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Quan Le and Braden Wild Department of Economics Albers School of Business and Economics Seattle University

From Crisis to Specialty Coffee Market: The Case of Nicaraguan Smallholder Cooperatives and Business Education for Sustainable Development at Seattle University

The global coffee crisis in the early 2000’s had a devastating effect on Nicaraguan coffee producers. In response, cooperatives were formed with the purpose of supporting the communities as they survived the crisis and moved toward coffee quality improvement for access to global specialty markets. This paper describes how the process of forming a social enterprise introduced the Seattle University students to coffee cooperatives in Nicaragua and revealed inadequacies in the fair trade and organic coffee export model. The innovative solution to this problem is to offer the producers a premium above fair trade and organic price and pay them up front. In addition, the supply chain was simplified and shortened that enabled the business to return another 12% of the sale price directly to the producers and 27% to an educational fund to support the children. For nearly a decade and a half, Seattle University students and faculty have partnered with the Universidad Centroamericana in Managua to work with the more than 300 smallholder farmers in Matagalpa. This paper describes the journey in which faculty and students have accompanied the farmers to hear their questions and make them their own and, in response to the needs of the producers, apply their expertise to develop projects related to the optimization of the fermentation of coffee and improving quality in the coffee, the design of a treatment plant for coffee wastewater, and the creation of a business plan to access the US specialty coffee markets. Café Ambiental, SPC is a student created and student run coffee wholesaler that sells fair trade organic coffee directly from coffee cooperatives and returns all profits minus needed working capital back to the farmers. For every 12 ounces bag sold for $12.95, Café Ambiental returns $1.60 directly back to the farmers and $3.50 go to a scholarship fund to support the children of the coffee farmers. We have funded 100 children the school supplies they needed to stay in school in academic year 2015-16, and in academic year 2016-17 funded 5,200 bus trips to get 70 students to the centralized middle school for the region that otherwise was too expensive and inaccessible to these secondary students walking 2+ hours in each direction. The social enterprise started by Seattle University students presents a business model that has great potential and is demonstrating that it can take significant steps toward fulfilling needs that improve lives of coffee farm families. This unique combination of educational focus, fulfilling community needs, and the empowerment of students has created a successful model that has transferrable potential to other Jesuit educational institutions.