The Silent Majority: Independent Smallholder Coffee Farmers

Last month, during the Specialty Coffee Association of America conference in Boston, I had the privilege of organizing a panel about the need to include independent smallholder coffee farmers in the industry’s sustainability efforts.   These coffee farmers are smallholders who are not organized in a cooperative or other type of farmer organization.  The panel included:

  • Michael Sheridan from Catholic Relief Services
  • Leo Purba, independent smallholder coffee farmer from Sumatra, and
  • Andrew Sargent from HRNS Neumann Foundation
  • Miguel Zamora from Fair Trade USA

Michael, Leo and Andrew have very significant experience working with independent smallholder coffee farmers. I have been collaborating with them as part of the work I do supporting this group of farmers. We believe in the potential of this group of farmers to create a more sustainable coffee industry so I wanted to summarize our discussion in this post.

Independent Smallholders: Why should the coffee industry care?

  • Industry’s supply chain is in jeopardy!
  • Producer reality: climate change, leaf rust, decreases in production, higher consumption at-origin.  Coffee production is not necessarily sustainable for most independent smallholder coffee farmers and new challenges continue to emerge
  • Most coffee farmers are independent smallholders: smallholders who are not part of a farmer organization.  This presents a set of specific challenges and opportunities
  • All of this brings challenges to the coffee industry since it makes it more difficult to obtain the coffee the industry needs

Andrew Sargent created the table below using information from the Neumann Group (NKG).  In some cases there are official country numbers but in many countries, this information came as general subjective estimates.  It stills provide a great estimate of what percentage of smallholders are part of farmer organizations

Created by Andrew Sargent for SCAA presentation in 4/2013

* UW: unweighted; W1: weighted by production; W2: weighted by # farmers W3: weighted by # smallholders. Source: HRNS/NKG interviews, 2013. Created by Andrew Sargent for SCAA presentation in 4/2013

Based on this and in previous estimates from the Neumann Foundation, here is graph that shows why independent smallholders are an important group:  They account for the majority of coffee farmers!

Coffee farmers share by size/type. Source: NKG 2010/2013.  Graph created by M Zamora

Estimated coffee farmers share by size/type. Source: NKG 2010/2013. Graph created by M Zamora for SCAA presentation in 4/2013.

Independent Smallholders: The Opportunity

Quality: coffees with probably the most quality potential in the world.  Right now, a lot of the coffee coming from independent smallholder comes to the U.S. with tons of defects, mixed with other “defective” coffee.  That does not have to be the case: Independent smallholder coffees come from communities/regions that are similar to areas that produce some of the best coffees in the world. With the right access to resources and information, independent smallholders could significantly increase the availability of great quality coffees.

Traceability: learning where most of the coffee actually comes from, where those communities are, who the farmers are.  Right now, most independent smallholders’ coffee comes to the U.S. “faceless”, without roasters and consumers really knowing where that coffee was produced.

Sustainability: reaching the biggest group of coffee farmers and making sure that coffee is a sustainable alternative for them and the environment.  The coffee industry could support developing more sustainable supply chains and building closer relationships with coffee farming communities

The challenges:

Smallholders tend to produce 5 to 50 bags of green coffee but containers coming to the U.S. are filled with 250-320 bags.  Being able to fill a container could give farmers chances to reach more buyers more directly since a container is, in many cases, the minimum amount of coffee that an importer will bring to the U.S.  Coffee from independent smallholders needs to be aggregated by someone.  Farmers, when organized, will have a better chance to aggregate their coffee and reach markets more directly.

For the presentation, Andrew shared this graph that shows different ways that coffee coming from a set of independent smallholders in Brazil had to reach the exports market:

Brasil - cadeia

In most cases, coffee changes hands multiple times.  When farmers are organized, coffee goes more directly to the exports market.  This will also mean more value in the pocket of farmers.  During the panel, Michael shared information about independent smallholder farmers he worked with in Nariño, Colombia, where only 4% of surveyed farmers were receiving quality-based premium.  For a region with such great coffee (in 2010 Cup of Excellence, 8 of top 10 places in Colombia were from Nariño), this would show that there is a disconnection between quality potential and what farmers could receive for their coffee.

An alternative:

Independent smallholders creating democratically-run, transparent, independent, effective farmer organizations owned by the farmers themselves

Why farmer organizations?

Farmer organizations bring benefits to farmers that allow them to reduce costs of production, improve capacity and quality, and get higher value from coffee prices.

