For future-proof coffee farming: Forging ahead with the trans­for­mation process

For over 65 years, we have offered our customers top-quality coffee. To be able to keep deliv­ering on this aspiration in future, we not only place a premium on flavour and taste, but also work to maintain and contin­ually improve the condi­tions needed for growing high-quality coffees. We commit to our local supply chains by cooper­ating with coffee farmers and standards organ­i­sa­tions and promoting sustainable farming practices. We also contribute our expertise to inter­na­tional initia­tives to promote a sustainable devel­opment of the coffee sector: systemic challenges can only be resolved by working together effec­tively with all protag­o­nists in the sector.

As we work towards becoming a 100% sustainable business, our medium-term goal is to offer only coffees whose culti­vation meets ecological as well as social and economic require­ments. By doing so, we contribute to safeguarding the liveli­hoods of coffee farmers and their families long-term – which also ensures the long-term avail­ability of the raw coffee qualities we need, and the future viability of our business. We apply a holistic concept to the sustainable devel­opment of the coffee supply chain and the entire coffee sector. There is also a growing focus on creating more trans­parency in the global supply chain.

Challenges in the supply chain

Our Arabica and Robusta coffees are grown in the ‘coffee belt’ along the equator in South and Central America, Africa and Asia. The culti­vation areas are predom­i­nantly located in devel­oping and emerging countries. The majority of the producers are small­holders whose farms usually comprise less than 2 hectares of arable land.

Due to the many small­holders that make up the supply chain at the origins, it is a great challenge to create trans­parency from the cup to the origins and to promote better condi­tions locally. Collab­o­ration with reliable partners in the growing regions and our supply chains is therefore essential for us. We cultivate mutually trustful, long-term supplier relation­ships with exporters and traders from the growing regions, as well as with cooper­a­tives and individual farmers, the socalled “estates.” Through our demand for sustainably grown coffee grades and our efforts at the origins, we can influence the culti­vation methods and condi­tions that govern coffee-growing, e.g. achieving environ­mental protection through a dimin­ished use of herbi­cides and pesti­cides, and a more efficient use of water.

Challenges in coffee growing

Around two-thirds of the world's 25 million coffee farmers are small­holders with only one or two hectares of land. Their resources are as limited as their access to technology, financial resources, and education. They often lack knowledge about eco-friendly and efficient culti­vation methods. In the medium-term this situation leads to declining yields, lower quality, and increasing environ­mental pollution through inappro­priate culti­vation methods such as overuse of fertilisers and use of pesti­cides. The reper­cus­sions of climate change additionally threaten the future viability of coffee farming, because farmers often lack knowledge how to adapt to changing weather patterns.

Once parts of the land become unfertile, the yield per hectare is reduced and production costs rise. Coffee culti­vation becomes uneco­nomic, and the farmers can no longer make a living from growing coffee alone. The upshot: they give up coffee farming and look for alter­native sources of income. Young farmers and female farmers in particular are leaving coffee farming and/or no longer even consider it as a source of income. In addition, there is an econom­i­cally difficult environment, such as strong price fluctu­a­tions on the inter­na­tional markets, against which farmers are rarely able to hedge. These often result in poor working condi­tions on farms, which do not corre­spond to the decla­ration on funda­mental principles and rights at work of the Inter­na­tional Labour Organ­i­sation (ILO).

So a 100% sustainable coffee assortment can only be achieved through access to small­holders. They need to be empowered to increase the yield in a sustainable way so that the land becomes fertile again and remains fertile. They need a basis for investing in more sustainable forms of culti­vation and production that protect the environment and take social criteria into account. The involvement of small­holder farmers is therefore an important pillar of our strategic approach, and requires efforts and commitment at the opera­tional as well as higher levels.

Further devel­opment of the strategic approach

Since 2006, we have been engaged in the sustainable devel­opment of the coffee sector, so as to meet the challenges of the supply chain and growing regions. We have achieved a lot in the past ten years. Our measures in the supply chain in particular have triggered positive devel­op­ments: we have strengthened the culti­vation of sustainable coffee grades, and contributed to the fact that more and more sustainable coffees are offered and being demanded by consumers. For example, Fairtrade coffee sales in the German market have nearly doubled since 2012; in 2016 they came to around 17,000 tonnes.

However, we have also had to acknowledge that there are limits to ourin­fluence as a single company. These include systemic challenges at the origins, such as child labour on the farms, and the lack of trans­parency in the supply chains. To find out how we can address these challenges even more specif­i­cally, we compre­hen­sively assessed our previous strategic approach for sustainable raw coffee in 2016, involving key stake­holders. The results help us to keep devel­oping the strategy in a targeted way.

