Available soon: living income coffee
It is not just you, getting ready to go to the office, that depends on coffee every morning. Around 20 million farmers depend on coffee to support their and their families’ livelihoods. Struggling already with unstable weather and prices, smallholder farmers most often do not earn a fair living income. How can one coffee importer make a difference?
Amsterdam, June 23rd 2021 – Whilst work is underway on living wages and incomes, should we just wait for legislation to set out the rules for CSR or should we take matters into our own hands? With a lot of farmers still not earning a living income and struggling to sustain their businesses and provide for their families, more work is needed to support our producers. In a joint effort, Trabocca, Fairfood, and Simon Lévelt will take the next step and ensure coffee farmers actually do earn a living income, whilst building a sustainable and transparent coffee supply chain.
In the supermarket, we only see one price that stands for all costs involved, from production to distribution. For most supply chains, it remains unclear how much exactly a farmer is paid for their product. Their current position in the chain often leaves them unable to bargain for higher prices and vulnerable to exploitation. Without traceability and transparency, how can we make sure that the producers are not taken advantage of? Trabocca, a coffee importer based in Amsterdam, recognizes the issues and decided to walk the talk: they are going to ensure their coffee farmers in Ethiopia actually earn a living income.
To do so, Trabocca has joined forces with Fairfood, an NGO with the mission to ensure a fair food system through digital innovations and strategic partnerships. An ambitious 5-year long project will involve tracing Trabocca’s supply chains back to the origin, and analysing the price gap in order to ensure a living income for farmers. Fairfood acts as an innovator and offers solutions to, for example, put payments directly in the farmer’s pocket. Simon Lévelt joins as a roaster and the first seller of the living-income coffee, ready to hit the shelves in 5-years’ time.
Living Income Benchmark
Trabocca buys their coffee from about 80 coffee suppliers in countries like Kenya, Ethiopia and Colombia. Each coffee supplier, in turn, works with hundreds of coffee farmers. Initially, the project will focus on two Ethiopian suppliers, who together have more than 628 farmers selling their coffee cherries to them. These suppliers represent 9% of Trabocca’s annual purchase value.
The first step in the project is to determine the living income benchmark for these farmers. This involves looking at the costs of production for coffee, but also at the costs of a healthy diet, housing and schooling. “A living income is important for coffee farmers – and farmers in general – not in the very least to be able to arm themselves against a changing climate”, Sander de Jong, director of Fairfood, explains. In recent years, farmers in East Africa, who were already struggling to make ends meet, are dealing with excessive droughts. Whilst battling the 3 C’s (conflict, climate change and coronavirus), they often do not have the financial capacity to respond to these challenges.
“In times of crises a lack of a living income means not having a piggy bank to fall back on, but you also see, for example, that farmers cannot make investments to brace themselves against climate change”, De Jong continues, “Let alone have the flexibility to change the business and switch to a product that is better suited to the new climate. That is why we really need to realize: a living income is a human right.”
The next phase will see Trabocca and Fairfood test different interventions and measuring the impact on the farmer’s income, ultimately making sure they earn a living income within the time span of 5 years. Menno Simons, founder and director of Trabocca, points out why direct payments matter: “There’s a lot we don’t know yet, but what we do know is that the price a farmer receives for her or his coffee needs to go up. Now, we may raise prices at our end of the value chain, but how do we know the money actually ends up in the right pockets?”
That is why Fairfood is expanding their existing platform Trace, which is currently being used by about 50 companies to increase transparency and traceability of their supply chains, with a new functionality: to make payments that directly end up in the farmer’s pocket, without other supply chain partners ever getting their hands on the money. “For now, this is one of the few ways for companies to actually have a positive impact at the beginning of the value chains”, De Jong adds.
The Business Case
A pilot by Fairfood and Trabocca in 2020 served not only as a foundation for the new project but also helped prove the business case for improved transparency. A batch of coffee from Ethiopia that could be traced all the way back to the farmer was eagerly sought after by coffee roasters, even though they had to pay a small premium for that coffee. “The results of that project were promising, and showed that there is a market for coffee with a good story,” says Simons.“But what we also noticed was that there is still too much information missing to actually get to the bottom of the problem. That’s why this new project focuses so extensively on that living income benchmark. Ultimately, we want to make a serious and lasting impact.”
By increasing prices paid to farmers for their coffee and thereby addressing the major risk in these supply chains, this project contributes to SDG 1 (no poverty), SDG 8 (decent work and economic growth) and SDG 12 (responsible consumption and production).
- Worldwide at least 20 million farmers and wageworkers are directly involved in the cultivation of coffee. Around 80% of coffee is produced by smallholder farmers.
- Home of Arabica coffee, Ethiopia accounts for 50% of the African coffee exports (2016).
- About 15 million individual farmers and workers depend on the African coffee economy in Ethiopia alone (Nature).
- Ethiopia has no minimum wage (ILO).
- Labour earnings vary greatly from country to country: whereas in Costa Rica plantation employees received 382.1 $USD, Ethiopian field workers earned 37.5 $USD (ILO).