Building a More Sustainable and Resilient Coffee Supply Chain
More than 80 percent of the world’s coffee is produced by smallholders. Despite their integral role, these farmers face significant challenges that threaten their livelihoods and the long-term viability of the global coffee supply chain.
Limited access to financing and training means that farmers are unable to increase their productivity or rebound from fluctuating market prices. Climate change brings another set of challenges, delivering devastating shocks from drought, unreliable rains, pests, and disease. In fact, the effects of a changing climate are estimated to halve the total amount of land suitable for coffee production by 2050.
With support from Feed the Future Partnering for Innovation, the world’s largest coffee trading group, Neumann Gruppe GmbH (NKG), is leading efforts to address these challenges in Honduras and Kenya. NKG is investing directly in smallholder-focused services in these two major coffee-producing countries to help increase the productivity and resilience of smallholder farmers and the cooperatives with which they work. NKG’s efforts in both countries will reach about 15,000 smallholder coffee producers with tailored assistance valued at approximately $1.1 million. These activities are part of NKG BLOOM, a global initiative launched by the company last year to provide holistic service packages to 300,000 smallholder farmers by 2030.
According to the company’s baseline assessment in Kenya, more than 50 percent of targeted farmers produce less than about 4 pounds (2 kilograms) of fresh cherries per tree, with 45 percent of them expecting yields to further decline from coffee berry disease and climate change. With the application of good agricultural practices, such as fertilization, pest and disease management, and pruning, production per tree can easily reach 11 pounds (5 kilograms) and even up to 44 pounds (20 kilograms) or more. To achieve this, however, farmers need access to knowledge, financing, and inputs to invest in their farms. It is estimated that approximately 40 percent of smallholder farmers in Kenya face financial exclusion (lacking an account at a certified financial institution).
NKG’s subsidiary in Kenya, Tropical Farm Management Kenya (TFMKe), supports smallholder coffee farmers organized in cooperatives by providing needed services to members and by improving the efficiency and transparency of the cooperatives. The cooperatives jointly wash and dry members’ coffee beans, and then market these beans with the support of an agent either through auction on the Nairobi Coffee Exchange or through a direct sales outlet. The replacement of a traditional paper-based system with a new electronic version has resulted in the delivery of more than 100,000 SMS messages that provide farmers with information about the timing and volume of their coffee deliveries.
To increase the availability of these services, NKG has established professionally staffed Farmer Services Units through its subsidiary companies TFMKe in Kenya and Becamo in Honduras. These permanent units will provide loans and training to enable farmers to purchase inputs (such as fertilizers and processing equipment), and even update their aging farms with more productive, disease- and drought-tolerant coffee trees. In Honduras, Becamo is well on its way, having already disbursed loans to 50 farmer cooperatives in the country.