For future-proof coffee farming: Continued support for the transformation process
Management approach: GRI 203; 304; 308; 407; 408; 409; 411; 413; 414
GRI 102-9; 308-2; 407-1; 409-1; 414-2
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 support a sustainable development of the coffee sector: systemic challenges can only be effectively met by working together 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.
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, it is a great challenge to create transparency from cup to plantation, and to promote better conditions locally. Collaboration with reliable partners in the growing regions and the 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 larger farms. Through our demand for sustainably grown coffee grades and our efforts on the ground, we can influence the cultivation methods and conditions in coffee-growing.
The coffee beans’ journey
After the coffee harvest, the coffee beans go through initial processing locally – either the farmer delivers them directly to a processing plant, or they are delivered by an intermediary. From dry, wet or semi-washed processing, the coffee beans continue on to the mill, where they are peeled and then sorted by export grade. Again, the beans arrive at the mill either directly or via an intermediary. If the processor does not possess an export licence, they sell the beans to an exporter or importer, if necessary through an intermediary. Alternatively, the beans may go to auction. The beans are then sold to a roaster, such as Tchibo, a process that again may involve several steps. Once the coffee beans have been transported to Germany, they are put in interim storage, cleaned again, roasted, packaged, and finally arrive at their consumer via retail.
Challenges in coffee growing
Around two-thirds of the world's approximately 17 to 20 million coffee farmers are smallholders with just 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. for instance, toxic pesticides are used – often without taking protective measures – and the soil is over-fertilized. 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.
The soil’s loss of fertility reduces the yield per hectare. At the same time, production costs rise because additional fertilizer is needed to maintain yields as far as possible. In many cases coffee cultivation stops being an economically viable proposition: in order to buy the fertilizer, many farmers have to take the risk of financing, without being able to hedge against the strongly fluctuating green-coffee prices on the world market. As a result, many smallholders can no longer live off coffee farming alone, so they give it up or merely grow coffee as a side-line. Moreover, traditional coffee farming without modern technical resources is regarded as hard work by many people and therefore not very attractive. Young farmers in particular therefore no longer consider it as a source of income if more lucrative alternatives are available to them.
On the other hand, there is an increased demand for green coffee. In the last few decades it has risen steadily by about 2 % per year. If this increasing demand is to be met in future as well, yields must be increased – including and especially those of the many millions of smallholders, because their yields are often low. So the idea is to help smallholders increase their yields in a sustainable way and thus secure a good livelihood. To do this, they need a financial foundation, for only then can they invest in more sustainable forms of cultivation and production that protect the environment and take social criteria into account. Beyond this, working conditions need to be improved in many places. While the large farms are inspected frequently, in the case of the smaller estates and smallholders, high production costs and the price pressure of the market often result in informal working relationships and working conditions that fail to meet ILO core labour standards. For this reason, involving smallholder farmers in the process of transforming the coffee sector is an important pillar of our strategic approach, which commitment at both the operational (supply chain) and higher (sectoral approach) levels.
Further development of the strategic approach
To meet the challenges of the supply chain and in the growing regions, we have worked for a sustainable development of the coffee sector since 2006. In these past eleven years, we have triggered a number of positive developments with our measures in the supply chain: we 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 – as shown, for example by sales of Fairtrade coffee in the German market, which nearly doubled to more than 17,000 tonnes between 2012 and 2016.
However, we have also had to acknowledge that we are encountering the limits of what we can do and achieve as a single company. Systemic challenges at the origins, such as impermissible forms of child labour on the farms, and the lack of transparency in the mainstream market, are issues that require efforts on a broader scale. For instance, our partners obtain the green coffee in the quality we require from many different farms. Depending on the origin, there may be several thousand who deliver their green coffee for a container – which makes it accordingly difficult to create transparency. To find out how we can address these challenges even more specifically, in 2016 we performed a comprehensive assessment of our previous strategic approach for sustainable raw coffee, involving key stakeholders.
We surveyed our key stakeholders about current challenges. They included the international standard organisations Fairtrade, Rainforest Alliance und UTZ, local standards organisations such as Coffee Care in Guatemala and CLAC in Fairtrade's Latin American network, coffee farmers in our main growing countries, and our suppliers. Deep-dive analyses of these challenges and of existing approaches were carried out. We looked at global trends, the increasing momentum in the coffee sector, and consumers’ expectations regarding taste and sustainability.
