The brief: to write a long-read for Rabobank.com about a sustainable coffee project in Peru. Read the article below or on their site.
Helping the world to a better cup of coffee
Rabobank’s Kickstart program aims to boost the sustainable food and agri sector worldwide. It builds on decades of work for and with farmers by Rabobank Foundation. Read how the Foundation supports coffee smallholders to supply the equitable produce more and more of us demand.
Food security. It is one of the biggest challenges we face today. The world’s population is expected to rise from seven to nine billion by 2050. As developing nations become more affluent, their inhabitants are demanding more varied, tasty and nutritious foods. These often feature animal proteins and sugars that have a high environmental impact. At the same time, consumers in the West want products produced without deforestation or exploitation of the people who grow, package and transport them.
Rabobank’s answer is Kickstart Food, a three-year program designed to give an extra impetus to the sustainable food and agri sector worldwide. In fact, Rabobank has worked with and for the sector, from growing grain to fish farming, for well over a century. And it has supported smallholders and their co-operatives through Rabobank Foundation since 1974. The aim is to help them professionalize and earn a decent living while at the same time making a sustainable contribution to feeding the world for decades to come.
Rebalancing the coffee trade
Coffee is one of the industries the Foundation is tackling intensively. The supply chain is imbalanced, with a few huge producers at one end of the scale, and thousands of smallholders at the other. The idea of drinking coffee grown on small farms appeals to our desire for fair trade produce. However, the farmers face several challenges in bringing their coffee to market, from ensuring their crops are healthy to finding international buyers. Rabobank Foundation is helping to resolve the situation by sharing knowledge and connecting supply with demand.
Growing good quality coffee costs money. The Yanesha, indigenous to the Andean rainforest of Peru, are a case in point. They had farmed coffee shrubs on small plots of land for generations, but their coffee’s flavor was mediocre despite the area’s excellent growing conditions. Their shrubs were prone to Roya, a devastating disease, and they did not have access to credit on fair terms or to international buyers.
Fair credit plus priceless knowledge
In 2011, the Yanesha set up a co-operative, CEPRO, with the support of Rabobank Foundation and local NGO, Amazonas. The Foundation provides CEPRO Yanesha with a line of credit which means co-op members can take out small loans against future harvests. That way, they can invest in their farms to improve the quality and quantity of their crops. The Foundation also ensures they have access to the agricultural and technical expertise to leverage those investments. Experts funded by the Foundation regularly visit far-flung coffee growing areas to help train farmers like the Yanesha, including the leaders of the co-operatives. They can then pass the knowledge on to their colleagues, creating a virtuous circle.
Rabobank Foundation helps farmers earn a decent living and make a sustainable contribution to feeding the world for decades to come
In this way, as many farmers as possible learn how to use soil improvers and organic pesticides to ensure higher yields, year in, year out. How the beans are treated and dried after the harvest also has a huge impact on the quality of the final product. However, getting the best results may entail buying expensive equipment, which is where a loan from the co-op can make a real difference. This technical support is in part simply good business practice: if farmers know how best to use the money they borrow, they are more likely to be able to pay it back. In fact, CEPRO members’ income is expected to rise by an average of 150% within five years of the loans being made.
Meet the Yanesha
Dora Espíritu is a single mother who lives in Tsachopen, a Yanesha village near Villa Rica. She has cultivated two hectares of coffee for the last 10 years. ”This year I borrowed 1,850 dollars from CEPRO so I could implement a new fertilizer system on the best part of my land,” she says. ”The DRENCH system applies the nutrients directly to the roots of the coffee bushes. There is much less waste and the plants thrive. I know how to make the best use of it
As a co-operative itself, Rabobank has a special affinity with farming co-ops. By offering management and financial expertise, its Foundation ensures they are run professionally and sustainably. Once it is clear that a co-op can supply high-grade coffee with the reliability international buyers demand, the Foundation connects it to wholesalers in its network willing to pay a premium for high quality beans. In the cases like CEPRO Yanesha, it also provided trade finance to facilitate the co-op’s first direct exports. In 2011, CEPRO shipped just one container load (a standard unit for trading coffee beans weighing about 18,000 kg). By 2017, this was up to 13 containers, plus a few special orders of the highest quality coffee.
Over half of the population in Peru’s more remote areas still live under the poverty rate, but CEPRO co-op members are achieving self-reliance thanks to the international buyers they have attracted. One of these is Peeze, an independent Dutch coffee roaster committed to sourcing and supplying fair trade, organic beans. It is also the winner of a prize for the country’s best coffee in 2015 and 2017: a coffee must taste truly excellent for Peeze to include it in its portfolio. CEPRO Yanesha’s coffee clearly fits the bill: in 2016 Peeze took a container load of the beans.
Peeze hand roasts the beans at its plant in the east of the Netherlands, before selling them on to private and business customers. While supermarket coffee blends are treated to achieve a homogenous result, Peeze uses a tailored process for its single origin beans to highlight their specific flavors. These can be as nuanced as any grand cru wine.
Rabobank serves Yanesha coffee
Peeze supplies Rabobank with much of the coffee it serves visitors and employees. In fact, Yanesha coffee has become something of a visiting card for Rabobank Netherlands. Says the Managing Director of Peeze, Timmo Terpstra: ”It’s coffee with a story, which usually interests customers and business partners. We’ve paid a lot of attention to the packaging and labelling to emphasize that, because the bank uses it as corporate gifts and to serve at special events. Some of the bank’s local branches have chosen to back CEPRO and we supply them with Yanesha coffee for their coffee machines.”
Peeze also offers Yanesha coffee to its other customers. They love the flavor: the beans are espresso roasted to bring out their rich aroma, with notes of hazelnut and caramel. They also like the fact that they can pinpoint exactly where they were grown and even by whom. It is something small wholesalers like Peeze can offer, and is at the other end of the scale to global companies that treat coffee as a commodity.
”It has been heartening to see a big player like Rabobank work with us and co-operatives to achieve more transparency in the coffee supply chain,” says Timmo. ”It seems to me that direct trade with co-operatives will be more and more important in future. We can see which co-ops are investing in their members and even what price the farmer is getting for his or her crop.”
Towards price stability
Coffee prices are subject to mark-ups by agents and speculation on the world commodity markets. The resulting volatility presents a huge obstacle to prosperity for smallholders. Unfortunately for the farmers, prices are currently below the cost of production. That’s why Peeze plans to run a pilot scheme offering co-ops a fixed price for their beans. When the head of CEPRO Yanesha visited the Netherlands in 2017, he visited the Peeze plant. Timmo had an interesting proposal for him.
”We will guarantee to buy a certain weight in beans at a fixed price and the farmers will have the security of knowing what their crop will fetch,” Timmo says. ”If all goes to plan, we want to roll the model out to our partner co-operatives in Sri Lanka, Kenya and Tanzania.
”Coffee costs a little more the way we produce it, but we think it is well worth it. Luckily, it seems our customers agree.”
Rabobank Foundation works with 70 coffee co-operatives around the world. It is just one example of how it leverages its experience in the food and agri sector to help achieve global food security. For more information on the Foundation’s work, see rabobankfoundation.com. For more on the Kickstart program, go to Rabobank.com’s article on Growing a Better World Together.