CARE Laos - EWEVC Project

Brian’s TOR as the Coffee Value Chain Advisor

TERMS OF REFERENCE

Program: ANCP
Project: Rural Ethnic Women REW-EVC Coffee Project
Name of Consultant: Brian M Touray
Position Title: Value Chain Advisor
Place of Assignment: Dakcheung, Sekong Province, Southern Laos
Reporting to: Assistant Country Director of Programs
Duration: 4 months (possible extension)
Start Date: March 1, 2020

Background

Cash crop production in Dakcheung has only began to improve over the past decade. Ethnic communities,
especially women in DakCheung, remain poor, with povertyashighas40%andwhere,likeotherremoteareasofLaos,low
birthweight (25%), child stunting (44%) and acute malnourishment prevalent. However, CARE’s ANCP coffee
project whose main objectives was to reduce poverty of small-scale coffee farmers, increase inclusion of women
farmers in decision making and improved nutrition, has significantly improved the lives of Dakcheung coffee farming
communities.
Nonetheless, women are still and often left out of decision making regarding communal land and bear the
burden of unpaid work for care of households and related farming. As market and agricultural practices
change, there is a real risk that existing gender inequalities will be reinforced and the situation for remote ethnic
women may worsen. Addressing this weakness within the coffee market represents value for money
ensuring women can fully participate in the economic opportunities it presents and thereby addressing the
endemic poverty and malnourishment faced by remote and ethnic women.

Context and Needs

After 2 years of implementation, CARE coffee project in Dakcheung already achieved important steps to bring
farmers towards technical empowerment and organizational capacities. The initial groups are capable of
processing quality coffee with higher value, with a professional administration of the members ensuring fair
distribution of incomes. This model has attracted more farmers within the target villages who want to benefit
from the following services:

▪ Access to collective equipment and knowledge

▪ Consolidated sales
▪ Technical demonstrations and activities
▪ Production and Processing techniques etc.
▪ Marketing, Negotiation and Sales Skills
▪ Farm and Group management
▪ Financial Management
The initial marketing strategy developed by CARE was to mostly target the domestic coffee roasting niche market
in Laos. The objective was to build short value chain, eliminating the middleman and significantly increase the
income of farmers with deeper partnerships models, closer communication and exchanges on required quality,
promotion of a pristine ethic community produced coffee and networking based on a long-term sustainable
relationship.
Last year, seven domestic coffee companies were interested in buying the coffee, but only one end up buying,
and the some of the ones that didn’t buy never provided feedback as to why they changed their minds, even
though they tested the samples provided to them. Couple of them also sent representatives to visit the villages
where the coffee farms are located, which was a sure sign of a keen interest in buying the coffee, however, they
were not convinced enough to make a deal. Nonetheless, after relentless follow-ups, some cited high pricing and
others quality.
Given that the domestic market can only buy so much (small quantities) The team suggested to sell remaining
coffee to coffee exporters at a much lower rate, but still considered a fair price because the higher priced paid by
the roasters compensated the price gap.

Beside some concerns with farmers not following protocol of coffee production and processing, the marketing
plans and strategies also suffered a setback due to the following scenarios.
• The coffee prices dropped dramatically before the beginning of the peak harvest season in major
production area of Laos.
• The major players in the coffee business could not and did not purchase coffee, because they are so
powerful, they determine the price of coffee within the Plateau even if it lower than the international
market price.
• Dakcheung farmers are not yet a member of a cooperative, which also hinders the possibility of a
Fairtrade certification. As a result, it makes it difficult to secure a guaranteed sale of the coffee to
international exporters that are associated with the International Coffee Organization (ICO)

These three factors resulted in supply more than demand of coffee with particularly low prices. There is usually a
gap of a coffee harvest start period of a month or two, between Dakcheung and Bolavens Plateau. The Bolevan
usually start picking first. as result, most of the roasters and exporters rush to buy or preorder their stock before
Dakcheung even begin processing green beans. Some of the roaster start reserving their supply in advance as
early as September for consignments to last them a year.

