Making impact with Coffee

Ndugu Farmers: a true price for coffee

Around the globe, having a delicious fresh brew of coffee on your desk every day has become kind of self-evident over the past decades. It’s NOT. And not the least for the many subsistence farmers in Uganda that grow your precious beans. ‘Ndugu’ means ‘brother, sister, or comrade,’ and is a growing social enterprise that creates value for over 6,000 farmers and 23 coffee cooperatives.

“For years, I’ve struggled with the challenges of being a coffee farmer, often feeling trapped in a cycle of small earnings and limited opportunities. But then, our cooperative forged a partnership with Ndugu, and things are beginning to change. Apart from trade financing to our cooperative, Ndugu has linked us to premium coffee buyers, offered us fertilizers on credit, invested in our traceability and certification, trained us on regenerative agriculture practices, such as agro-forestry for which their partner ACORN pay us for carbon offsetting. We are no longer just coffee farmers; we are proud stewards of our soils and our environment.” – Mpaulo Richard, Coffee farmer & Cooperative leader

Mission Ndugu
The founder of Ndugu is Martijn Harlaar who lives in Uganda for more than 10 years. He has personally observed at first hand the problems in the coffee sector. That has encouraged him and his team to look at the market in a more innovative way and come up with new and especially sustainable solutions. From that vision, Ndugu was founded 3 years ago, and became very successful in a short time! Ndugu has related its mission to three key points:

1. Increased income: to increase the living income of farmers through fair trading support, quality and quantity control, improved access to finance and effective representation and decision making through cooperatives.
2. Sustainable practices: to decrease on-farm emissions and increase soil health through regenerative agro-forestry practices, ensuring the longevity of farms by nurturing precious ecosystems.
3. Social wellbeing: to increase the social wellbeing of farmers through preventing child labor, improving gender equality and increased access to medical insurance and education; crucial elements of the social fabric in thriving communities.

Trade facilitation
To Ndugu, it seems fair to earn the trust of subsistence farmers through creating financial value, before we invite them to take other steps with for example agricultural practices. Ndugu often receives the question what type of organization it is. “Are you a trader? A data collector? A service provider?” Well, it is all three, and even more.

Ndugu is a platform organization, which means it doesn’t own the means of production. Instead, Ndugu creates the means of connection and financial access. In little over 2 years, Ndugu has established direct trading relationships with 23 farmers cooperatives and 6,000+ farmers, numbers that are rapidly growing. The farmers and the cooperatives in which they are united are the beating heart of the organization. However, this heart would not beat without the direct relationships with local and international traders, and international certification organizations. The video below gives a good impression!

Digitization, a game-changer in small-scale coffee business
As mentioned before, the Ndugu team’s innovative approach is something that sets them apart enormously. For example, in recent years they have put a lot of time and energy into developing an app, which accurately records every piece of land (every plot) of a ‘connected’ coffee farmer with the correct GPS coordinates. This now turns out to yield a ‘gold mine’ of interesting data! Partly due to its rigorous digitization approach, Ndugu now appears to be a very attractive player for various parties in the coffee market. For traders as UGACOF and ETG, Ndugu serves their need to sell traceable certified coffee in larger quantities. For NGOs such as Solidaridad and Fairfood, Ndugu serves their need to platform larger quantities of farmers for their social and sustainable goals. Ndugu has been a data drive organization from the start. Many well-trained youth are now being employed as data collectors to collect data on a growing number of indicators, identifying farmers’ needs in detail.

Impact
Ndugu has ambitious goals, but given the developments, they seem very achievable. By the end of 2028, Ndugu wants to partner with a large number of cooperatives to grow from the current $6 million to $25 million it facilitates as a platform in coffee trade (400% growth). Specifically, this means a growth from the current 6,000 small coffee farmers to about 20,000 coffee farmers (233% growth). Thereby, the expected income improvement is 30%, regardless of inflation.

Investment needs
Over the past 3 years, the five shareholders have already jointly invested nearly $200,000 in setting up the business. Over $125,000 of this investment has been in actual finance, while approximately $75,000 has been invested in time and ‘sweat’.

To continue to grow and meet its impact goals by 2028, Ndugu approached MissionInvest to help them with the necessary investments. MissionInvest’s Investment Advisory Committee did a comprehensive assessment in the first quarter of 2024 based on the 14 MI criteria, and completed with a positive recommendation. Below is part of their conclusion:

The initiators of the Ndugu platform clearly understand that coffee production as it has been for decades hardly contributes to welfare gains in the lives of producers and their families. The intrinsically motivated team has a nice mix of Ugandan cultural experience, sector knowledge and insights into the opportunities and possibilities of a data-driven approach. This composition and Ndugu’s model is thus quite unique and, in the opinion of the IAC, certainly has the potential to influence the “balance of power” in the chain in favor of farmers. Investment in working capital is essential for further growth in volumes and number of participating cooperatives.– Investment Advisory Committee MissionInvest 

For the years 2024-2025, Ndugu needs trade financing totaling €800,000. This is a 5-year loan with deposits starting at €100,000 and an interest rate of 5% per annum. These loans will be used to further scale up Ndugu’s own cooperatives and also make them more competitive in the regional and international coffee market. A complete PitchDeck is available for interested financiers, including the assessment report and underlying Business Plan.

‘Are we together?’

This is a popular Ugandan phrase. No single farmer, trader, NGO, financier can do this important work alone. Ndugu aims to facilitate the ‘sum of parts’, also in the way it facilitates decision making. In this regard we consider each and every farmer, trader, supplier and buyer as a ‘rightsholder’; a voice that matters. As an investor, you are an essential link in this process. Therefore, please strenghten the Ndugu team and meet them in Uganda for a delicious cup of real Ugandan coffee! Enjoy!