Real Farmer Income Case Studies


Published on

Nespresso in collaboration with coffee suppliers, development agencies, and non government organisations
has implemented a series of projects that aim to improve farm management practices and the standard of
living of coffee farmers and their families

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Real Farmer Income Case Studies

  1. 1. Fact sheet: Real Farmer Income™ case studies At a glance • Nespresso in collaboration with coffee suppliers, development agencies, and non government organisations has implemented a series of projects that aim to improve farm management practices and the standard of living of coffee farmers and their families Due to stagnant or falling prices for many grades of coffee, an increasing number of small growers are abandoning their coffee trees and seeking alternative income opportunities. While overall coffee prices are unlikely to make coffee production the most lucrative possibility in many rural areas, the global demand for high quality specialty coffees is expected to continue to increase. Given appropriate geographic positioning, soils, climate and other fixed factors, many farmers have the potential to supply this premium market segment and increase their incomes. During the six years since the original inception of the initiative Nespresso has collaborated with a range of partners within its AAA Sustainable Quality™ Coffee Program, each of them contributing to the goal of producing AAA coffee and ensuring that coffee farmers, communities and the environment benefit from the approach. The following three cases studies demonstrate how Nespresso is working with different partner organisations in order to achieve this. Case study 1: Cauca and Nariño The Colombian departments of Cauca and Nariño are characterised by smallholder coffee-growing activity, in which poverty has been a constant for many years. However, the coffee-growing area stands out because it produces a very high quality coffee, valued and desired by the most demanding markets worldwide. In Cauca and Nariño coffee cultivation is mostly undertaken on farms of less than 1.5 hectares of coffee and with an inadequate coffee infrastructure, resulting in wastewater contaminating water sources. In addition deficient drying infrastructure drastically affects the producer’s income because its adverse impact on the quality of the product. Nespresso is working with the National Federation of Coffee Growers of Colombia (FNC) and the local community to revitalise the production of highest quality sustainable coffee through: • Technical assistance • Follow-ups to continuous improvement plans • Process verification and assessment • Training • Adaptation and improvement of coffee milling and drying processes • Disseminating pre-harvest and post-harvest practices • Handling waste waters generated on the farm to avoid environmental pollution • Applying sustainable agricultural best practices At the same time, the project is stimulating social and environmental improvements in coffee areas and is helping to improve the quality of life and wellbeing of 3,839 coffee growers enrolled in the Nespresso AAA Sustainable Quality™ Coffee Program. In overview, the project is focusing its efforts in two main areas:
  2. 2. 1. Improvement of coffee milling and drying processes, and water decontamination of coffee- growing farms: Through the direct relationship with coffee farmers, Nespresso has been able to collect information on individual needs. This includes requirements for improving coffee quality and obstacles to overcome in order to achieve minimum environmental and social standards. As such Nespresso is financing investments at farm level such providing 306 new parabolic solar dryers, upgrading 136 wet mills and constructing 186 new ones, and setting up 396 waste water treatment systems and 804 process or household water treatment systems. 2. Technical support to strengthen sustainable coffee production: Training is being provided to improve the knowledge, adoption and application of sustainable farm and agricultural management. This might come in the form of assistance for the creation of farm improvement plans, business management workshops, environmental management training, safe and efficient management of pesticide training, first aid, and soil management and conservation practices. The project is also facilitating access to credit among coffee producers by allowing them to access the ICR for ecologic benefit. The ICR is a cash incentive that the Colombian Government gives to farmers who want to improve their productive infrastructure (e.g. wet mills). More than US$4.7 million is being invested by Nespresso, The National Federation of Coffee Growers of Colombia and the local community in this project. The producers and their families are supporting the infrastructure component by contributing with manpower and materials from the region. In addition, the project has been reinforced through an additional partnership with ACDI/VOCA (an independent non-for-profit organisation) and Acción Social (a Colombian government social development organisation). This new partnership is supporting the productive infrastructure improvement process and water decontamination of 581 coffee-growing farms in Nariño. These two partners and Nespresso have contributed an additional investment of US$319,000 for this project. Case study 2: Caldas In Caldas, Colombia, Nespresso has concluded a three-year program with the NGO TechnoServe. At the end of 2006, TechnoServe and Nespresso launched a collaborative effort to integrate small- scale coffee growers into the Nespresso AAA supply chain. The program was designed to create and capture more value for players across the value chain. The project focused on developing a sustainable