported to 18 countries (Umami Area Honduras, 2017). The coffees are certified Fairtrade a nd Organic . I n some cases, producers receive other certifications that focus on social and environmental sustainability, such as Rai nforest Alliance, UTZ, Smithsonian Bird Friendly, Naturland, and JAS. Certifications can reflect the orient their purchasing principles and bus iness relationships around such sustainable philosophies. As one buyer Buyer 6 ). drive the sustaina ble growth of the community the cooperative supports. It began as a group that sought to provide a safety net for coffee producers while also sharing knowledge and resources. With their success, they have effectively shifted their focus to cover not only t he coffee farmers, but also other community members whose livelihoods depend on other means than coffee. Due to climate change and an unpredictable coffee marke t , COCAFCAL began to invest in the diversification of
Stitt 35 agricultural products. This investment in diversification is a core organization al c ompetency that is providing alternative incomes to community members while enabling the cooperative to experiment in various markets for greater economic gain. In my efforts to assist the cooperative achieve its ob jectives, I implemented various types of data collection and analysis. Interview data from coffee value chain professionals (namely, buyers) was the most significant source of data for my analysis, and ultimately my recommendations to COCAFCAL . 4.1.1 Parti cipant Analysis at COCAFCAL , it is appropriate to think of it cyclically, where each actor, or node, in the value chain has influence on the following node (e.g., producer to cooperative employee working in p rocessing to exporter, and so on), eventually until it reaches the consumer, whose purchasing power enables the coffee roaster or buyer to pay the producer. The figure below illustrates how each stakeholder group impacts the next, ultimately resulting in b uyer interaction with the cooperative members. F igure 3: The cycle of actor relationships at COCAFCAL.
Stitt 36 4. 1 . 2 Appreciative Inquiry at COCAFCAL Understanding the reputation and success of COCAFCAL across western Honduras, I could more easily discover while gaug ing the current state of the coffee value chain as it relates to Capucas t hrough in person unstructured and semi structured interviews with various stakeholders. These stakeholders include cooperative members (N=8) , agronomists (N=1) who aid farmers in technical assistance, wet and dry mill employees (N=1) , office employees who work i n certification (N=1) , accounting (N=2) , administration (N=3) , quality control specialists (N=2) , and baristas (N=2) . I conducted phone/Skype/Zoom interviews with importers and roasters who buy COCAFCAL coffee and lemongrass, as well as various intermediar ies whose interests align with the overall success of the cooperative. The stages of A I include an inquiry stage , which involves conducting interviews and gathering information on what makes this organization and community successful . The assessment stage (this section is explained in the section) where the data can be organized in a way that benefits the final stages of designing and implementing . The final stage entails creating a plan for introduction of appropriate ideas formed from the initial processes. For this project, the final stage is in the form of a commercialization plan. Inquiry Stage In all interviews, part of the focus was to discover peak moments of organizational excellence over time, and what current processes enable success. There are numerous aspects of the cooperative the community members can be proud of, and one of the most outstanding is its longevity CafÃ© Capucas is going into its 20 th harvest season. Over this period, the cooperative population has fluctuate d around 900 members. COCAFCAL find the pride the cooperative members Nearly every buyer interviewed mentioned the impact their individual visits to Capucas have on their appreciation for the relationship with the cooperative, while also reaffirming their role in the coffee industry as ambassadors for the hardest working demographic in the supply chain. The responses from buyers h ighlight a key aspect of the overall potential of COCAFCAL. The success of the cooperative lies within the people who make it
Stitt 37 run every day, from the farmers to the administrators, the members are diligent and reliable. In interviews with coffee farmers, 1 socios make the cooperative a positive organization. In interviews with employees, nearly each respondent (75%) claimed the people are one of the greatest strengths of the cooperative. Capacity building is much more efficient and rapid when the people carrying out daily tasks and projects support the direction of their organization. G rowth therefore depends on the strength and leadership of the management who can guide and direct its members who support them. Subjectively, this is one of the reasons the cooperative started, and how it became successful in the first place the members put their trust in the process and in its decision makers to execute the vision with integ rity and confidence. 4.1. 3 Needs Assessments After completing the interviews with cooperative members, employees, coffee producers, and associated partners, I assessed the needs of the cooperative as it seeks to complement its business practices for commu nity development. Members , employees, and buyers expressed existing problems with communication across sectors. One employee expressed displeasure with disorganization and a lack of punctuality in response from management about trainings. Another was frust rated by the lack of information they believed should be easily available to clients , for example, changes in farmer production methods or updating buyers about crop expectations due to climate change. Unfortunately, because employees in administration and management work on numerous projects with various partners, buyer desires are not documented or organized. I spoke with a coffee business consultant from the United States who has expertise in the specialty coffee industry in Honduras. He works directly w ith the cooperative expressed h is belief in the potential for the cooperative to be successful, especially because of his respect for the farmers. However, the farmers also think there are too many projects with too few people taking responsibility for the ir execution. Based on these responses, the cooperative needs to improve administration and management of projects and communication with clients. While funding for projects can be applied for in the future, the data suggests that it is
Stitt 38 more beneficial fo r the cooperative to focus on its successful projects and treat them like individual parts of a business that they depend on the revenue from before continuing to establish more. There was a common understanding that the cooperative was introducing too man y projects of which required more resources than were available. There was only speculation from internal participants (farmers and employees) as well as external partners (buyers and a coffee consultant), and because it was a seemingly recent issue, none of the participants could say for sure if it was a situation where there more projects than the cooperative could manage. This led to the question of h ow do you know if there has been too much growth, too fast? One way to tell is when one project starts be fore another one has yet to get off the ground and has lost resources for growth. For example, the honey and apiculture project. It is one that was widely accepted in the community for alternative income generation, but a decrease in activity and inconsist encies in management result ed in uncertainty of success (Producer 3, Buyers 4 & 6). When the resources exist, and investments in infrastructure and trainings are made available, it is essential to carry out the project with an organized plan and have a des ignated manager who can devote the right amount of time to ensuring its completion. My impression is that projects start because of excitement due to the potential benefits to the community, but prior to implementation, th orough plans are not put into plac e to ensure their long term success. 4. 1 . 4 SWOC for COCAFCAL While AI focuses on the positive aspects of a business to make improvements, aware ness of various aspects of a business about which people are actively talking is vital . The needs assessment helped me design an abbreviated SWOC (Strengths, Weaknesses, Opportunities, Challenges) analysis. This is a fluid document and therefore includes dynamic figures . Therefore, adjustments will be necessary. Information derived from i nterviews, sta keholder analysis, and participant observation combined to formulate th e list to carry out this activity .
Stitt 39 Table 5 . SWOC Analysis for COCAFCAL. Information comes from interviews with all COCAFCAL members, employees, and buyers. Category Observations and Notes Strengths Each stakeholder group agree d the people of Las Capucas is the greatest strength. Other strengths include: Commitment to social action and community development through social projects Relationships with clients/coffee buyers The reputation CafÃ© Capucas developed over the years with quality, certified coffees The diversity of products its members cultivate for improved financial (income), natural (biodiversity), and social (food as a resource for the household) capital Relationships with Honduran private and public organizations who support ongoing projects and su stainable development Commitment to sustainable coffee growing practices Commitment to education through: o Best management practice training o Technical assistance for various products The annual coffee event, Te Van a Conocer Compa , which brings coffee buyers to an auction at COCAFCAL, and its continued influence on the coffee value chain and impact on the coffee growing communities it directly affects Weaknesses Generally, the weaknesses expressed by actors are not debilitating, but issues or problems that can be approached and solved. A lack of consistent communication with clients/buyers Buyers uncertainty of response or inability to follow up due to the number of projects AND/OR to few people with the authority to follow up A lack of advertising existing projects and potential profit gaining initiatives o One long time buyer said the cooperative does well promoting themselves with shirts, stickers, and merchandise but does not advertise its brand enough to more profitable marke ts Ambitio n of projects and their detraction from the major component of the cooperative coffee o Various clients and employees expressed the cooperative either losing sight activiti es Opportunities Cooperative strengths can mitigate existing weaknesses. Through an analysis of both, opportunities arise. A consistent buyer and an external source expressed the opportunity to market or trademark Te Van a Conocer Compa if it continues to expand, so while it can be used as a medium for training farmers and connecting coffee communities with
Stitt 40 buyers, it can also act as a money making investment, especially if staff are sent to work the events and train those adopting the ideas. To mitigate communication and administration issues , more regular and thorough updates of the coffee production processes could be offere d to buyers o Content could include: Information and pictures on trainings (what it was, who was there, who is supporting it, what the aims and objectives of the trainings production in the re gion) Climactic and/or unexpected changes in production (positive or null) Experiments with new varieties Farmer spotlights producers could be introduced to buyers in a more informal setting A further opportunity connected to branding and sharing content is through the initiation and upkeep of an Instagram account o This is an opportunity to update current buyers and others in the coffee industry to follow the activities at CafÃ© Capucas while also building the CafÃ© Capucas brand o It can promote the success and growth of the social projects occurring here that make Capucas unique A final opportunity is the planned project of a case study organized and led by CafÃ© Capucas to inform actors on the roasting and retail side of the supply chain of the effect of the o The idea is to have CafÃ© Capucas share information and data on producing and processing and the direct effect on farmer members, and why its important prices for coffee increase, especially in the special ty market o partners Challenges Challenges are based on direct responses from cooperative stakeholders Maintaining projects and initiatives while keeping a focus on coffee and the existing business relationships o Balancing and managing projects Available resources to carry out business and develop new initiative s Are there areas where we can move components of our work onto others, and rely on them? We need help administering various projects Is there someone to help in sales or marketing who speaks English? Communicating payments to farmers during a time where prices are low o Various coffee farmers expressed a lack of understanding why they were receiving low returns for their project
Stitt 41 4. 1 . 5 Interview Data Analysis In eight ( 8 ) interviews with cooperative member producers, I learned several important considerations for assessing their roles in the value chain. Ultimately, the interview questions aimed to answer how producer experiences with the cooperative compared in terms of overall satisfaction with the cooperative, the support it provides to its members (the producers), and the degree to which t he involvement of the cooperative extended into financial planning of farming practices . To assess the needs of the cooperative, I asked questions to 8 producers on the current state of the ir farms (Table 6 ) , their development since becoming members, and s pecifically, how the cooperative is helping them , or not (Table 7 ). P roducer interviews also revealed strengths and weaknesses they consider most pertinent to the described the socios (members) as one of the the coope rative is Capucas Producer Interview 1; Capucas Producer interview 4 , respectively ). Further s trengths expressed by producers include the general support of the cooperative, such as assistance for other farm improvements, and the ability for producers to r eceive help as they prepare for buyer competitions ( Te Van a Conocer Compa ) (Capucas Producer Interview 4). A repeated weakness was the uncertainty associated with payments from the cooperative for their coffee. Five of the eight COCAFCAL producers claim ed they had not experienced any problems, but they heard of confusion over timing of payments being a consistent issue for farmers. One producer expressed concern with how the cooperative failed to help connect him with buyers. He told me that even though he is not interested in entering the specialty market, he still wants a buyer that depends on him, and that he has ambitions to join a market where he can receive higher prices. When I asked him what he would need for that to happen, he more assistance for that to happen. There must be problems with coordination because I have
Stitt 42 (Capucas Producer Interview 1). Thematic data analysis via coding and sorting of the interview responses enabled me to organize necessary infor mation for developing the needs assessment. Producer interview data showed there is positive perception of association with the cooperative , and that producers feel happy and safe with the benefits and support the cooperative provides . Question or Topic Yes No Relevant Quotes In general, was the past harvest a good one? 5 3 Producer 1: No, just a regular harvest Producer 2: No, last year was much better Producer 3: Yes, but it depends on the year. After the thinning ( la poda ) we had good productivity. Do you use particular methods for registering costs? 6 2 use them in everything, since I use the organic fertilizer from the cooperative, I would consider using better methods. Producer 4: Yes, we have a book that we use for all our costs and investments. W e take down all the payments from the cooperative as well. Our book works well for us. Is your coffee certified? 8 Are the certifications helpful? 8 Producer 1: They are Good. I get a better price for the coffee. Since I joined the cooperative, I have had higher prices for my coffee with the certifications. Producer 2: The are very important, especially for the producers. The provide us with premiums and they require technical assistance to introduce and maintain. Did the cooperative help you achieve and maintain certification? 8 Producer 1: The entire process, they helped. And they continue to help each year. Producer 3: a long process, and most producers cooperative helps to explain all the things that can and Table 6 . assistance from the cooperative (N=8).
