Coffeelands: Building on Success
The success of Borderlands Coffee Project in Colombia, encourages a next step.
Borderlands delivers direct support to 1,600 farmers in Nariño—a region with nearly 40,000 smallholder coffee growers in a country with 560,000 growers. At a global level, CRS has reached about 50,000 coffee farmers. Estimates suggest there are as many as 25 million coffee growers worldwide. The next step is to reach them.
Value Chain Approach
The Coffeelands program promises to help CRS achieve lasting impact in the coffee sector. How we will do that is illustrated in eight components of the Coffeelands program: Value-chain approach; Capacity building; Chain-wide facilitation; Innovation; Livelihood diversification; Labor; Research; Influence.
Value-chain approach has anchored our coffee programming overseas since 2003.
A value-chain approach considers all aspects of the coffee chain, from seed to market. We examine the relationships between growers and other actors in the chain as well as providers of goods and services outside the chain. The CRS value-chain approach rests on two distinct but related categories of activity: capacity building and chain-wide facilitation.
The goal is to increase efficiency, profitability and competitiveness.
Capacity-building focuses primarily on smallholder growers and their associations or enterprises. The goal is to increase efficiency, profitability and competitiveness. At the farm level, this means a strong productive base built on a foundation of good genetics and agronomic practices that are proven and appropriate for the surrounding environment. Farmers acquire skills through farmer trainings at the farm and community levels each year.
At the enterprise level, this includes a broad range of business skills including basic management, financial management, warehousing, logistics, grading, marketing and financing. The Coffeelands Program is beginning to develop trainings for price risk management, an emerging competency requirement for smallholder enterprises in a marketplace characterized by chronic and extreme price volatility.
In coffee, capacity building often also includes highly specialized training in skills like sample roasting and coffee cupping.
Trust and Transparency
On its own, however, building farmer and enterprise capacity won’t lead to inclusive and equitable value chains without effective relationships along the supply chain. Our approach brings growers together with downstream actors including exporters, importers and roasters, and facilitates relationships with providers of essential goods and services, including seed, agronomic assistance, financial services and other specialized trainings.
We promote collaboration, transparency, risk-sharing and open communications all along the supply chain. We also help create and capture additonal value at every link in the chain. In many cases, our programming brings growers and roasters together for the first time. From these meetings, growers gain invaluable information on the volume, quality and service requirements of different segments of the marketplace. Buyers (roasters) learn about the threats and opportunities in smallholder production systems. In all cases, we strive to help growers meet market requirements and become more competitive, open new trading relationships and strengthen existing ones.
When the value-chain approach works, it delivers vital market intelligence to growers who don’t always understand what happens downstream in the supply chains. It links these vulnerable farmers to some of the most demanding and rewarding buyers in the world. That drives increases in earnings and profitability. Starbucks, which is purchasing coffee from CRS-supported growers in Eastern Congo for its exclusive Starbucks Reserve line, is one of many such market-linkage examples.
Other companies consistently sourcing coffees from CRS-supported growers may be lesser-known among mainstream consumers, but exert outsized influence in the coffee industry and demonstrate deep alignment with the principles of CRS value-chain approach. They include the influential Durham, North Carolina-based Direct-Trade roaster Counter Culture; Portland, Oregon-based Stumptown Coffee Roasters; and the Chicago-based Intelligentsia Coffee, another influential Direct Trade roaster.
The “coffee biography” that Intelligentsia Coffee published in connection with its early purchases from participants in our Borderlands project began by declaring: “The Borderlands Project is one of the most exciting and innovative development programs being operated in coffee today.”
Anchored by Advisory Council
If our coffee programming to date has been anchored by a value-chain approach, then our Coffeelands value-chain approach is anchored by a platform for ongoing private-sector engagement we call the Coffeelands Advisory Council.
The Advisory Council consists of leading coffee roasters and traders committed to delivering market-based advisory services to CRS staff, partners and project participants, and to support the project’s commercial objectives through the purchase of coffee grown by project participants in the event it meets their sourcing standards.
The approach has proven an effective way to market-validate project activities, deliver value to coffee buyers seeking field-level insights and access to new or improved suppliers, and expand market access for CRS-supported growers.
The Advisory Council mechanism represents the third iteration of our strategy for collaboration with private sector allies in the coffee sector and an innovation of our Borderlands project in southern Colombia.
Clear opportunities existed for smallholder farmers in the quality-differentiated segment of the market.
Baseline Survey — 4, 89, 2
As part of our Borderlands baseline survey process, we conducted a comprehensive value chain assessment to identify latent market opportunities for smallholder coffee farmers.