  • Access to cheaper inputs: farmers could get better prices if they buy inputs together, by bulk
  • Access to credit: independent smallholders rarely receive credit for working capital from banks.  Farmers, together, are more likely to get credit
  • Access to services and support: it is more likely that farmers can access local government resources (extension services, funds for projects), and NGO resources if they have a farmer organization.  Farmers who are not part of a farmer organization will likely receive less support  when times get tough (for example: less support to fight leaf rust)
  • Access to information: about market expectations and conditions (quality, service, price, etc)

During the panel, Andrew had information about a project in Uganda where farmers increased yields by 100% and income by 250% due to creating democratic, transparent and effective farmer organizations.

What type of organizations?

Farmers need to find the right structure and right size that work for their specific needs.  Some things to consider:

  • Governance: democratically-run, transparent and independent organizations
  • Capacity: well-managed, efficient, and profitable
  • Services: provides services and support to members (beyond buying and selling coffee)
  • Time dimension: ‘good’ characteristics maintained over time

Recommendations for YOU:

-     If you are a coffee roaster or work in the coffee industry, you can support a more sustainable industry by making sure the coffee you buy comes from farmers who are growing coffee in a sustainable way and have access to prices, information and resources that make coffee production a viable alternative.  How?
-     Since most of the coffee farmers in the world are independent smallholders, ask questions to your importer or provider?

  • Who are the farmers growing this coffee?
  • Where are those communities?
  • What is the cost of production of those farmers?
  • What is the farm gate price farmers received for that coffee?

-     Support organizations and initiatives that help independent smallholders to create farmer organizations.  If you want to learn more about our work supporting independent smallholder coffee farmers (for any of the four of us panelists), leave a comment here and I will get back to you.

Being the majority of coffee farmers and having a great potential to improve quality, traceability and sustainability, independent smallholder coffee farmers present an important opportunity for the industry to create more sustainable supply chains.  Finding ways to make coffee production a viable and sustainable alternative for this group should be a goal of the specialty coffee industry.  We will all benefit from that.

Read about Farmer Aggregation and the ICO – below:

An Encouraging Discussion on Farmer Aggregation

 

11 thoughts

  1. Buen dia Miguel, Andrew and Cia, very interesting angle to increase sustainability in our coffee communities. Being and independent coffee trader and exporter, I am very much interested to cooperate in anything that you may need here in Honduras.

  2. Thank you for the comment, Jimmy. Cooperation with every link in the chain is necessary to achieve more sustainable coffee farming communities. Hopefully this panel at the SCAA show will allow to continue the discussion and to support independent smallholder farmers.

  3. This is the reality on the ground for the coffee industry in Kenya, and I guess it also gives the farmers, through their co-operative societies greater bargaining power especially if they are working with an aggressive marketer.

  4. The synthesized information are very interesting. And they reflect the reality in Brazil, especially in the coffee regions of the Chapada Diamantina Plateau and Vitória da Conquista, Bahia in both, and the Zona da Mata in Minas Gerais.
    Good job!

    • Thank you, Fabio. I hope things are going great with farmers in Bahia. I was in the Chapada Diamantina a few months ago and it was great seeing that beautiful area again. I will be in Zona da Mata next week for a couple of days (Lajinha) visiting Fair Trade farmers there. Regards

  5. Miguel, I have been reading your materials since finding them recently and am VERY interested in corresponding to learn how to approach the process of helping coffee farmers in Oaxaca, Mexico. I worked in the area for 8 years in a group of villages where they are coffee farmers, but now reside in Portland, OR. While some farmers are part of CEPCO and maybe other co-ops the majority for many reasons only sell their coffee to buyers in what is essentially a black coffee market. I am sure you are familiar with all of this :)
    So, just hoping to begin a conversation to learn, collaborate and work to improve the quality of the lives of these beautiful people. Gracias! Mateo

    • Hi Mateo,
      Thanks for the comment. The situation you describe is common for other cooperatives and regions I have visited. Right now I am trying to work with a group of farmers in Peru who are organized in a cooperative but want to support farmers who are selling their coffee independently. Since there is a buyer interested in buying that coffee through the co-op, that is helping the process since there are bigger incentives for the independent farmers to worker closely with the co-op.

      regards,
      miguel

  6. Dear Miguel,
    as we speak I am starting a new business model. We a buying and selling coffee from small holders. First we pre-finance the coffee which we sell on the European and American Market to small roasters. After we sold the micro-lots we share the profit we made with the small holders. I would like to meet you and discuss this new business model.

  7. Pingback: from independent farmers to farmer organizations | coffee gente - the people in coffee

  8. Pingback: an encouraging discussion on farmer aggregation | coffee gente - the people in coffee

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