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.