Three data points — 4, 89 and 2 — revealed a clear market failure in Nariño’s coffee sector.
4: Only 4% of growers reported ever earning quality-based premiums for their coffee.
89: A sensory baseline produced a high percentage of cupping results over 85 points and a few results in excess of 89 points—coffees that should command significant price premiums in the marketplace.
2: Less than 2% of all Nariño’s coffees was being exported as fully-traceable lots commanding price premiums.
Clear opportunities existed for smallholder farmers in the quality-differentiated segment of the market, and to a lesser extent, opportunities for value-addition in the market for certified coffees.
On the basis of those results, CRS leveraged its relationships in the marketplace to bring six U.S.-based coffee companies into collaboration with the project.
Counter Culture, Intelligentsia and Stumptown—are sometimes referred to as “The Big Three,” and were pioneers in the 1990s of the Direct Trade model that has had a significant influence on industry sourcing practices, particularly at the high end of the quality spectrum.
The remaining three are leaders in the U.S. market for certified coffees. Keurig Green Mountain is the world’s largest buyer of Fair Trade Certified coffee, while Allegro Coffee Company sources coffee for Whole Foods that are consistent with its Whole Trade Guarantee. Sustainable Harvest was a key trading partner for both companies.
Business Sense and Sustainability
We asked these companies only to deliver market-based advisory services to CRS staff, partners, project participants and other local stakeholders—to “market-validate” the project’s approach to building more robust supply chains for high-quality coffee. They did this for four years through field visits, face-to-face meetings in the United States and constant email and telephone communication.
We were explicit with members of the Borderlands Advisory Council that there was absolutely no quid pro quo—purchasing coffee from project participants was not a requirement of participation. We wanted companies to purchase coffee if and only if it met their sourcing requirements. It had to make business sense. We did not want companies to do favors for the project or its participants outside its standard operating procedures—a firm position based on lessons learned the hard way.
Our first coffee value-chain project was the Fair Trade Coffee Project in Nicaragua. It began in late 2003 as part of a response to a collapse in global coffee prices in 2001 that created significant economic dislocation for many farmers—a time when access to Fair Trade markets and Fair Trade’s guaranteed price floor represented significant insulation from price risk. For two years, our Fair Trade Coffee Project in HQ worked to connect CRS-supported organizations in Nicaragua to our U.S. coffee roasters who participated in our Fair Trade Program. In the 2005/2006 crop year, we succeeded in facilitating the purchase of the first Fair Trade Certified coffees produced by a cooperative called CECOSEMAC that CRS helped to organize and certify.
Our partners purchased these coffees to honor our relationship, and did so despite concerns about the strength of the cooperative and their Nicaragua inventory, which was already crowded by coffees sourced from stable, long-time partners. This commercial linkage was a signature success of our Fair Trade Coffee programming, but it proved to be short-lived. The 2006/2007 crop year was the last time this coffee was on the market. Well-intentioned buyers tried to do CRS a favor, but in the end did no favors to the CECOSEMAC cooperative by bringing them into markets for which they were not ready and in which there was no clear demand for their coffee.
We wanted to do better in Colombia.
In the case of the Borderlands Advisory Council in Colombia, we suspected that once members visited Nariño and its growers and got a clearer picture of what they had to offer, that they would be eager to source coffee from participants in our Borderlands project.
We were right.
Building on Success
Members of the Advisory Council for Colombia drove the commercial success of the project. Their purchases grew from just 16 small single-farm lots in 2013, whose sale was arranged as a signal of the market potential of Nariño’s coffee and an incentive for participants to continue to work on quality, to more than 10 containers of coffee in 2016. By the time the project closed in 2016, members of the Advisory Council had sourced coffee from participating farmer organizations at premium prices for four consecutive crop years—an extraordinary period of commercial incubation that simply would not have been possible in the absence of the Advisory Council construct.
The Coffeelands Program will build on the success of the Borderlands Advisory Council. Moving forward, we will not have six companies advising and accompanying our work in one country, but more than one dozen companies collaborating with us globally across our entire coffee portfolio. While the composition of the Advisory Council in Colombia reflected the specific market opportunities that CRS identified there, the Coffeelands Advisory Council must include a broader range of actors to ensure that a full complement of market perspectives are brought to bear on our work.
We have already secured commitments from traditional ethical trade partners Equal Exchange and Cooperative Coffees and influential traders including Volcafé, one of the world’s largest coffee traders, and Nordic Approach, an innovative quality-focused importer based in Oslo.
This the second of a four-part Coffeelands series. Part 1, Part 3, Part 4