Stitt 43 Are you satisfied as a member? 8 Do you think the cooperative has done a good job with connecting you with coffee buyers? 6 2 Producer 1: Not really. I am not looking to enter the specialty market Producer 4: Yes, the main thing is that i t has given opportunities for producers. Alone, the farmers do not have the time to make the relationships they wish, and so the cooperative ca n help them coordinate. Question or Topic Yes No Explanation Does the cooperative assist you with using methods for registering costs on your farm? 5 3 Producer 4: Yes, the cooperative helps a lot with registering costs. Especially for farmers who want to change or who do not have formal training. Producer 5: Not really, and to be honest, the way it works now is fine . Producer 6: Even though there is technical assistance available for farmers, I wish I had better methods for finances Do you think the cooperative could help you more with coffee finances? 3 5 need help from the cooperative with recording and writing costs and data because I have the experience Producer 4: For the cooperative to help more, it needs more. It needs to continue making money and improving. More funds for them can then go to other producers. More technical assistance as well Since you joined the cooperative, have you seen any improvements in your coffee? Either through quality or improved sales? 8 Producer 4: I wanted to get certifications, and I wanted higher quality coffee and I could not do it alone Table 7 . Producer interview questions and responses concerning the type of assistance the cooperative provides to its members (N=8).
Stitt 44 I understand coffee cooperatives are beneficial for producer groups because of what they provide to the members. Are the benefits and services associated with the cooperative helpful for the improvement of your livelihood ? 5 3 Producer 2: The benefits and services the cooperative provides are the most excellent parts and they help many people Producer 4: The cooperative wants to help and support the members of the cooperative first. The final goal is to improve the community, and if that can be done by taking part in different projects than that is what the cooperative will do Producer 6: The people, the socios (members) are the best part of the cooperative I conducted eight (8) interviews with COCAFCAL employees . The roles of COCAFCAL employees range from processing manager, certification manager, accountants, administrators, quality control specialists, and baristas. Since my goal of these interviews was to gain an understanding of how well the cooperative funct ions, and the impacts daily life may have on the efficiency of the value chain, my questions were straightforward and direct. I wanted to know what the employees enjoyed most about their work, if they had been provided opportunities to lea r n and grow as pr ofessionals, what the main strengths and weaknesses were, if they believed the cooperative supported the community, and what they believe the cooperative can improve on . Generally, employees enjoyed their experiences and they were grateful for the support the cooperative provided them and their fellow community members through employment (%) cooper ative provided opportunities to learn and grow through their work. An administrative employee told me I have been here from entry level to professional. There have b (Capucas Employee Interview 1). Another person told me that she is learning all the time, even in areas she does Of the 8 producers, quotes from only 6 producers were selected. Quoted Producers and color associations: Producer 1 Black Producer 2 Green Producer 3 Blue Producer 4 Red Producer 5 Orange Producer 6 Purple
Stitt 45 more through my conversations with the (Capucas Employee Interview 5). Strengths of the cooperative ranged from financial security for members and employees, the ability for producers to earn certification for their coffee through cooperative assistance, and the type of work generally. One ople work on here and the processes in which they are executed are of the cooperative and the reputation it has gained since it was founded . One employee told me that and for Aside from one respondent telling me he felt the primary weakness was related to the outdated infrastructure where coffee was processed and dried and another person wh o did not express any weaknesses in the cooperative, six of eight employees mentioned lapses in communication, a lack of organization, or inefficient administration as the most debilitating aspects to cooperative development. Some employees took these weak responding to buyers or people we rely on for financing. If we miss on something a deadline or a buyer, we feel ). The ten (10) interviews with coffee buyers were informative for my assessment of the cooperative. I spoke with six (6) representatives from coffee import ing companies and four (4) from coffee roasting companies. At the beginning of each conversation I explained who I was and my objectives for the cooperative and how the conversation would help me in my assessment of the cooperative. The six major themes I covered in my conversations with buyers were:
Stitt 46 1. Coffee (quality and consistency) 2. The annual coffee event, Te Van a Conocer Compa 3. The current status of business strategies and efficiencies at the cooperative as they relate to the relationship with buyers 4. Strengths of the cooperative 5. The current projects and initiatives at the cooperative 6. Weaknesses and challenges the cooperative face The data represents unprovoked responses from buyers, and the themes in the figures below represent when buyers addressed the topics afte r asking them to share their thoughts on positive and negative aspects, and suggestions for improvement. As shown in Figure 4 , n ine of ten buyers agreed that the people of Las Capucas were a strength of the cooperative. Generally, buyers believed COCAFCAL produced high quality, consistent quality. Eight buyers claimed they buy COCAFCAL coffee because of the quality, and six confirmed the consistency of the coffee produced annually encouraged them to continue buying from C OCAFCAL.A majority of buyers expressed appreciation for the annual event, Te Van A Cononcer Compa , as seven buyers regarded it as a strength. Many of the representatives explained that it was one of the first connections they had with the cooperative, as they were invited by a coffee importing company that initiated the event with COCAFCAL in 2007. Furthermore, buyers felt that the relationships COCAFCAL made was a positive aspect of the business.
Stitt 47 COCAFCAL was one of the first certified organic cooperativ es established in western Honduras. A majority of buyers , 8 of 10 , mentioned certifications as one of the key reasons they developed interest in buying coffee from COCAFCAL. Buyers also associated certifications as a strength of the cooperative . Similarly, 7 buyers believed reputation as a strength. When asked about weaknesses and challenges within the cooperative, seven buyers said inefficiencies in administration were a clear weakness (Figure 5 ) . For example, specific tasks, such as organization of farmer or consolidation of buyer information, were left undone. This appreciation explanation of a cooperative weakness being delegation of tasks during the off season where one person inundated with a heavy workload is unable to receive help because others are prohibited from engaging in certain tasks. Six buyers agreed inconsistent communication and the taking on of overly ambitious projects hindered the cooperative from focusing on other priorities. For example, numerous buyers explained that at each Te Van a Conocer Compa e vent, a new project or initiative was introduced, and they ranged from honey production and processing, to aquaculture , a drying facility for lemongrass, a zip line for tourists, to the integration of a cloud based app for farmers. Buyers admitted some of these initiatives resulted in community benefits or improved 0 2 4 6 8 10 People Certifications Quality Client Relationship Social Action Reputation Event Consistency Number of Buyers Positive Aspects of Capucas Figure 4 : Positive aspects of COCAFCAL via interview data with coffee buyers.
Stitt 48 coffee productivity, but others shifted the focus of key actors in the cooperative away from critical coffee projects. Finally, it can be inferred from Figure 6 that the cooperative must address various areas of communication inconsistent communication, information availability, and an uncertainty of response to messages. In Figure 6 , the data suggest b uyers strongly agreed COCAFCAL should make improvements in how the y communicate with clients and administer tasks to their staff if they want to be more efficient. The y believed i mprovements in these aspects would help the cooperative conduct business with more punctuality. Buyers explained their experiences where they would go weeks or months without communicating with anyone from the cooperative. Some suggested regular updates on farmers, coffee varieties, or specific projects they were proud of so the buyers could communicate these updates with their customers . 0 2 4 6 8 Lack of Admin. Inconsistent Comm. Over Ambitious Information Availablity Lack of Advertising Uncertain of Response Number of Buyers Negative Aspects Figure 5 : Negative aspects of COCAFCAL based on responses to weaknesses and challenges via interview data with coffee buyers.
Stitt 49 4. 1 . 6 Commercialization Plan Ultimately, the data guided my design and development of the commercialization plan for COCAFCAL. The main goal s of the plan are 1) for COCAFCAL to identify how it can create value for its clients , and 2) to provide recommendations for internal improvement based on input from a range of stakeholders . The plan also members while also providing benefits to its clients, both of which depend on the quality of the coffee. Questions the plan answer s include: 0 2 4 6 8 10 Administration Punctuality Communication Financial Transparency Number of Buyers Areas for Improvement 1) W 2) What are our skills and strengths and what do we have that can help us meet the needs of our clients? 3) Who is the competition and how are they meeting overlapping clients 4) Who collaborates with us and how can they continue to help us meet our goals and generate revenue? 5) What is our situation and how does it limit our development? Figure 6 : Areas where COCAFCAL can improve based on interview data with coffee buyers.
