December 11, 2019 – The low market means big risk to the coffee industry. Low prices threaten farmers, especially smallholders. In response, Sucafina North America has created the Farmgate Initiative, allowing roasters to make additional cash payments directly to farmers to increase the farmgate price.
The Farmgate Initiative starts with high-altitude coffee produced by farms and washing stations in Sucafina’s vertically integrated supply chain. Currently, it focuses on the complex supply chains of Ethiopia, Kenya, Burundi, Rwanda and Papua New Guinea (PNG). The project links roasters with farmers directly through contracts, creating the opportunity to increase income and improve livelihoods transparently and traceably.
Farmgate payments typically equal one-off cash distributions to growers, leaving many farmers with little to rely on the rest of the year. Through Sucafina’s new initiative, this cycle is disrupted. The initiative invites roasters to add a second payment to coffee producers directly through their sales contracts. Wherever possible, this payment is made as a direct cash distribution to farms or farmers. In countries where the supply chain is not completely digitally connected (for instance Burundi), farmgate interventions are made to increase to wealth for contributing farmers in other ways, such as in the form of livestock, health insurance, or solar power (implemented by the Kahawatu Foundation).
In the long-term, the Farmgate Initiative will allow roasters to track their payments digitally using Farmer Connect, a blockchain-driven platform that builds farm-to-consumer traceability. Farmer Connect’s cutting-edge approach builds coffee transparency, better communication, and improved efficiency all along the supply chain.
The Farmgate Initiative was inspired by roasters committed to improving coffee farmers’ income. Some of North America’s most prominent roasters have already committed second payments directly where it matters most – at the farm gate. These include Allegro Coffee Roasters, Amavid, Anodyne, Cloud City, Intelligentsia, Irving Farm, Jittery Joe's Coffee, Joe NY, Kickapoo Coffee Roaster, Kittel, La Colombe, Luna, Onda Origins, Ozo Coffee Roasters, Red Rooster, Reunion Coffee Roasters, and Sightglass. Most commitments are year-on-year. So far, the Farmgate Initiative has raised over $95,000 for farm-level distributions related to coffee purchases.
“Putting farmers directly in the contract is a big step forward,” says Max Veglio of Rwacof, Rwanda. “For growers that make on average 75 to 125 USD per cherry harvest – every extra dollar is significant. We plan to pay out $165,000 of bonuses to growers directly into their bank accounts. Anything that specialty roasters could add for specific washing stations would go a long way to improve farmer income. And we will be sure to communicate to growers who the money comes from.”
“Supply chains can be remote, complex, and opaque,” adds Kat Nolte, Senior Trader, Sustainable Supply, North America. “Transparency means creating visibility from farmer to roaster so it’s clear where value is being added and where money is being paid. It takes work with willing partners who are engaged in the buying and selling of cherry and parchment and who are involved in the physical transformation of coffee.”
Roasters of all sizes can participate in the Sucafina Farmgate Initiative. Those interested in getting involved in should contact TradingNA@sucafina.com.