In essence, the analyses showed that major ecological and social challenges – such as the causes of impermissible 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. On the one hand this finding encourages us to continue our involvement in international collaborations. But 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 and doing their part in their respective roles in order to bring about systemic changes.
We want to join these forces and have therefore added a systemic programme to our integrative existing concept: ‘Mainstreaming Sustainable Coffee Production’. Our goal is to bring together all relevant stakeholders and jointly identify urgent, regional issues, to then develop various solution scenarios in dialogue with everyone involved. 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.
Our first test market is Brazil, as the country has already attained a high degree of maturity when it comes to sustainable development in coffee cultivation. So a systemic, institutional cooperation on implementation solutions could be realistic, especially as Brazil has already gone through an intensive stakeholder process with the National Coffee Platform, to define its own national sustainability standard.
As a first step, we conducted a multi-stakeholder workshop in Belo Horizonte in the Brazilian state of Minas Gerais in November 2017. In 2018, we will initiate small collaboration experiments.
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”. So in 2017, we expanded our Tchibo Joint Forces!® qualification programme to include coffee-growing regions in Brazil. By developing a sustainability approach that is effective locally, we make an effective contribution to the sustainable development of the coffee sector. Our measures are designed to support the shift to sustainable agriculture, strengthen local structures in organising farmers, and facilitate their market access. Certification processes help ensure compliance and increase transparency in the supply chain.
Beyond this, as a member of the steering committee of the international Global Coffee Platform (GCP), we contributed to the development of a new vision for the sector: Vision 2030. Its development and the establishment of the GCP, in conjunction with many other efforts, mark a first decisive step in supporting the process of transformation towards becoming a more sustainable sector. The Sustainable Development Goals (SDGs) are an essential part of the identified visions.
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|
|In 2017, we sourced 26,4 % of our green coffee from coffee farms that are certified according to accredited international standards (e.g. Fairtrade, Rainforest Alliance, UTZ, Bio), or are validated to the baseline standards of the 4C Association. (More information)|
|Supply chain: Tchibo Joint Forces!® qualification program|
|We support smallholders and their families with our Tchibo Joint Forces!® qualification programme, to further develop the local structures in a sustainable way. The coffee farmers and their families are to be supported in improving their living conditions through sustainable and profitable coffee farming. Here also women, children and communities are being more included. So support for farmers is not only provided at farm level, but in an integrated manner: through jointly developed activities and measures to secure income, ensure childcare, and prevent child labour. (More Information) |
|Systemic approach: ‘Mainstreaming Sustainable Coffee Production'|
|The ‘Mainstreaming Sustainable Coffee Production’ multi-stakeholder experiments initiated by Tchibo are our way of tackling structural and systemic challenges – in partnership with the sector’s key protagonists. In our pilot project in the Brazilian state of Minas Gerais, we are seeking an innovative way to develop a shared understanding with local stakeholders of what sustainability means in Minas Gerais, and how we can work together to achieve it. To this end, we are shifting our focus from 4C-validated green coffees to our systemic approach. An important success factor will be to win over all relevant partners for this idea. Unlike in the textile industry, there is still very little cooperation at the pre-competitive level to develop systemic solutions. (More Information)|
|Cross-industry co-operation and alliances|
|We are involved in cross-industry cooperation and alliances. The Global Coffee Platform (GCP), which acts on an international level, and International Coffee Partners (ICP) are of particular importance for us. (More Information)|
|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 impermissible child labour, and open up additional sources of income. We want to empower local people to continue working independently on the topics addressed even after the project has ended. (More Information)|
Regular evaluation of the measures
Part of our sustainability concept is to systematically evaluate the effectiveness of the assumptions taken in our supply chain management approach as well as those of our systemic approach.
As regards supply chain management, we are currently developing a concept to record and rate the effectiveness of individual measures – so that we can identify how we can further develop our approach. 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 other project participants. It is important for us to be able to use the knowledge gained to intervene while the project is still ongoing, and not merely to discover missed opportunities at the end of the project. That is why in 2018, we will concentrate on selecting innovative methods. To evaluate the development of the coffee sector, the members of the Global Coffee Platform are working on indicators that show how effective the implemented measures are. Based on selected indicators, in future the Global Coffee Platform members will be obligated to report on their performance. The indicators will be selected and the mandatory report content compiled in 2018. Binding results are expected by the end of 2018.