procurement model to benefit small coffee growers. The effort targeted an area in the north of Caldas, Colombia, with around 10,000 hectares of coffee production. Within the partnership, TechnoServe and Nespresso worked with, the Comité de Cafeteros de Caldas (local branch of The National Federation of Coffee Growers of Colombia), Expocafé (main Colombian coffee exporter), three cooperatives in the Caldas region and Cafexport (Swiss coffee importer, supplying directly to Nespresso). The program focused on improved farm productivity, upgrading wet milling, developing new pricing strategies and improving business management. This holistic approach has proven very effective, and has united the major coffee sector actors around a common vision and strategy. Most importantly, it has generated impressive results benefiting small growers while making the Nespresso process more efficient and reliable, augmenting volume, and standardising quality. Specifically, the program included four main activities: 1. Improvement of farm productivity through technical assistance
  3. 3. 2. Assessment of the potential for improving coffee quality through wet milling 3. Improvement of purchasing techniques by developing price incentives and traceability 4. Improvement of the AAA program by building field knowledge The program lasted over two years, starting in August 2006, and covered 3 cooperatives in the department of Caldas, Colombia, for a total of 1,260 farmers. The most significant results of the project under each activity area were: 1. Farm productivity: Under the Technical Assistance Program 1,260 growers benefited from 4,332 direct one-to-one visits while the coffee community in general gained knowledge indirectly through the program’s diffusion of best practices by radio and open meetings. Subsequent interviews with AAA farmers proved their satisfaction with the technical assistance since it helped them lower production costs, utilise natural resources more efficiently, increase sanitary and hygienic conditions and organise their farm’s financial accounts. 2. Wet milling: The financial, operational and qualitative analysis of a central wet mill concluded that such an effort would not only be feasible economically but it would also increase volume and the standardisation of the coffee’s quality. This was verified by an independent review. 3. Price incentives and traceability: A traceability system was designed to improve transparency throughout the supply chain. 4. Building field knowledge: The AAA program’s field knowledge was improved through interviews that helped clarify farm economics, growers’ motivations and potential incentives for loyalty programs. The program has proven to be a successful AAA Ecolaboration™ that creates value for producers, exporters, the roaster and retailers. It has raised the living standards of people at the base of the pyramid through improved income, field expertise, sanitary practices and environmental education. Nespresso has gained a larger production base as the success of the program attracts additional coffee growers. Furthermore, the program has demonstrated a model that ca be replicated and scale up. The growers have also been able to increase sales to other buyers and have reaped considerable additional socio-economic value outside the immediate domain of the Nespresso supply chain. Case study 3: Central America Nespresso is currently over halfway through a multi-lateral public-private partnership (PPP) with the International Finance Corporation in Central America. Nespresso, through its parent company Nestlé, signed a three-year project with The International Finance Corporation (IFC), the commercial finance division of the World Bank, and ECOM (a AAA coffee supplier). The project objective was to increase profits (shared value) of coffee producers in Central America and southern Mexico, that are part of the ECOM-Nespresso value chain, by improving their social and environmental standards for higher prices, while reducing their expenses and enhancing their productivity. Rainforest Alliance was selected to be the project execution coordinator due to its significant experience accumulated in similar projects, and its knowledge and expertise in working with coffee farmers.
  4. 4. The project began in January 2007 and was expected to run until December 2009. However, in order to be able to evaluate the performance of the Nespresso clusters and collect data from the sales of the 2009/10 harvest, the project has been extended to April 2010. The project is being implemented in three countries in Central America and includes support in improving agricultural practices to achieve better quality and sustainable coffee through the Nespresso AAA Sustainable Quality™ Coffee Program. The implementation of this project included conducting workshops that introduce producers to the Nespresso TASQ™ Self Assessment tool, technical assistance for continuous improvement and final AAA system verification. Producers who qualify in the Nespresso AAA Sustainable Quality™ Coffee Program are able to demonstrate continuous improvement in quality, social, environmental and economic standards as specified in TASQ™. The project’s progress is monitored and evaluated on a quarterly basis against a set of measurable targets & key performance indicators. According to the latest results, in less than three years, farmers have received 180 training sessions and ongoing technical assistance. Owing to its success, the program has grown from just under 3,400 farmers to almost 5,700 farmers. The premium paid to Nespresso AAA farmers so far has resulted in over US$3 million of increased income for their efforts, while 23% of farms in the Nespresso AAA Sustainable Quality™ Coffee Program have moved from underperforming to either basic or emerging.