Stitt 50 Literature regarding how best to convey messages of the cooperative concisely to its decision makers (SBIR 2018; Dolan 1997; IPIRA 2018; Kolchinsky, 2004) ; however, I enriched the plan based on suggestions and recommendations given the analys is of data c ollected. After providing justification for the content of the plan and background on the cooperative and its major partners, I identif ied the markets, client base, and competition of the cooperative and how existing practices affect how succes sful COCAFCAL is in fitting into its desired markets, outline these themes, so the cooperative can address them internally and make changes. 4. 2 Umami Area Honduras Umami Area Honduras formed in 2012 as a concept aiming to disseminate specialty coffee culture through education to coffee enthusiasts and professionals in Italy, and in 2014 Umami Area was founded as a non profit. (Godina & Accerenzi, 2018: 10). Education became a central value in the Umami Area philosophy and eventually, the organization supported students across educational sectors and international boundaries through training sessions and coffee camps on campuses in Europ e and coffee plantations in South America (Umami uses the term camp/campus in their practice, but they are essentially training events for professionals pursuing a career in coffee, whereby these individuals have an opportunity to learn about the aspects o f the coffee trade they have less experience in coffee production and processing in origin countries5 ). Through a partnership with various European non profits, Umami Area could support young coffee professionals in their trainings (Godina & Accerenzi, 2018: 11). Through growth and demand for an increase in learning environments for coffee enthusiasts and entrepreneurs, a private company was formed in Honduras Umami Area Honduras S.A de C.V. private company. It was founded with the vision of unifying actors across the coffee value chain through education of production, trade, and consumption through expert training, while also emphasizing a commitment to sustainable agricultural practices through the purchase and renovation of a coffee plantation in w estern Honduras. With the
Stitt 51 support of 34 international partners representing seven countries , the initiation of various projects focusing on entrepreneurial, financial, social, and environmental development could be coordinated and planned for execution in the community of Las Capucas, Honduras. Through the careful and respectful management of the company owned farm, Finca RÃo Colorado (36 ha with 22 ha in production) , Umami Area Honduras seeks to create a sustainable educational environment for responsible coffee students and professionals. The farm is an essential resource through which the company aims to provide educational opportunities for foreign and local coffee entrepreneurs, while also existing to provide financial support to rural communities near the farm. All this, while also growing to a financially sustainable business seeking to profit from its certified specialty coffee produced on the farm sold to its European buyers . Finca RÃo Colorado is in the town , south of Las Capucas. Since Umami Area Honduras owns the farm but does not have resources for processing and transporting coffee after harvesting, they developed an agreement with COCAFCAL. Umami Area Honduras would become a member of COCAFCAL , thus shifting responsibilities to the cooperative for processing , and transporting the coffee to the exporter in Santa Rosa de Copan . In exchange for the resources at COCAFCAL, Umami Area Honduras would use its educational platform and alternative network of coffee buyers and professionals to help expand the COCAFCAL brand (note: Umami Area Honduras pays equal membership fees as other members, there are simply additional benefits to the relationship) . The connection between the two organizations is strong because of the mutually beneficial relations hips that exist between the two. For example, one of the founding members of the cooperative is the current c apataz , or farm manager of Finca RÃo Colorado. Furthermore, he also has two farms i n Las Capucas, and COCAFCAL processes the coffee from these farm s . However, even though there are existing relationships, the executives of the company do not think business is carried out as efficiently as it could be. Upon knowing of my project in Honduras for COCAFCAL, a connection between the Umami Area Honduras ex ecutives and my field supervisor was made. Through their support, I created a plan for integrating the Green Value Tool for Simplified Financial Analysis
Stitt 52 (GVT) for Finca RÃo Colorado, and the outcomes from its adoption could be considered in a strategic pl an the company intended to develop. Umami Area Honduras knew that d ue to the novel nature of this business, one existing limitation wa s how it could compare its development to a similar organization, because few, if any exist. I t was therefore difficult to make plans to achieve their mission more efficiently than their competitors . Through t he development of a strategic plan (Appendix B) , Umami Area Honduras want ed to look ahead to trend s and issues they expect and align them with their organizational priorities (UN Strategic Plan, 2016). As the company continues doing business in Honduras, t h e strategic plan wil l work as a foundation for achieving the vision of Umami Area Honduras effici ently and succinctly. 4. 2 . 1 Key Stakeholders and Analysis of Participant Relationships A value chain analysis requires a thorough understanding of stakeholder groups and their relationships. Through interviews with Umami stakeholders, I identified strengths and weaknesses within the value chain as each actor interacts with the other(s). I also established the existing chain of command within the company . Below is a breakdown of the Umami stake holders with their roles defined. 1) Finca RÃo Colorado Capataz T he steward for environmental sustainability who is responsible for cultivating the coffee, and delegating tasks to farm workers throughout the harvest and non harvest seasons . The capataz a t Finca RÃo Colorado is regarded as one of the most distinguished and experienced farmers in the cooperative. The ultimate success of Umami Area Honduras' field projects will be a result of his work and dedication to creat e a system for high quality, sustainable coffee production. 2) Day laborers T he first line of quality control are farm workers. During the harvest season , there are maximum 18 workers per day, and during the non harvest season there are anywhere from four to eight. Year long, meticulous labor ensures consistent yields on the farm and selection of mature cherries for high quality processing of coffee. With Honduras coffee wages ranking among the lowest in Central America , their efforts cannot be taken for granted (CastaÃ±eda 2018) . Low wages and unstable politics are leading to a greater
Stitt 53 outmigration of seasonal pickers (CastaÃ±eda 2018). Without consistent la bor for picking ripe cherries, the overall quality of the product will suffer. The company is actively working to improve efficiencies to appropriately compensate these employees . 3) COCAFCAL personnel COCAFCAL is the main coffee processing entity in th e area. Extensive infrastructur e includes facilities for processing , drying, and preparing coffee for export , administrative offices, a quality control laboratory for tasting dried and processed coffees , a nursery, and a laboratory for honey production analysis . Umami Area Honduras depends on COCAFCAL personnel for nearly every activity involved in post harvest coffee processing. COCAFCAL plays an essential role in aiding Umami Area Honduras create its tradable product. This is a mutually bene ficial partnership as Umami Area has been working with COCAFCAL for several years and is a supporter of the Las Capucas Coffee Academy , the education initiative recently created by the cooperative in collaboration with Umami Area Honduras and several long term buyers interested in establishing a place for community members and cooperative members a place to learn and interact with coffee professionals virtually Importantly , U mami Area Honduras is also a partner of the cooperative. 4) Buyers The clients who desire high quality products and pay a fair price for the coffee they receive. They are essential in the value chain and they can help farmers in difficult times through l ong term contracts based on strong relationships. Buyers also provide critical information in a volatile market. 5) Coffee Campus participants These are international stakeholders who participate in Umami campus training throughout producing and consumi ng countries. They are part of a key group of people who are contributing to continued education across the value chain through their experiences and relationships with Umami Area Honduras. 6) Umami Area Italia Partners The founders of the organization and the creators of the educational activities as well as the promoters of Umami Area Honduras.
Stitt 54 7) Umami Area Honduras Shareholders 34 people from Italy, Honduras, Germany, Belgium, Israel, and Peru. They are owners of Finca RÃo Colorado and they promote education al activities in collaboration with Umami Area Italia. Umami Area Honduras is also in charge of selling coffee to the European market as part of its social responsibility program and business (income generation) . 4. 2 . 2 Online Survey Questionnaire Analysis Responses from t he Umami Area Honduras shareholder survey questionnaire helped guide my proposal for the reorientation of goals and priorities of the company while also helping support my recommendations for how the company should p roceed in its communication strategy. The president of Umami Area Honduras sent the surveys to 32 shareholders and I received 25 finished surveys within the 10 day period in which the questionnaire was open , resulting in a 90% response rate (two additional shareholders joined Umami Area Honduras since the conclusion of the survey in July, 2019) . Shareholders could choose from four versions of the survey based on the language they preferred to answer in English, Spanish, Italian, or German. Responses were translated into English by myself, my supervisor who is fluent in Italian, and the Vice Pres ident of Umami Area Honduras, whose native language is German. Figures 7 and 8 represent responses from shareholders on why they initially 9 shows the most
Stitt 55 c ommon answe rs selected by shareholders in the survey relating to two core factors they selected from the survey options. Notably, personal relationships with the Honduran producers and the international buyers as well as a commitment to improving the farm to make it productive were the most important aspects to shareholders (Table 0 2 4 6 8 10 12 Desire to Contribute to Social Development Supporting an Organization Improving Coffee Livehihoods Commitment to Solving Coffee Chain Inequities Business Opportunity with Positive ROI # of Responses Reasons for Initial Investment 0 2 4 6 8 10 12 14 16 18 20 Relationships with the Community Social Action Environmental Action Economic Action Other # of Responses Notable Company Accomplishments Figure 7 . Reasons for initial investment by shareholders at Umami Ar ea Honduras. Figure 8 . Aspects of Umami Area Honduras where shareholders are most impressed.
Stitt 56 9 ). Table 10 shows what shareholders believe are the most important characteristics of the coordinators and Table 9. Two core factors that give life to Umami Area Honduras Core Factors that Give Life to the Organization (N=25) Number of Shareholder Affirmatives Relationships with f armers and b uyers 18 Commitment to ma king F inca RÃo Colorado (FRC) a p roductive and s uccessful f arm 17 Coffee Campus e vents 11 The c ollaboration of u mami with o ther o rganizations 9 Other factors: Satisfaction of meeting established goals (1) Making FRC a means to improve local livelihoods (1) Common impact jointly running a coffee plantation (1) Table 10. The most assuring aspects of the coordinators and organizers of the projects that give you hope for the future of t he company. The most assuring aspects of coordinators and organizers involved in Honduras projects that gives you hope for the fut ure of the company (N=25) Number of Shareholder Affirmatives Willingness to carry out the mission 17 Determination 11 Commitment to excellence 10 Other: Courage and confidence (1) Faith in actors who have a social focus (1) Their knowledge of the market (1)
Stitt 57 A full analysis of the online survey can be found in Appendix C of this report . In terms of general satisfaction, respondents answered two questions. The first concerned the satisfaction with the efforts of the organization and its pursuit of meeting its g oals, to which 20% (5 of 25) were Very Satisfied , 64% Satisfied , 8% Neutral , and 8% Unsati sfied . The second satisfaction question asked if the respondent was a satisfied member of the Umami Area Honduras community. There was also a section open for them to provide a reason for their answer. 23 respondents that they were positively satisfied members of Umami Area Honduras, while two provided negative answers . Among the reasons provided by the latter to justify their negative responses are statements such as: positive satisfaction perception provided explanations such a s : meeting their needs, 56% of respondents agreed this was the case and no one disagreed (Table 11 ). Still, some respondents stated they did not have enough i nformation to make a case for or against the statement and that hope was for improvements to be achieved across gender boundaries. Regarding empowerment within the coffee communities, there was relative agreement there was a commitment for this empowerme nt to be possible (84%). Moreover, only 8% of respondents stated they did not consider the issues of women equality and empowerment to 11 ). Shareholders were also asked to respond to questions convinced of the project. I know there is a long way to go,
Stitt 58 s role of gender empowerment within the coffee communities it works in. The questions sought to 11 ) and if they think gender equality should be considered in business strategies (Table 1 2 ). Do you believe Umami Area Honduras is making an impact on women's basic and strategic needs? (N=25) % of Shareholders Strongly Agree 56% Partially Agree 20% Neutral 12% Partially Disagree 0% Strongly Disagree 0% Other have all the elements to answer about the current impact, but I believe we are on the right path Yes, let us hope that work conditions and income would be independent of the gender We lack a strategy to make an impact. However, without baseline and strategy is impossible to assess How would you rank the importance of Umami Area Honduras' commitment to gender equality and women's empowerment as it continues to carry out its project? (N=25) % of Shareholders Very Important 68% Important 16% Neutral 8% Less Important 4% Focus should be in other areas 4%
Stitt 59 The final sections of the survey allowed shareholders to express any topics not addressed in the survey and p rovided a space for suggestions and recommendations for the company to consider as it continues to carry out its improvement: Overall, shareholders expressed satisfaction with the company and the direction it is going, but many agree there needs to be more shareholder involvement in decision making. Also, shareholders agree there should be a higher degree of financial transparency with project funds. M make more progress and be more visible. For me, it would be easier in climate change. I also value trying new varieties as we evaluate new plants more resistant to Roya (coffee leaf rust) then we have to keep to these objectives (not always the case, for example, the capataz [he is not benefiting yet]). I am sure that this project is very important and will have a grea periodical visibility on the activities done in Las Capucas. I would [also] like to have evidence of the economics of transparency among members, strengthen internal commun ication. I believe it is a very good project as objectives but still weak as
Stitt 60 4. 2 . 3 Financial Analysis Prior to the introduction of the Green Value Tool for Simplified Financial Analysis (GVT) during the project proposal development process, there was no intention of analyzing financial data . H owever, after becoming familiar with the tool I determine d how t o appropriately implement it into my research. Umami Area Honduras sought to introduce techniques so the main asset of their business, Finca RÃo Colorado, could become more profitable, and thus I had an opportunity to pilot the Green Value Tool for Simplif ied Financial Analysis (GVT) for a coffee production system. Data entry into the Green Value Tool for Simplified Financial Analysis (GVT) included two previous years of farm costs, as well as updated invoices, receipts, and cash advances. The analysis summary showed that Materials and Services and Advances are the highest overall costs, making up for 40% and 42% of costs, respectively (Table 1 3 ) (Note: The Advances and Transfers section of this table was an adaptation made by Umami Area Hondura s for their farm, and it is not in the original preformatted worksheets in the Green Value Tool) . The analysis also showed that Finca RÃo Colorado is not profitable, currently. CY (coffee year) 2018 2019 showed a rate of return of ( 43%) (Table 1 4 ) , wit h costs significantly outweighing sales. This is somewhat expected as Finca RÃo Colorado is a new venture, and that t he farm is not in full production since its purchase in 2016. Due to the ongoing work with Umami Area Honduras, financial data is not avail able for public use. In this project, the analysis provided by the Green Value Tool for Simplified Financial Analysis (GVT) enabled decision makers at Umami Area Honduras to determine how they could consider future financial management.