We surveyed our key stake­holders about current challenges, including the inter­na­tional standard organ­i­sa­tions Fairtrade, Rainforest Alliance and UTZ, coffee farmers in Brazil, and our suppliers. In-depth analyses of these challenges and our existing approaches followed, conducted in exchange with the Hanns R. Neumann Stiftung and other relevant stake­holders in Brazil, one of the main coffee-growing countries. We looked at global trends, the increasing dynamics in the coffee sector, and consumers’ expec­ta­tions regarding taste and sustain­ability. At the same time, we began evalu­ating our Tchibo Joint Forces!® projects. Also, as a member of the Steering Committee of the inter­na­tionally active Global Coffee Platform (GCP), we contributed to devel­oping a new target vision for the sector, Vision 2030. The GCP and Vision 2030 mark a new decisive devel­opment step towards more sustain­ability at sector level. The require­ments to meet selected targets of the Sustainable Devel­opment Goals (SDGs) are also taken into account in this.

Further devel­opment of the integrative approach

In essence, the analyses showed that major challenges – such as the causes of unacceptable child labour and use of prohibited pesti­cides – are systemic. To tackle them effec­tively, it is necessary to go beyond supply chain activ­ities and address problems at a systemic level, involving govern­ments and public interest groups. This finding encourages us, on the one hand, to continue our engagement within the supply chain and in inter­na­tional cooper­ation. On the other hand, it also shows that further efforts are required to sustainably transform the coffee sector in the long term. All coffee sector stake­holders must take even more respon­si­bility for shaping the trans­for­mation process in their respective roles, because we need to join forces to bring about systemic changes.

We are ready and willing to join forces and have therefore extended our integrative approach to include a new pillar: the systemic programme ‘Mainstreaming Sustainable Coffee Production’ we jointly initiated with the Hanns R. Neumann Stiftung. Our goal is to bring together all relevant stake­holders and jointly address urgent, regional issues and contribute to a systemic solution. We are aware that such a process takes time and that we cannot create an impact overnight. That is why our programme takes a long-term approach. 

We are also extending our Tchibo Joint Forces!® quali­fi­cation programme from the level of individual small­holders to a regional level, by e.g. addressing suppliers, NGOs and other roasters and devel­oping scalable solutions. The core goal of our commitment is “Coffee farming as a viable business”. Our measures aim to teach sustainable agriculture methods, improve local struc­tures by better organ­ising farmers, and facil­itate their market access. Certi­fi­cation processes help ensure compliance and increase trans­parency in the supply chain.

Focus on: supply chain and systemic solutions

As we continue devel­oping our integrative approach, we are pursuing five coordi­nated strategic approaches.

Supply chain: Purchasing sustainable coffee grades

We source 36,3% of our raw coffee from coffee farms that are certified according to accredited inter­na­tional standards (e.g. Fairtrade, Rainforest Alliance, UTZ), or are validated to the baseline standards of the 4C Associ­ation. Another 50% will be covered in future with the ‘Mainstreaming Sustainable Coffee Production’ systemic sector approach.
Supply chain: Tchibo Joint Forces!® quali­fi­cation program
We support small­holders and their families with our Tchibo Joint Forces!® quali­fi­cation programme, which we will expand more to the regional level from now on, to further develop the local struc­tures in a sustainable way. The coffee farmers and their families are to be empowered to improve their living condi­tions through sustainable and profitable coffee farming. We increas­ingly involve the women, children and commu­nities in this as well.

Systemic approach: ‘Mainstreaming Sustainable Coffee Production’

We are tackling struc­tural and systemic challenges with the launch of the ‘Mainstreaming Sustainable Coffee Production’ multi-stake­holder initiative which we initiated with the Hanns R. Neumann Stiftung – together with key players in the industry. Together, we wish to create more trans­parency and achieve a level of sustain­ability for as many farmers as possible, i.e. throughout the sector, that covers jointly defined demands and ensures compliance. To achieve this, we are shifting our focus from increasing 4C-validated raw coffee to our new, systemic approach.

Cross-industry co-operation and alliances

We are involved in cross-industry cooper­ation and alliances. The Global Coffee Platform (GCP), which acts for the coffee sector on an inter­na­tional level, and its Vision 2030, as well as Inter­na­tional Coffee Partners (ICP) are of particular impor­tance for us.

Education projects in the countries of origin

We promote educa­tional projects that help people to help themselves in the coffee-growing countries. By doing this, we hope to improve social struc­tures on the ground, provide alter­na­tives to unacceptable child labour, and open up additional sources of income.

Regular evalu­ation of the measures

Part of our sustain­ability concept is to regularly evaluate the effec­tiveness of our supply chain management approach as well as our systemic approach.

As regards supply chain management, we are currently devel­oping a concept to record and evaluate the positive effects of our measures for the coffee farmers. This will enable us to make the necessary adjust­ments. The goal is to incor­porate innovative forms of evalu­ation at the design stage of the project. This also makes it possible to identify challenges and to develop possible solutions with the involvement of farmers and project partic­i­pants.

To evaluate the systemic approach, the entire coffee sector is currently working on indicators that will provide evidence for the effec­tiveness of the inter­ven­tions. The Global Coffee Platform has obliged its members to report these indicators. The devel­opment of the first indicators will be completed in 2017.