Only 9 villages produced coffee last and 7% of the total production of green beans was purchased at a price of
45,000 KIP per KG, by one roaster identified by the CARE Coffee team. The rest of the coffee was sold part will be
sold to a Thai exporter with whom a lengthy and intense negotiations led to get a higher price than the
international market price, allowing a significant increase of farmers’ incomes.
A “marketing speech” created, depicting the background of REW project and the beneficiaries of the project
played a critical role, as most of private companies did not appear to be sensitive about development context,
ethical & social responsibility aspect of the coffee business.

Currently, there are 14 processing centers with a total of 30 villages. More coffee is expected to be produced this
year, however, there is not enough staff to serve/cover all coffee growing areas for technical support and
training. This year 3 new potential buyers are identified, in addition to the buyers and potential buyers identified
last year, however, only 2 feedbacks has been received, one indicating that the results of the sample tested not
meeting their standard, and the other is still deciding between 3 samples short listed. Dakcheung has a
reputation of producing poor quality coffee, which is all a myth, nonetheless, that stigma still lingers, and the only
way to overcome it is to improve the quality of the coffee and enhance the marketing strategy, tools and
approach.

Main Output:

Marketing development/enhancement is urgent, to make sure that efforts invested by the farmers are rewarded,
on a consistent and sustainable long-term basis. To do so, the Value Chain Advisor would carry out the following
responsibilities.
 ▪ Develop and strengthen coffee market-related knowledge among CARE team and coffee farmers, in sync
with the technical aspects of production and processing, and with the current farmers group and
cooperative formation process.
▪ Contribute to develop and improve Dakcheung’s coffee notoriety at provincial and national levels.
▪ Identify and facilitate a strong network between of coffee actors and Dakcheung coffee farmers.
▪ Maintain communication and dialogue, with actors and farmers, including the organization of exchange
visits between, CARE team, farmers and the private sector.
▪ Contribute to develop a model of fair coffee value-chain, including logistics and administrative aspects of
coffee production, processing and marketing.

Output: Network building and facilitation

a) Prepare a list of possible buyers and other relevant partners (national and international).
b) Develop a typology of actors according to their profile, business vision, willingness to support development
dynamics, etc.
c) Develop specific speeches/approach for each type of actors, based on awareness raising and trust building.
d) Prepare and implement schedule meetings in Vientiane, Pakse, possibly Luang Prabang.
e) Organization of field visits for private actors interested in Coffee Related activities.

Output: Communication

a) Prepare a communication and promotion plan to make Dakcheung’s coffee visible and try to restore its
image coffee playing field.
b) For marketing purposes, enhance the existing brand of “Dakcheung Community Coffee” by producing,
roasting and distributing it to serious key roasters and coffee shops in Pakse, Vientiane and Luang
Prabang.
c) Enhance the current marketing flyer/literature and to present to potential buyers and establishments
frequented by coffee loving individuals.
d) Participate in coffee and or all agricultural development forums and fairs with the possibility including key
farmers and some members of the CARE coffee team.

Output: Commercial coordination

a) Prepare, enhance and introduce “partnership-type” contracts to the farmers (templates have been
created and are available) to promote trust building and exchanges between buyers and farmers groups.
b) Empower farmers and CARE coffee team by developing and enhancing series of trainings and workshops,
necessary to equip them with premium skills on coffee production, processing and marketing.
c) Participate in activities related to the Fair-Trade and Organic Farming principles and Certification process.
d) Tighten communications and networking focusing on the balance between demand and supply
opportunities, bridging the gap of commercial relations between farmers and buyers.

In addition to this ToR, a work plan will be submitted, nonetheless, 4 months is short period to achieve all the
desired results based on the outputs listed. They are all very essential in achieving a long-term sustainable Coffee
project in Dakcheung.