Stitt 61 Table 13. Total costs by activity and input type for Finca RÃo Colorado for CY 2018 2019. Table 14. Rate of Return for Finca RÃo Colorado for CY 2018 2019. 4. 2 . 4 Strategic Plan The Umami Area Honduras managers determined that after nearly three years of building partnerships and improving farming techniques at Finca RÃo Colorado, an organized strategic plan was necessary. Umami Area Honduras desired a restructuring of overall goals, aims, and objectives for the company as well as a renewal of the mission and vision. S takeholder interviews and an online shareholder questionnaire enabled adequate updates to each of these elements . Interviews with the capataz and with buyers indicated the existing positives and negatives of t he business model through information on production, processing, trading, and distribution of coffee . The online questionnaire survey allowed 25 shareholders the opportunity to provide feedback on the compan
Stitt 62 strengths and weaknesses. By engaging with co mmunity members and local organizations, Umami Area Honduras wants to develop a sustainable coffee growing operation through Finca RÃo Colorado high quality coffee production while also supporting educational and social projects that create a more sustaina ble community. 5. Discussion I used information from 34 interviews with coffee sector professionals across the value chain , an online survey questionnaire, and a financial analysis of Finca RÃo Colorado, I conducted separate analyses of the COCAFCAL and Umami Area Honduras value chains . Furthermore, role and description within the value chain could be explained concisely through the deliverables a commercialization plan and a strategic plan. The VCD fr amework proved useful for assessing the existing or limited forms of capital in Las Capucas. The assessment and value chain interviews led to a thorough SWOT analysis. The analysis ultimately conveys that improvements are possible because of the existing e ndowments and strong relationships COCAFCAL has with its buyers. For COCAFCAL, information from within the cooperative provided insight for how to improve practices immediately. s. Producers has helped them become successful since the origins of the cooperative. Employees explained the capacity for growth and learning that the cooperative provides, and they agreed the cooperative helped the comm unity with overall access to social (maintaining the local health facility), physical (improved coffee processing infrastructure), and natural (improved coffee varietals which are ei ther resistant to disease or produce higher quality fruits) capital. Buyers highlighted strengths explaining why COCAFCAL had not experienced issues with maintaining clients the community, the quality and consistency of the coffee, the certifications, an d the commitment to providing opportunities for cooperative members, employees, and community members through
Stitt 63 sustainable social action. Notably, each stakeholder group , determination, and the desire to improve of the people . My conversations also revealed similar views from stakeholders concerning weaknesses and areas for improvement. Producers believed a lack of fi nancial transparency concerning the timeliness of payments weakened the cooperative, whereas buyers viewed greater financial transparency as an opportunity for improvement. Both employee and buyer groups identified issues with consistent communication between buyers and the cooperative, mismanagement of administrative tasks and follow up, and a general lack of available information for sharing with consumers. Generally, buyers wanted to provide any information to help the cooperative become more efficient in its business practices. Ultimately, my conversations provided a better understandi The analysis for Umami Area Honduras was more technical. By collecting financial data on Finca RÃo Colorado I gained a better understanding of costs associated with the business. The analysis and use of the Green Value Tool enabled me to identify, structure, and prepare topics for discussions with Umami executives concerning financial planning , and upon finishi ng the analysis, the company determined it wanted to continue using the tool in its financial management strategy. The company believes it can continue to use the GVT as it seeks to improve productivity and increase the overall rate of return. Interviews w ith Umami buyers, participant observation, conversations with Finca RÃo Colorado workers, and an online questionnaire survey for shareholders framed with an appreciative inquiry approach objective s so they better aligned with key stakeholders. Notably, appreciative inquiry illuminated the positive aspects of the company, providing the shareholders ideas for improvement rather than simply identifying and stating problems for the managers to discuss. The survey data showed shareholder relationships with coffee workers at the farm and in the community (from the capataz, to assistants, to other producers) is one of the project variables they value most. The results also showed that financial transparenc y (i.e., how managers made financial
Stitt 64 decisions) must improve as the company seeks to become more sustainable. The vast amounts of information gathered strategic plan . Finally, my f indings indicate that the influence of certain coffee value chain actors is clear. While coffee buyers provided me with important information in assisting COCAFCAL to consider overall improvements to the sustainability of the business, they did so for a fe w reasons that involve their position in the value chain. First, they have the general capacity to do so financial and human capital for access to information through their established networks. This puts the coffee buyer in a position to consult its sup pliers, and whether this is done transparently where a buyer acts with respect and integrity, as I experienced in my interviews, toward its supplier (who lacks the same access to financial and human capital), the power gap still exists. Ultimately, the sup plier (in this case the cooperative) lacks a capacity to leverage due to low coffee prices, a requirement to IHCAFE, existing debts, and a lack of access to information. While I did not explicitly explore these aspects of the coffee value chain in my study , the results suggest that smallholder coffee producers and producer groups maintain a considerable degree of dependence on the actors at the other end of the value chain. 5.1 Pathways for Learning and Unexpected Lessons In the proposal prior to my arrival in Honduras, I developed various expectations about my contributions to the Las Capucas community and generated ideas about what I would learn. Using the methods and accompanying instruments, the data often correlate d with my learning o bjectives . H owever, there were numerous situations in which I gained valuable insight from unexpected sources. Many of these instances occurred during participant observation periods or when a community member or cooperative employee invited me to accompan y them in an activity. While there were several encounters in my research that incited pessimism for the future of sustainable coffee production in rural areas like Las Capucas, one of my most hopeful and pleasant experiences came through the introduction of capacity building via Resilient Coffee this term comes from a USAID Feed the Future project, Alliance for Resilient Coffee (ARC), where a consortium of global organizations are working to
Stitt 65 disseminate climate change information in coffee p roducing regions. Separately, t hrough the support of USAID, Texas A&M and the Norman Borlaug Institute created a three year project in partnership with various private and public entities supporting sustainable coffee production across Honduras, El Salvado r, and Guatemala . The ongoing project is for the implementation of Resilient Coffee in Central America , and it focuses on certain varieties and cultivars of coffee resilient to La Roya (coffee leaf rust), which are also more tolerant of extreme drought . Em phasis also considered improved practices for transportation and plating of these seedlings on the (The Borlaug Institute, 2017) . Currently, the project aims to benefit nearly 25,000 producers across the three countries. Fortunately, I had an opportunity to learn more about the project through a training event organized by the Resilient Coffee in Central America project in central Honduras with members of COCAFCAL. The event took place in July of 2019 in Lago de Yojoa (Map 1 ) , Honduras assembled 25 coffee farmers from the three countries mentioned above to a central location to learn about sustainable production and main tenance practices . The two day event cover ed various topics including the project origin, environmental aspects and climate change mitigation, gender in the coffee value chain, young professionals in coffee producing regions with the capacity and interest in making changes to their farms , updates on the success of the project, and finally a hands on presentation from a coffee nursery specialist explaining best coffee planting practices. Through a grant from the Tropical Conservation and Development program through the UF Center for Latin American Studies, I received support to return to Honduras in March of 2020. The purpose of the grant was two fold: 1) it enabled me to return to Honduras to present updated findings to the board of COCAFCAL in Las Capucas, and 2) it allowed me to facilitate a training workshop for 18 local coffee producers and coffee cooperative representatives who were interested in learning more about the Green Value Tool and incorporating it into their current financial management strategies. While the workshop was successful through new users continued interest in adoption of the tool, it also enabled me to improve how I use the tool by adapting it for a more diverse set of coffee businesses. For examp le, the participants helped my supervisor and I to change the
Stitt 66 major field activities to become more associated with greater coffee production practices for smallholders or cooperative members in the Green Value Tool example we used. While Step 1 calls for each enterprise using the tool to identify and use the most appropriate activities for their practice, this change helped us to become more aware for potential new users to incorporate. In Table 1 3 , there are two major activities ( Future Projects , E xtra Co sts/Deductions ) that do not make up any percentage of the overall CY 2018 2019 costs. Since Umami Area Honduras is a unique entity where the main investment (Finca RÃo Colorado) receives support from international shareholders, my experience with the tool was unrepresentative of what mos t small coffee producers might expect. Ultimately, the experience facilitating the training workshop for Honduran coffee producers allowed Umami Area Honduras and FundaciÃ³n ETEA to best learn how the Green Value Tool can ad dress improvements of existing financial monitoring systems . 5.2 Limitations, Setbacks, and Areas for Improvement In my three months and beyond collecting data and interacting with stakeholders associated with Umami Area Honduras and COCAFCAL, multiple e vents opened my eyes to internal realities with potentially negative consequences. Upon the first few weeks of interactions whe n everything wa s new and enlightening, I witnessed actions and conversations I had to question. As an outsider, welcomed into the community for only twelve weeks , I had to be careful with how I voiced any opinions or shared my perspectives. During the project I was as objective as possible, except for circumstances when someone asked for an unbiased opinion or a recommendation. Unfortunately, there were instances when I could not provide suggestions even though I was confident with my intuition. L imitations included insufficient t ime for gathering data, the inability to randomly select COCAFCAL memb ers to interview , and a lack of access to other cooperatives . Considering the methods required to perform m analyses for two coffee businesses, I could have benefitted from more time collecting data and interacting with the community. The managers of the c ooperative selected the producers for me to interview. The selection by the managing body likely does not represent the cooperative accurately. It is possible the managers chose producers
Stitt 67 with close connections or biases toward the cooperative. If I were a ble to select (or randomly select) producers, I believe my analysis would be more accurate. Finally, an inability to travel to similar or competing coffee organizations, inhibited my ability to address critical aspects of the commercialization plan for COC AFCAL. While in the final weeks , I visited two different coffee organizations a cooperative and a coffee association business . If I had been able to visit more producer organizations , I would have gained a more thorough understanding of how other local organizations conducted their operations. Ultimately, my perception of the community and how the managers made decisions would have been more inclusive , specific , and contextual. 6. Conclusion Consumers are growing more aware of sustainability issues within global commodity chains, namely concerning the socioeconomic inequities that occur in the production and processing of raw materials. A lack of transparency has increased pressure from consum ers requiring their goods providers to supply ethically sourced products, influencing the entire coffee value chain. Stakeholders across institutional boundaries are enhancing sustainability through the promotion of value chain development. Value chain dev elopment requires the recognition of existing access to capital and the subsequent implementation of sustainable strategies for communities and organizations to build and adapt. In Las Capucas, a value chain development approach was used with two contrasti ng coffee producing organizations. Overall, assessments of existing financial, human, and natural capital were carried out, and this led to asset building activities in the form of business plan development. Through applications of value chain development , I conducted value chain analyses to formulate a strategic plan for Umami Area Honduras and recommendations for a commercialization plan for COCAFCAL. A mixed analyses and overlappin g stakeholder groups made it possible to achieve data collection and analysis for these organizations. My analysis for Umami Area Honduras showed that a strong core mission, access to financial and human resources, and involvement of key stakeholders are a ll essential for a small private enterprise to have success. Furthermore, the
Stitt 68 lack of available financial analysis tools was evident, and the need for them , ev en clearer for stakeholders as the pilot implementation of the Green Value Tool for Simplified F inancial Analysis (GVT) for coffee production saw initial success and widespread interest from producer organizations in the area. The most important stakeholders for Umami Area Honduras are more centralized and well connected than those of COCAFCAL. This is mostly because the Umami Area Honduras chain has fewer links in the chain. However, the stakeholders associated with COCAFCAL are well managed, considering the magnitude of the business . 6.1 Recommendations Interviews with actors throughout the value ch ain imply the international coffee trade has come a long way, even if there is still need for additional value chain development. For continued asset and capacity building to occur, coffee producing groups will require increases in access to various forms of capital. The impact of COCAFCAL on Las Capucas community is evident. Since 1999 this cooperative has supported the livelihoods of its people and has a n ongoing commitment to socioeconomic and agricultural assistance. An indicator of the potential of the cooperative was the nearly unanimous reaction concerning the current state of the cooperative there is room for improvement. The cohesiveness of the key stakeh olders in the community and their commitment to finding new solutions for the sustainability of the coffee sector will be consequential in the future. With t hat said, there is a clear need for improvement in communication and administration within the cooperative. Communication within the community, especially between decision makers, and communication with buyers, must become a higher priority. The administration of tasks and projects by cooperative employees and managers requires improvement as w ell. Stakeholders agreed that people are stretched too thin, and poor time management leads to unfinished projects while others begin. From the farmers perspective, there is a lack of financial transparency that requires assessment . If the cooperative has debts to pay, it should be transparent with its members about it. Too often did farmers feel discouraged by the uncertainty of payment times .
