The chief executive of Nespresso has high hopes for coffee from South Sudan, part of the area in east Africa from where the bean originates.
The farmers in the African nation are several years away from providing beans for the company’s coffee capsules. But after receiving the first export from the country, Jean-Marc Duvoisin wants consumers around the world to sample the brew from the “cradle of coffee”.
The head of the company – owned by Swiss food group Nestlé – will on Wednesday announce a SFr500m ($546m) six-year farmer welfare and environmental programme, which includes SFr15m of investment in South Sudan, Ethiopia and Kenya. The project will make contributions to a retirement fund for a coffee growing community in Colombia and provide funding to its aluminium capsule recycling programme.
It is part of a growing trend of large international agribusinesses and food companies that are increasing their involvement with smallholder growers. They regard these suppliers as important sources of commodities as well as potential customers.
Some 500m smallholder farmers – those who tend to work on farms of less than 10 hectares – produce about 70 per cent of the world’s food, and are a key source of commodities such as coffee and cocoa, the main ingredient for chocolate.
High quality coffee needs to be grown in high altitudes due to specific climate needs, making it uneconomical for the bigger landowners to cultivate.
With many of the world’s small growers concentrated in developing countries, where government support is often inadequate, an increasing number of multinational companies, many working with aid organisations and not-for-profit groups, are offering assistance to counter the effects of political risk, climate change and poverty.
Sir Gordon Conway, professor of international development at Imperial College, London, says there has been a realisation that unless these farmers feel they have a future in agriculture, the companies’ own strategies will be at risk.
“A lot of big businesses know that the risks of the food system are going to grow and grow,” he says. “They are finding a way forward and are having more involvement on the ground.”
In South Sudan, Nespresso is organising farmers from what was a pilot project into co-operatives, and is providing education and training with the assistance of not-for-profit group TechnoServe.
Supported by brand ambassador George Clooney, the programme envisages the farmers there will become part of Nespresso’s network of 60,000 smallholder suppliers around the world.
“Only 1-2 per cent of the world’s coffee meets the standards of the beans we need. We want to make sure that we get those supplies,” says Mr Duvoisin.
Other big coffee sellers such as Starbucks and Keurig Green Mountain are also providing assistance to growers, while large cocoa traders and chocolate companies this year agreed to collaborate on social welfare and farming aid initiatives for cocoa farmers in west Africa. In May, 12 companies, including Olam, Cargill, Mondelez, and Mars, announced they would align their individual social aid programmes and co-ordinate their efforts.
Meanwhile Sweden’s Hennes & Mauritz is investing in cotton farmers with Dutch NGO Solidaridad to ensure supplies of environmentally sound high quality cotton at a time when demand for food could lure growers away from cultivating the fibre.
Ray Jordan, chief executive of Self Help Africa, which helps farming communities negotiate with international businesses, says the companies’ willingness to engage with local farmers has grown over the past five years.
“Maybe before it was lip service about corporate social responsibility, but the reality is that the needs of the big international companies and small agricultural operations are converging.”
Adriana Mejia, European director of Colombia’s National Federation of Coffee Growers, says that businesses’ environmental and aid plans are under increasing scrutiny.
“You have the NGOs asking questions, and we, as a growers’ federation, also want to see impact,” she says. “If you’re saying you are transforming the lives of producers we want to see how that is being done.”
Some companies also regard the smallholder growers in developing countries as an important future customer base.
SABMiller, the brewer, for example, sees its production of cassava and sorghum beers for certain African markets as a way to boost smallholders as well as accessing new markets.
Mark Bowman, head of SABMiller’s African operations, says sourcing from smallholders leads to “local economic growth and empowerment, stability of supply and, ultimately, the ability to offer our beers to a wider low-income consumer base”.
For Nespresso, greater engagement with the growers can improve the relationship between the product and the customer, says Mr Duvoisin. By getting close to the farmers, Nespresso says it can relay to customers the conditions the beans were grown under, including the soil and the climate.
“The different stories we can tell of what is in their cup creates a strong link between the producer and the consumer,” says Mr Duvoisin.