Securing a Supply Chain for the Future: The Role of Private Sector Extension in Building a Sustainable Coffee Industry
In Kenya, coffee travels a long way before it ends up for sale to private sector buyers on the Nairobi Coffee Exchange. Most coffee is produced by smallholder farmers and then aggregated by cooperatives who wet mill, dry, and send the coffee to be processed into green coffee. Concurrently, marketing agents are responsible for bringing the cooperatives’ coffee to market, either through auction on the Nairobi Coffee Exchange or through a direct sales outlet. The formalized and multi-faceted nature of this supply chain means that private sector firms that buy and export coffee in Kenya often have no interaction with the smallholder farmers that produce it. This, combined with the long gap between when farmers harvest and receive payment for their coffee, makes it difficult for farmers to access the services they need to improve yields, incomes, and food security. With support from Feed the Future Partnering for Innovation, one private sector firm is leading efforts to bridge the gap.
Neumann Gruppe Gmbh (NKG), working through its subsidiary company, Tropical Farm Management Kenya (TFMKe), has managed large coffee estates in Kenya for many years through a comprehensive service package that includes business and agricultural management, certification, financing, and market access. For its cooperative clients, TFMKe has historically focused on the last service: market access. Facing mounting challenges, these cooperatives and their smallholder members requested additional support – leading TFMKe to begin offering financing and training. Now, TFMKe recognizes the need to scale these services and offer committed cooperatives a holistic service package that will ensure the future of the coffee supply chain.
In Kenya – and throughout the world – smallholder coffee producers are facing a variety of escalating challenges. Climate change has led to increased incidences of drought, unreliable rains, pests, and disease. This change in climate is expected to halve the total land suitable for coffee production by 2050. In addition, many cooperatives lack the administrative, human, and financial resources to provide efficient services to their members. Most importantly, farmers lack access to the financing and extension services required to fertilize, prune, and renovate their aging farms with more productive, disease- and drought- tolerant trees. With smallholder farmers producing more than 80 percent of the world’s coffee, their vulnerability poses a direct threat to the coffee industry as a whole.
With support from Feed the Future Partnering for Innovation, NKG is investing directly in private sector extension to combat these problems and increase the productivity and resilience of smallholder farmers and cooperatives to ensure the long-term viability of Kenya’s coffee supply. To accomplish this, NKG will establish farmer service units (FSUs) that are full-fledged departments staffed with high-capacity teams of field and financial officers dedicated to providing farmers with access to finance, technical assistance, inputs, and markets. NKG designs FSUs to be commercially viable and also improve farmers’ incomes. More productive and resilient farmers will be better able to weather shocks, leading to a stronger and more dependable supply chain.
Read more about Feed the Future Partnering for Innovation’s partnership with Neumann Gruppe Gmbh here.