Stitt 69 Umami Area Honduras is a young organization establishing practices for efficient international business. Sharehol der questionnaire data suggest a need for increased business transparency from the management to other shareholders. At the farm level, communication between farmers and field workers with those making financial decisions must improve. Ideally, the inclusi on of the Green Value Tool for Simplified Financial Analysis (GVT) will help address issues in budgeting. Furthermore, there is potential in the scaling of the Green Value Tool for Simplified Financial Analysis (GVT) . If producer groups continue to adopt t he tool, a controlling body (potentially governed through the tool ) can compile data from multi level producer entities (e.g., small or medium farms, or cooperatives), average results by producer type, and create reports. The information is these reports c an either be sold to or shared with banks and lenders in the area. Sharing these financial reports enables banks and lenders to establish the financial standing of the operations they work with (Nebraska Farm Business, Inc. 2019). 7. Works Cited Accenture, 2019. More than Half of Consumers Would Pay More for Sustainable Products Designed to Be Reused or Recycled. https://www.businesswire.com/news/home/20190604005649/en Bacon, C. 2005. Confronting the Coffee Crisis: Can Fair Trade, Organic, and Spe cialty Coffees Reduce Small Scale Farmer Vulnerability in Northern Nicaragua? World Development Vol. 33, No. 3, pp. 497 511 Bacon, C., Mendez, V. E., Gliessman, S., R., Goodman, D., Fox, J. A. 2008. Confronting the Coffee Crisis Fair Trade, Sustainable Liv elihoods and Ecosystems in Mexico and Central America. Massachusetts Institute of Technology. Ecology a nd Society 17 (4). Bebbington, A. 1999. Capitals and Capabilities: A Framework for Analyzing Peasant Viability, Rural Livelihoods and Poverty. World Development 27(12):2021 2044. www.elsevier.com/locate/worlddev CastaÃ±eda, O. 2018. Unfair coffee prices pus h Hondurans to migrate. Heifer International . https://news.trust.org/item/20181104170436 03tcm/
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Stitt 73 Tacchi, J., Fildes, J., Martin, K., 2007. Ethnographic Action Research Training Handbook . Queensland University of Technology http://ear.findingavoice.org/intro/index.html Talbot, J. M. 2004 Grounds for Agreement: The Political Economy of the Coffee Commodity Chain. Oxford: Rowma n and Littlefield Publishers, Inc. Tark, S. 2019. Coffee Producer Debt is Growing and its Causing Problems. https://www.perfectdailygrind.com/2 019/12/coffee producer debt is growing its causing problems/ The Borlaug Institute, 2017. Resilient Coffee in Central America , Texas A&M. https://borlaug.tamu.edu/resilient coffee in central america/ Topik, S. 2009. Historicizing commodity chains: five hundred years of the global coffee commodity chain. Chapter 2 in Jennifer Bair, editor. Frontiers of commodity chain research. Stanford University Press, Stanford, California, USA. Tucker, C., 2008. Changing Forests: Collective Action, Common Property, and Coffee in Honduras. Springer Science & Business Media. Tucker , C. 2017. Coffee Culture: Local Experiences, Global Connections . New York: Routledge. Umami Ãrea Honduras. 2019. http://www.umamiarea.com/aree/M/Umami_Area_Honduras 3032 Umami A Project for Honduras. 2017. http://www.umamiarea.com/public/075feaf0 ba2a 4ef9 94b6 abca58b78bd7.pdf https://www.ams.usda.gov/services/grants/scbgp/specialty crop USDA GAIN Report. 2018. Honduras, Coffee Annual. https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Coffee%20Ann ual_Tegucigalpa _Honduras_5 22 2018.pdf Valkila, J., Haaparanta, P., Niemi, N. 2010. Journal of Business Ethics 97 (2): 257 70. Varangis, P., Siegel, P., Giovannu cci, D., Lewin, B. 2003. Dealing with the Coffee Crisis in Central America: Impacts and Strategies. World Bank Policy Research Working Paper 2993. Wallerstein, I. (1998). The Rise and Future Demise of World Systems Analysis. Review (Fernand Braudel Center), 21(1), 103 112. Retrieved April 10, 2020, from www.jstor.org/stable/40241417 Wang, Z., Sarki s , J. 2013. Investigating the relationship of sustainable supply chain management with corporate financial performance Int. J. Prod. Perform. Manag., 63 (8) pp. 871 888 WFTO, 2016. History of Fair Trade https://wfto.com/about us/history wfto/history fair t rade
Stitt 74 Whelan, T., Kronthal Sacco, R. Research: Actually, Consumers Do Buy Sustainable Products, Harvard Business Review https://hbr.org/2019/06/research actually consumers do buy sustainable products Wollni, M., Zeller, M. 2007. Do farmers benefit from participating in specialty markets and cooperatives? The case of coffee marketing in Costa Rica. Agricultural Economics. Vol: 37 (2 3). 243 248. doi.wiley.com/10.1 111/j.1574 0862.2007.00270.x Wyeth, J. 1987. Coffee Production and Coffee Diversification in Honduras. Tegucigalpa, Honduras: Overseas Development Administration, Instituto Hondureno del CafÃ©. Yuliani E.L., Adnan H., Colfer C.J.P, Indriatmoko Y, 2014. Problem solving versus appreciative inquiry approaches in community based conservation, Forests, Trees and Livelihoods. Zambrano, M. A. H., 2020. Exploring The History of Honduran Coffee Production. https://www.perfectdailygrind.com/2020/03/expl oring the history of honduran coffee production/ Appendix A COCAFCAL Commercialization Plan (abbreviated) 1. Executive Summary This commercialization plan aims to offer a clear and concise description of the role of coffee for COCAFCAL, its market potential, and the planned path to improved commercialization. This plan will use the successes of the past and the strengths the organ ization has been developing since its founding in 1999 to introduce the areas where marketing can be updated. The strategy below aims to help COCAFCAL generate more revenue and gain greater access to business opportunities as it works toward expanding its marketing landscape. The overall structure and design of the plan are based on literature that provide insight on how best to convey messages concisely and articulately, but the suggestions and recommendations are synthesized from various forms of qualit ative data collected over a three month period. Since COCAFCAL is a coffee business, a majority of the data sources are people or businesses within the industry or stakeholders who have direct interest in the success of COCAFCAL, generally. This document i s meant to provide recommendations for improvement that can come from within the organization, but it is also meant to provide a foundation for future reflection. 1.1 Goal The central goal with this plan is to express ways we can create value for our client s. Value is created by meeting our client needs. Therefore, COCAFCAL aims to define itself by the focusing on the livelihoods of our members while also providing a benefit to our clients, both of which are results of the quality of our product. 1.2 Questions we answer though this plan (Dolan, 1997 ; IPIRA 2018 )
Stitt 75 1) What are our clients (customer) needs? a. Which needs can we satisfy? 2) What are our skills and strengths? a. What do we have that can help us meet the needs of our clients? 3) Who is the competition? a. Who competes with us as we seek to meet those needs? 4) Who collaborates with us and how can they continue to help us grow and generate revenue? a. Is there anyone else we can reach out to so we can achieve our goals, and if so, how do we motivate them? 5) What is our situation and how are we limited by it? a. Is there are way we can overcome aspects of various contexts that hinder us from developing? 2. Purpose and value of the project As COCAFCAL goes into its 20 th harvest season as an established cooperative, this updated commercialization plan seeks to clearly demonstrate how the business can use its internal strengths and external resources to make improvements to its marketing strategy so its clients can be satisfied as they understand the product they are receiving is being cultivated, processed, and distributed in a way that will strengthen the relationship over the long term. The positive qualities that have helped the organization grow over time are the main attributes that have led to the creation of this plan. Whil e this plan is based on the successes of the past, it improving the quality of its products while adopting an improved commitment to transparen t communication. Overall, the relationships that can be strengthened through execution of this plan will benefit the company and its clients, and the livelihoods of cooperative members who depend on achieving greater access to the market through their co environmental systems that ultimately result in positive financial feedback to the community. The success of the commercialization plan will help to create mo re fluidity across the coffee value chain through the satisfaction of 2.1 Product, History, Problems, and Advantages
Stitt 76 The coffee industry is complex, complicated, and competitive. For people trying to make a living on coffee in countries where (importers and brokers), roasting companies, and brewing or retail based companies where consumers are charged high prices for their coffee. In Capucas, and throughout Honduras, competition has become a major issue that the cooperative has had to manage. How do we create new relationships with buyers who expect a c ertain quality and cup profile when more coffee organizations in the country are being established and branding themselves as business who supply similar products as us? Embedded in the problem of competition is the reality of the low market price of coffe e. Even though the cooperative supports its members who produce specialty grade, certified coffee, our members feel that they require more financial stability to be successful. Historically, competition has always existed, but its evolution has not affect ed our business until recently, as more Honduran coffee producing organizations are entering the specialty and certified market that we first explored almost twenty years ago. Honduras has held a different position in the evolution of coffee production an d marketing as compared to its Central American neighbors. At the turn of the 20 th century, two thirds of the total area of coffee cultivation was made up of small, family sized farms, with only one third being exported. An increase in capitalistic investments led to a shift away from traditional land tenure toward modern, larger scale forms of production, processing, and exporting (Williams, 1994:191). The formation of national and international institutions that supported coffee production helped Honduras establish itself as a formidable global producer while also improving livelihoods for small producers through better living standards and investments in development and infrastructure projects (Tucker, 2017:121). While these policy changes helped improve national coffee production and marketing, weak central government would make the a vailability of resources for many rural coffee producers minimal (Eakin et al. 2006:160). However, the allure of the specialty and certified markets after an international crisis in the early 2000s would lead to increased competition in a fast growing mark et. The increase in producers seeking to explore
Stitt 77 the specialty market has made standing out to potential buyers difficult. When thinking about the greater problems that exist in the coffee industry, this competition can help to provide more equal trade for the members of our cooperative. The competition forces us to improve our quality and adapt production and processing practices that are environmentally and socially responsible, and when we can accomplish this, we can position ourselves to gain access to a fairer market. Our commitment is to our members who are responsible for the creation of our product, but the problem we all must deal with is the low prices we receive for our products. Since we do not have control over the market, it is necessary for us to be creative in our approach. We are required to work in such a way where we can receive the highest prices possible, and we do this by tapping into the specialty market and attracting buyers so they can have access to high quality coffee while also inv esting in supporting a grassroots, community based organization. Furthermore, we outcompete our competitors by using our decades of experience in the field, taking advantage of the existing resources and institutions who have abilities and interest in help ing us become more successful, and finally investing in cooperative based projects that aim to benefit our members through additional sources of income as well as positively affecting others in the community through our commitment to environmental sustaina bility. This commercialization plan aims to convey our mission as we improve our marketing strategies. Through our research and discussions with stakeholders across the value chain, we can adjust to reach more clients and sell more coffee at better prices so we can meet the needs of our farmers and continue to make progress on our community projects. For example, if we are able to successfully improve our system of organizing the profiles of producers who are not introduced to new buyers during networking events, and share them with buyers (importers) who can then share with their customers who desire a cup profile, a direct connection can be made and a producer can begin to create a relationship. Depending on the success of producers who can take advantage of tapping into a safer and more lucrative market, the effort, organization, and outreach for making these improvements will be worth it.
Stitt 78 The impacts and outcomes of committing to carrying out the goals of this plan will add value to our business, our rel ationships with our clients, and finally to our most essential actors, our producers. 3. Company Overview Cooperativa Cafetalera Capucas Ltda. (COCAFCAL) was founded in 1999 by Omar Rodriguez, a third generation coffee farmer. At the time of its founding, Om ar wanted to share his knowledge of coffee production and commercialization to his family members, but also other members of the Capucas community. Within ten years, many small producers would join as they sought to gain access to a new market, but also be came interested in sharing information and experiences with each other, each year, adding more to the non monetary value of the cooperative (COCAFCAL, 2015). Currently, we have 911 members. Altogether, our producers have over 5,000 hectares of coffee prod uction that produce 9,300,000 kg in annual production, nearly all of which we export to 18 countries (Umami Area Honduras, 2017). Our coffees are certified Fairtrade and USDA Organic, and in some cases, producers receive other certifications that focus on social and environmental sustainability, and these include Rainforest Alliance, UTZ, Smithsonian Bird Friendly, Naturland, and JAS. We have been able to connect with buyers and create long term relationships thanks to our early dedication to Organic and Fa irtrade practices, and our clients recognize this Our guiding objectives revolve around the sustainable growth of the community the cooperative supports. We began as a group that sought to provide a safety net for coffee producers while also sharing knowledge and resources. With our success, we have been able to shif t our focus to cover not only the farmers, but also other community members whose livelihoods were dependent on other means than coffee. Our community has been supported by agriculture for generations, but it was not always coffee. Due to climate change an d an unpredictable coffee market that has evolved at the detriment of small producers, we began to reinvest in the promotion of
Stitt 79 diversifying our agricultural products. This investment in diversification is a core company competency that is providing altern ative incomes to community members while allowing our company to experiment in various markets for greater economic gain, overall. As we continue to grow we will work together and with external organizations to improve quality and quantity of our coffees w hile also improving farmer profitability; seek to attract higher, fairer prices for our coffee while developing long lasting, sustainable relationships with buyers; improve our crop diversification practices as we adjust in a changing financial and environ mental climate; expand as a reliable and necessary educator for coffee producers and producing organizations in the area; and use our overall growth to promote revenue growth which can support the environmental and social practices within our community. 3.1 Partnering Institutions and Project Collaborations Our commitment to responsible environmental and social practices has allowed us to invest in diversifying the types of products we can provide for international and domestic markets while also incentivizin g local producers to take on new agricultural practices to earn additional income. For example, we have current projects where we provide technical support in the production, processing, and marketing of honey and lemongrass, as well as other products like passion fruit, tomatoes, cascara. While our ideas are created internally, we have a variety of external organizations that provide support and help us to carry out our projects. After establishing our business not only as a successful area for supplying q uality Honduran coffee to international buyers, but as a community driven organization that has always been driving by its mission to provide better quality of life to our members, we were able to gain the support and thus begin partnering with various non profit, private, governmental, and international organizations that could mutually benefit from supporting our work in Las Capucas. These organizations include but are not limited to: IHCAFE, HQC, Heifer International, ComRural, FundaciÃ³n ETEA, Umami Area Honduras, Umami Area Italia, CESAL, Texas A&M Borlaug Institute, and Hanns R. Neumann Stifung. We believe we are a qualified and
Stitt 80 outstanding candidate as a partner and participant for projects being executed by these groups based on our reputation as an o rganized business, but also because of our ability to communicate and transfer knowledge to producers across Honduras ( The Borlaug Institute , 201 7 ). 3.2 Company Vision and Future Goals Our vision has maintained its place as a foundation of our business. We wa manages its resources rationally and transparently, with the purpose of guaranteeing the sustainability of coffee in western Honduras, while also improving the quality of life of its associates, collaborators, and community in general. Differentiated and recognized as a model business through a dynamic of permanent growth to achieve (COCAFCAL, 2015). 4. Market, Customer, and Competition Our success in the past as a coffee producing business developed because of our attempt to enter into the certified Organic and Fair Trade markets in the United States and Europe. Relationships with our initial customers were established becau se of the part of their portfolio we could fit high quality, certified Central American coffees. Our ability to maintain certifications and promote them as a means for adding value to coffees, the environments where they are grown, and the sustainability of the community responsible for their growth has allowed us to focus on maintaining consistent profiles and improving overall quality for our customers. As the specialty market in Honduras has evolved, so has the competition. While we were one of the fir st organized group of certified farmers in 1999, the attraction of higher price premiums for certified and high quality coffee has made for a more saturated market. 4.1 Market
Stitt 81 We have had a lot of experience in positioning ourselves in various markets, and we have had success in reaching the markets we desire. Since we have identified the markets that we want to be a part of for coffee, for the future, it is important to consider which markets are most appropriate for other products the cooperative is pr oducing and trying to market. The Small Business Innovation Research group identifies markets by asking r example, Market Research Future (MRFR) predicts a 4.32% CAGR (compound annual growth rate) expansion in the coffee market from 2018 to 2023 (Global Newswire, 2019). While this is broad data, it informs a direction and can help determine which markets to be aware of as consumer demands grow. 4.2 Customer customer positions. There are recommendations for seeking and identifying the right new customers, but there is less emphasis on identifying the needs of current customers. Four of five CafÃ© Capucas coffee buyers expressed certifications characteristics the cooperative can continue to use as ways to attract clients and maintain relationships. However, there is also room for improvement in a few ke y areas. After speaking with representatives of five clients, both importers and roasters, there was objective agreement that the cooperative rethink and shift focus into communication and administration . More punctual and consistent communication was a re quest by all but one client. Specifically, more timely responses to buyer needs sentiment was unprovoked from each person interviewed, thus p roving how important it is to address. This also relates to needs in making changes to overall communication and delegating specific administrative tasks to more
Stitt 82 people within the cooperative, as four of five respondents suggested allowing more cooperative employees more responsibility. 4.3 Competition Initially, we were one of the first Honduran coffee cooperatives in the region to offer certified coffees. As the certified coffee market has become more accessible for small farmers who are part of grower o rganizations, our competition has also become more evident. Even though we have grown rapidly and created good relationships, it is worth taking time to consider the steps our competition has made as well. What are they doing well and how are they attracti ng their clients? Are they reaching a market we are also interested in moving into, and are they doing it efficiently? Once these questions have been answered, look internally. How do we compare to other cooperatives, and how might our growth and success affect how clients perceive us? One client who was interviewed expressed how he value chain most buyers and roasters should not be considering that buying from a supplier is helping them similar to a charity. Nonetheless, it is also an opportunity to upsell current producers and why their coffee deserves premium prices. By provid ing an image to clients that shows the benefits of continued growth, Capucas could begin to refine this negative impression. One way to do this is to express the initiatives the cooperative is executing as compared to their competitors, and the benefits th ey bring to the community. Two key competitive advantages the cooperative has over other similar organizations are the existence of alternative income generating projects for its members and the event, Te Van a Conocer, Compa . All five respondents during i nterviews shared the idea that these two core competencies of the cooperative helped give it a leg up over the competition. The next phase is marketing these comparative advantages adequately. For example, can the benefits of the alternative product projec ts be advertised more aggressively? One importer client who was
Stitt 83 interviewed said they received information about the social benefits of an educational program in the cooperative on one of their ather known about this from their connection and communication with the cooperative. experiences of clients and how can cooperative members continue to learn? 5. Marketing Plan ls of distribution), Promotion (communications strategy), Pricing. Instead of marketing the product by itself, try to introduce it and its added value or accompanying benefits that the customer is receiving (SBIR, 2018). Fortunately, there are multiple bus iness partners and clients who are responsible for the direct distribution, or place , of your product, but internally, think if there are alternative channels you wish to enter, and ask importers to assist you with the distribution strategy. Arguably the most important way you can position how your product is distributed is through promotion . In the specialty and certified coffee market, products are promoted successfully through social media and status updates. Through planned public posts, you can commun icate with customers more directly and foster awareness of the realities in Capucas (SBIR, 2018). A straightforward plan for improving product promotion is achievable recognition and track your audience (see more explanation in the Commercialization Recommendations document). If this idea is taken seriously and maintained with the similar efforts as other projects, it can help the product sell itself while giving final consumers an idea of where their coffee comes from. Finally, it is a way to express transparency to clients and consumers, as they will see more regular updates at the cooperative. The final P is pricing . While it is uncertain how much control Capucas has on their pricing, as I am sure there is some negotiating and hedging that occurs within the business, it is important to know that the value of the
Stitt 84 product can come from the customers perception of the product (SBIR, 2018). This is worthy consi dering as you market your products. With the success that we have had with Te Van a Conocer Compa , and the interest other groups have expressed in adopting it, is there a way we can monetize? Is there a contract opportunity where we can receive royalties f or other cooperatives using the idea for their benefit? ( ) Appendix B Strategic Plan (abbreviated) I. Executive Summary Umami Area Honduras aims to carefully execute multi year projects in collaboration with various organizations and institu tions in western Honduras through sustainable production of high quality coffee. The principal objectives of the company are to create a more equitable coffee value chain while also working to improve the overall quality of the product. This strategic plan for Umami Area Honduras seeks to contribute to current and future projects concerning client needs. Through guidance by the Sustainable Develop ment Goals and by defining key actors involved in their value chain, Umami Area Honduras will work to promote the improvement of just systems for coffee production while implementing key foundational values, proper education and transparent communication t o its stakeholders. To approach the financial aspects of the business, a financial analysis tool, the Green Value Tool for Simplified Analysis, was introduced to help the main asset of the business, Finca RÃo Colorado, to become more economically responsib le. The tool analyzes costs such as major field activities, labor and equipment costs, or administrative costs, and compares them to sales of a product and other means of income to aid farmers to understand the costs of production. In a pilot project for a coffee production system, the tool was integrated at Finca RÃo Colorado, and after analyzing nearly two years of financial data we
Stitt 85 believe the tool can help the company become more profitably through financial awareness while also helping increasing socia l and economic capital by encouraging farmers to become more financially literate through use of the tool. Over time, however, the success of the tool will need to be monitored and its impact reassessed, as it influences the development of future projects. Finally, a questionnaire for Umami Area Honduras shareholders gave us data to help improve current and future goals as well as the ability to redefine priorities. The qualitative and quantitative data gathered from these methods are important for defining the future of the company. II. Who We Are Umami Area formed in 2012 merely as a concept that aimed to disseminate specialty coffee culture through education in Italy, and in 2014 Umami Area was founded as a non profit. (Godina & Accerenzi, 2018: 10). Education became entrenched in the Umami Area philosophy and eventually, the organization was able to support students across educational sectors and international boundaries with training sessions and coffee camps on campuses in Europe and coffee plantations in South America. Through a partnership with various European non profits, Umami Area could support young coffee professionals in their trainings (Godina & Accerenzi, 2018: 11). Through growth and demand for an increase in learning environments for coffee enthusiasts and entrepreneurs, a private company was formed in Honduras Umami Area Honduras. Umami Area Honduras S.A de C.V. is a Honduran private company. It was founded with the vision of unifying actors across the coffee value chain through education of production, trade, and consumption through expert training, while also emphasizing a commitment to sustainable agricultural practices through the purchase and renovation of a coffee plantation in western Honduras. With the support of 34 international partners, the initiation of various projects focusing o n entrepreneurial, financial, social, and environmental development could be coordinated and planned for execution in the community of Las Capucas, Honduras. Through the careful and respectful management of the farm owned by the company, Finca RÃo Colorad o, Umami Area Honduras seeks to create a sustainable educational environment for responsible coffee students and professionals. The farm will be an essential resource as the company aims to provide educational opportunities for foreign and local coffee ent repreneurs, while also existing to provide financial support to rural communities near the farm. All this, while also growing to a financially sustainable business that will profit from its certified specialty coffee produced on the farm. Due to the novel nature of this business, a limitation that exists is how to compare its development to a competitive organization, because few, if any exist. In this way, it is difficult to make plans to achieve our mission
Stitt 86 in a better way than others. Through this strat egic plan, we want to look ahead to trends and issues we expect and align them with our organizational priorities (UN Strategic Plan, 2016). This plan will work as a foundation for achieving the vision of Umami Area Honduras efficiently and succinctly. II I. Mission and Vision Mission : To produce high quality coffee, sustainably, through the respectful treatment of natural resources, the transparent interactions with our farmers, the education of actors throughout the value chain, and the genuine pursuit of excellence by passionately supporting the community. Vision : Umami Area Honduras aims to improve the coffee value chain through constant assessments of the dynamic factors that affect a volatile market, and it is constantly working to communicate informat ion to stakeholders efficiently. The current system in which coffee is produced, traded, and consumed is unequal. Umami Area Honduras is promoting the growth of high quality, organically produced coffee through climate smart agricultural practices to achie ve more equity within the value chain. By creating positive relationships with coffee growers and their families and supporting their communities, we aim to improve livelihoods by limiting economic insecurity. We believe that community based conservation c an occur at a sustainable level through collaboration with local institutions and organizations that support coffee production and processing. We envision our farm, Finca RÃo Colorado, as a model for the surrounding coffee communities that desire to produ ce high quality coffee, sustainably where the livelihoods of those responsible for the products can be improved and sustained and their access to capital can be increased. I V . Justification and Context For improved development actions in the community, Uma mi Area Honduras needs a strategic plan. With support from local government, private and public companies, and through improved strengths and logistics and coordination it can be achieved. A plan will make for better cohesion and integration of the surroun ding territory and promote improved social and economic activity, while also helping us to define how to make decisions within the community. With high poverty rates in western Honduras, Umami Area Honduras is using development practice theories for applic ation in their projects. Specifically, maintaining a sense of the various types of "capital" that exist in assessing livelihoods (Table 1).
Stitt 87 The assets can be defined as stocks or flows that cross to other types of capital, and therefore, positive or negat ive feedback loops can be defined. This adaptation to the framework allows for more flexible pathways to be developed depending on the communities being analyzed. Support from necessary organizations including but not limited to FundaciÃ³n ETEA, CafÃ© Capucas, Hans R. Neumann Stiflung (Neuman) Foundation, Starkmacher, Agata (Mantano Project), and IHCAFE. This also requires input from shareholders who continue to invest in our efforts. V. Objectives A. Short Term Goals 1) Improve the quality of coffee grown at Finca RÃo Colorado by integrating best practices, incorporating appropriate varieties, and constantly seeking to improve management techniques, of which requires constant communication with the farm manager. a. Implement soil and foliar analysis for a proper management plan b. Prepare the soils to be farmed or ganically c. Buy and add organic fertilizer locally produced at CafÃ© Capucas (COCAFCAL) d. Collaborate with Neumann Foundation to initiate experimental farming plots at Finca RÃo Colorado 2) Introduce a diversity of vegetative species for improved natural, physic al, and economic capital Table 1: Key household and business assets for value chain development assessment (Donavan & Stoian, 2013)
Stitt 88 3) Identify and improve relationships with coffee buyers who have an interest in various grades of coffee we produce 4) Support community members, Umami Area Honduras farmworkers, and COCAFCAL members and employees during coffee campus events 5) Determine the success of the Green Value Tool by entering costs and income data from Finca RÃo Colorado. It is important to enter data regularly and accurately, so to make a proper analysis, data will be entered throughout the rest of 2019. a. This tool is meant to provide a financial analysis through organization and differentiation of costs by production activity. 6) Execute renovations for the roads in and around the farm (a request reiterated by Capataz, Panchito), and other infrastructural developments (i.e. solar drier, drying patio) 7) Improve commu nication and coordination with coffee buyers and coffee roasters a. Make relationships between Coffee Planet, Interkom, and Finca RÃo Colorado coffee roasters more mutually beneficial b. Continue to search for the most mutually beneficial relationships across t he value chain, especially those who are interested in supporting and promoting ethical trading practices and transparency B. Mid Term Goals (3 5 years) 1) Employ a greater number of people in the area and provide financial support for workers a. Add two members to Umami Area Honduras salary b. Communicate with the farm manager the best and most efficient strategies for recruitment of harvest season workers 2) Increase the volume of organic, specialty coffee at Finca RÃo Colorado by 10% by 2021 a. This will be done in a multi step approach where organic soil and foliar practices are executed while new organic seedlings will be either purchased locally or grown in the nursery on the farm and planted each year 3) Increase the rate of return, making it posit ive by 2022 4) Define clients and ensure 2 to 3 year contracts based on their needs 5) Determine ways to make coffee campus events more efficient
Stitt 89 a. Who can Umami Area Honduras work with or partner with to ensure objectives are met? b. What new methods can be adapt ed to improve the events? C. Long Term Goals (5 10 years) 1) Improve farmer knowledge through education and introduction of best practices, and use this as a platform for the sharing of successes and failures with surrounding coffee farmers 2) Market and negotiate with potential future buyers 3) Increase volume of certified organic, specialty coffee at Finca RÃo Colorado by 25% 4) Improve transparency with trading partners 5) Market the success of Umami Area Honduras and associated projects to companies comm itted to Corporate Social Responsibility and Environmental, Social Governance for continued support. This must be done carefully and thoughtfully so the standard for sustainable development can be maintained 6) Construct a dry mill with a patio and solar dr yer for on site processing of specialty lots 7) Develop plans for an eco tourism site on the farm D. Aims Create a system that improves efficiency and equity in the coffee value chain Contribute to the reforestation of areas near Celaque National Park Form into a model farm and business that creates a reputation as a standard for high quality Honduran coffee Experiment with new coffee production practices. Use the best knowledge that exists in the area and introduce it to the farm in its initial stages. Depending on its success, share our experiences with neighboring farmers and other decision makers. Use the Green Value Tool for financial analysis to help the company become more financially sustainable. The tool will also allow for tracking of financial performance and allow for an increase in financial transparency Provide technical and financial support for coffee farmers Address the lack of transparent structures within the chain and work to improve transparent partnerships
Stitt 90 Umami Area Honduras aims to adopt the European definition of a Social Enterprise, or one that has a clear social mission that is set out in his governing documents. Umami Area Honduras is an independent business seeks to earn at least half of its income fr om trading. Contribute to education concerning urban migration through education and incentivization of farmers and their families to invest in coffee farming, if it suits them. VI. Table and Timeline of major Short Term and Mid Term Goals Goal Aims Timeframe Remarks 2019 2020 2021 2022 2023 (Short Term Goal) Improve the quality of coffee grown at Finca RÃo Colorado by integrating best practices and incorporating appropriate varieties Experiment with climate resilient coffee practices Introduce HR Neumann experimental plots with climate resilient coffee varieties Soil, foliar analysis; prepare soils for organic production Receive an annual update on Neuman test plots Execute another soil analysis Shift to 60% of the production of climate resilient coffee varieties Since improving quality is paramount, we aim to contribute to this goal for years to come Introduce varieties that produce high quality coffee Work with Neumann for treatment and COCAFCAL for organic seedlings Increase the overall production of HQ coffee by 8% Designate 15 20% of production to micro lots (Short Term Goal) Identify and improve relationships with coffee buyers Improves efficiency and equity in the coffee value chain Communicate with buyers more regularly and provide appropriate updates Increase overall production of the farm by 10% thus supplying buyers Have contracts with various buyers for micro lots and specialty grade coffees Maintaining a positive and trustworthy relationship with exporters and buyers (Short Term Goal) Support c ommunity members, Umami Area Honduras farmworkers Improve equity in the coffee value chain; provide technical assistance and trainings for farmers Provide technical assistance and training from COCAFCAL and Neumann to Panchito and other supervisors Research and find appropriate trainings for field workers and/or Panchito allow for this in budget Work with groups and partners who want to support social development
Stitt 91 (Mid Term Goal) Employ more locals and provide adequate financial and social suppo rt Carry out a comparison of labor demographics from the first years of production. Women included? Add two more people to Umami Area Honduras salary This will require constant monitoring and effort (Mid Term Goal) Increase overall production by 10% by 2021 Increase overall production of the farm by 10% thus supplying buyers If goal not met due to unexpected conditions, increase by 10% Focusing on short term goals for production will help us achieve this VII. Long Term Goals Goal Aim Timeline Improve farmer knowledge through education and the introduction of best practices Use this as a platform for the sharing of successes and failures with surrounding coffee farmers 2022 2024 Increase volume of certified organic, specialty coffee at Finca RÃo Colorado by 25% Increased yield for increased profit 2022 2024 Improve transparency with trading partners More long term relationships with conscious buyers who have each Con struct a dry mill with a patio and solar dryer for on site processing of specialty lots Become more self sufficient and less dependent on COCAFCAL 2024 Develop plans for an eco tourism site on the farm Provide a sustainable educational environment for vis iting students and professionals 2025 VIII. On Sustainable Development The evolution and success of Umami Area Honduras will bring changes for international shareholders, but its activities will work toward achieving some of the UN Sustainable Development Goals (SDGs). These include, to varying degrees, SDG's 3, 4, 5, 8, 9, 10, 11, 12, 13, and 15 (Table 2). Experience in education in international settings and expertise in coffee training will allow Umami Area Honduras to have success in trainings and information sessions for students of coffee, and Finca RÃo Colorado will offer employment opportunities without discriminating while promoting principles of gender equality.
Stitt 92 Furthermore, it will employ numerous people from the community who will earn improved wages f or their careful and important work. The farm will be a model for environmental education, but its practices will align with sustainable, climate smart agriculture. The diversification of plant species, and maintenance of shade trees for temperature regul ation and high quality coffee cultivation practices, along with the protection of local water sources from contamination, Finca RÃo Colorado will begin to form in a functional, sustainable farm within the next five years. To achieve these visions for the f uture, it is important to define how the company will address the three pillars of sustainability. A. Socially Sustainable Social sustainability is highly geographically and contextually specific. While it is defined generally as Accerenzi, 2018: 9), how a social system achieves this is complex. The level of social sustainability can depend on access to various forms of social and human capital that exist in an area as well as additional external resources that affect social interactions. Umami Area Honduras aims to contribute to the social sustainability of the community in various ways. o nd Starkmacher, both of which work toward reducing poverty in various ways in rural communities of Honduras, Umami Area Honduras is committed to making positive impacts in and around the communities where it is working o s of expertise is in education. The organization got its start by educating people about the dynamics of roasting, preparing, and tasting coffee. o Umami Area Honduras will always prioritize the education of local people and young aspiring coffee professionals o The interactive coffee learning center can be used for trainings and coffee information sessions B. Environmental Environmental sustainability is difficult to achieve in high yielding agricultural production systems, but through best mana gement practices and ecosystem services, along with environmentally conscious decision making that is not solely profit driven, a private entity like Umami Area Honduras can work to make each of its branches environmentally sustainable. Furthermore, an imp rovement in management principles such as the introduction of organically grown coffee, increasing the diversification of products such as cacao, Liquidambar ,
Stitt 93 and the apiculture program for improved biodiversity, and adoption of climate smart agriculture i n coffee production can add to this dimension of sustainability. o Within the projects of Umami Area Honduras, first, through Finca RÃo Colorado, the company will aim to become more environmentally sustainable o First, a transition to Organic production throu gh organic coffee seedlings and soil and foliar management Focus on sustainable agricultural practices (climate smart agriculture, improved varieties for quality, yield, and profitability) Maintenance and improvement of forest resources Ensuring no contami nation of groundwater, soils, or bordering rivers Maintain soil integrity use of organic soil and foliar amendments when possible o Supporting and taking advantage of local organizations and institutions that focus on environmental sustainability through b est agricultural management practices C. Economic Individuals who work in coffee production suffer the most of any other actor in the supply chain in terms of financial capital. The market systems that define the price at which coffee is sold globally are not organized to improve issues of equity in the coffee value chain. Because of the realities of the current system, coffee stakeholders are required to increase their awareness of inequities in the value chain and subsequently become involved in practices or develop relationships to understand how those involved in coffee production can achieve improved livelihoods. Umami Area Honduras can educate coffee stakeholders through transparent communication of these realities while continually learni ng how to collaborate with local people and organizations on methods for greater economic sustainability. o Improving equity in the coffee value chain by ensuring coffee farmers and laborers are supported fairly for their efforts o Connecting small farmers wit h international buyers so long term relationships can be made. These relationships are important, especially when incomes decrease but costs of production stay the same or increases o The introduction of alternative products in coffee farms such as cacao, lemongrass, and beehives for honey production can help local farmers with alternative sources of income (although, for farmers to be profitable, Table 2: Sustainable Development Goals (SDGs) guiding Umami Area Hondur as actions (UN SDG's, 2018).
Stitt 94 at least 5 manzanas of cacao should be planted). These products are less labor intensive than coffee, and after their initial stages of development, they require little maintenance Umami Area Honduras Shareholder Survey Questionnaire The online survey can be found through this link https://www.123formbuilder.com/form 4859845/ . Greetings. This questionnaire was designed by Weston Stitt . a graduate student at the University of Florida pursuing a Master's in Sustainable Development Practice and is currently interning with FundaciÃ³n ETEA. In collaboration with Umami Area Honduras, he has been tasked with helping create a strategic plan for s hareholders and administrators. To create an accurate and refined strategic plan, he would like to have the input of Umami Area Honduras shareholders. This questionnaire will provide shareholder input and use it as a basis for refining the goals and aspira tions of Umami Area Honduras while also providing a fuller understanding of how the projects can help improve livelihoods in coffee growing communities. Sustainable Development Goal Goal Description and Aim SDG 3 Good Health and Well Being Ensure healthy lives and promote well being for all SDG 4 Quality Education Ensure inclusive and equitable education and produce lifelong learning opportunities for all SDG 5 Gender Equality Achieve gender equality and empower all women and girls SDG 8 Decent Work and Economic Growth Promote sustained, inclusive, and sustainable economic growth, full and productive employment and decent work for all SDG 9 Industry, Innovation, and Infrastructure Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation SDG 10 Reduced Inequalities Reduce inequality within and among countries SDG 11 Sustainable (cities and) Communities Make cities and human settlements inclusive, safe, resilient, and sustainable SDG 12 Responsible Consumption and Production Ensure sustainable consumption and production practices SDG 13 Climate Action Take urgent action to combat climate change and its impacts SDG 15 Life on Land Protect, restore, and promote sustainable use of terrestrial loss
Stitt 95 Part One: Basic Information Name Where do you currently live and work? What is your current rol e in the coffee sector? Trader Buyer Roaster Business Owner Business Manager Barista Consultant in the Coffee Industry Coffee Trainer Farmer Final Consumer other: How many years of experience do you have in the coffee sector? 1 3 years 4 6 years 7 10 years Over 10 years For how long have you been an Umami Shareholder? Less than a month 1 12 months 1 2 years What is your connection to Umami Area Honduras? Association with Umami Area Italia Coffee Campus Participant Acquaintance with other shareholders other: How satisfied are you with the efforts of the organization and its pursuit of meeting its goals? Very Satisfied Satisfied Neutral Unsatisfied Very Unsatisfied Part Two: Appreciative Inquiry (positive aspects and streng ths) What are two key factors that led you to invest in Umami Area Honduras Projects? Please choose 2: Desire to contribute to social development
Stitt 96 Interest in being a part of a high quality coffee producing business A personal commitment to approaching inequities in the coffee value chain Supporting an organization that aims to improve livelihoods through coffee cultivation projects Business opportunity with positive return on investment other: What are you most impressed by with Umami Are a Honduras and its projects in relation to its commitment to sustainable development? Check all that apply: Social Action Environmental Action Economic Action/Influence Relationships within the local community Neutral other: When considering current projects (coffee production at Finca RÃo Colorado, coffee education through Campus events), what drives you to continue supporting the organization? Check all that apply: Prospect for profitability from coffee production Willingness to support continuation of projects to develop a foundation for high quality coffee production Contributing to the development of the community by collaborating with local organizations for improvement Prospect of corporate social responsibility Promoting sustaina ble coffee production Disseminating culture for sustainably produced, high quality coffee other: Can you describe a time during the existence of the Umami Area Honduras project that you consider to be a high point experience, a time when you were particu larly engaged? What do you value most about your work and your connection with the organization? What are two core factors that give life to the organization when it is at its best? If there is an option not printed, please provide your own. Please choose 2: Commitment to making Finca RÃo Colorado a productive and successful farm The collaboration of Umami Area Honduras with other organizations in Honduras Relationships with farmers and buyers Coffee campus events in Las Capucas Unsure
Stitt 97 o ther: What are the most assuring aspects of coordinators and organizers inolved in Honduras projects and which of their qualities give you hope for the success of the company? Check all that apply: Their determination Their commitment to excellence Thei r willingness to carry out the mission as expressed by Umami Area Honduras Unsure other: What are two or more strengths of the organization. If an option is not listed, please provide your own. Commitment to improving livelihoods of employees at Finca R Ão Colorado The continued education of Las Capucas community members during coffee trainings events The organization of coffee campus events for actors across the coffee value chain The interaction with local organizations to ensure improved productivity of high quality coffee at Finca RÃo Colorado Unsure other: Are you a satisfied member of the Umami Area Honduras community? Yes No Why or why not? Additional Information: Based on your understanding of green coffee market dynamics, how do you think current market prices represent compensation for actors in on the production end of the value chain, namely coffee farmers and other laborers? Adequately Fairly U nfairly other: The local cooperative has had a significant impact on the community. It has provided employment opportunities, helped established additional ways of gaining income, and offered increased access to diversified markets for its members. As U mami Area Honduras aims to make an impact on the community through its educational projects, how would you rank the importance of Umami Area Honduras' commitment to social development as it continues to carry out its projects? Very Important Important N eutral Less Important The focus should be prioritized in other areas other: How would you rank the importance of Umami Area Honduras' commitment to gender equality and women's empowerment as it continues to carry out its projects?
Stitt 98 Very Important Impor tant Neutral Less Important The focus should be prioritized in other areas other: Do you believe that Umami Area Honduras is making an impact on women's basic and strategic needs by increasing their participation in equal conditions? Strongly Agree P artially Agree Neutral Partially Disagree Strongly Disagree The focus should be prioritized in other areas other: Conclusion: If you feel there was anything not introduced in the questionnaire, or if there are any topics you would like to know more about, please use this space to expand. Finally, if you have any suggestions and/or comments for improvement, generally, please use this space to answer. Thank you for your time and continued interest in making Umami Area Honduras better. For any direct questions concerning this questionnaire, please contact firstname.lastname@example.org. Submit Customer Satisfaction Survey Combined Appendix References Bunn, C. et al. 2015. Multiclass Classification of Agro Ecological Zones for Arabica Coffee: An Im proved Understanding of the Impacts of Climate Change Plos One. Cooperativa Cafetalera Capucas Ltda. (COCAFCAL), 2015. http://www.mycapucascoffee.coop/about us Dolan, Robert. Note on Marketing Stra tegy. MS thesis. Harvard Business School, 1997. Boston, MA: privately published, 1997. Print. Donovan, J. A., Stoian, D. (2013). Assessing impacts of value chain development on poverty: a case study companion to the 5 capitals tool. CATIE Technical Serie s, 396. Rural Enterprise Development Collection 8.
Stitt 99 Eakin, H., Tucker, C., Castellanos, E. 2006. Responding in Mexico, Guatemala and Honduras. The Geographic Journal 172(2):156 171. Global Newswire, 2019. Coffee Market Size to Reach USD 102,279.2 Million by 2023 at 4.32% CAGR, Predicts Market Research Future . Godina, A., Accerenzi, A., 2018. Integrating the coffee value chain to promote rural sustainable developme nt in Honduras. Conference Paper: IV International Congress of Development Studies, At CÃ³rdoba, Spain. ICO Historical Data on Exportable Production, 2018. http://www.ico.org/historical/1990%20onwards/PDF/1c exportable production.pdf International Coffee Organization, 2019. Coffee Market Report, May 2019. http://www.ico.org/documents/cy2018 19/cmr 0519 e.pdf IPIRA, 2018. Template Startup Commercialization Plan. Office of Intellectual P roperty & Industry Research, University of California, Berkley. Kolchinsky, P, 2014. "The Entrepreneur's Guide to a Biotech Startup." 4th edition: 1 96. Print. . Perfect Daily Grind, 2018. This is How Much it Costs to Produce Coff ee Across Latin America. Carvela Coffee. https://www.perfectdailygrind.com/2018/07/this is how much it costs to produce coffee acros s latin america/ SBIR, 2018. Writing a Good Commercialization Plan: Suggestions for SBIR/STTR Applicants. Small Business Innovation Research Group. Tucker, C., 2017. Coffee Culture: Local Experiences, Global Connections, Second Edition. Routledge, New York. Umami Area Honduras, 2019. http://www.umamiarea.com/aree_det.aspx?M=Umami_Area_Honduras 3032&P=5128 UN Strategic Plan Guide for Managers, 2016. UN Sustainable Developme nt Goals, 2019. https://sustainabledevelopment.un.org/?menu=1300 USDA GAIN Report, 2017. https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Coffee%20Annual_Tegucigalpa_Honduras_5 24 2017.pdf Williams, R., G., 1994. Stat es and Social Evolution: Coffee and the rise of National Governments in Central America. UNC Press Books