What do millions of people around the world enjoy every day at home and in the office, with their friends and their colleagues?
Coffee, of course! Coffee has become such a staple of modern life that most of us can’t imagine our day without it. Worldwide, we drink over 500 billion cups of coffee every year, with 90% grown in developing countries where over 25 million people earn their livelihoods from it. With the average price of a latte costing more than a fast food meal, coffee retailers seem to make large profits from coffee sales. But in a competitive market dominated by large traders, it can be hard for small coffee growers to secure a fair price for their product.
No less popular than coffee is that much-loved treat, chocolate. The chocolate confectionary market is an USD 80 billion a year industry, and global demand for chocolate is expected to increase 30% by 2020. Smallholder farmers produce 90% of the world’s cacao; however, most cacao farmers only earn a fraction of the retail price for their product. In addition to keeping cacao farmers in poverty, low prices result in less investment in better farming techniques, in turn affecting product quality and yields, reducing its value.
In Nicaragua, through our Inclusive Business approach, we are harnessing public-private partnerships to bring true value for farmers back into the coffee and cacao value chains, through a programme valued at EUR 10,750,000. We are increasing incomes and promoting food security for 3,000 coffee and 2,000 cacao producers, by supporting access to the market of trading company Exportadora of the Swiss ECOM group. This private coffee and cacao trading company holds more than one-third of the market share for both products in Nicaragua. Through the programme the company supports farmers to improve product quality, and pays them a fair price, which guarantees a better more profitable product. The capacities of 20 farmer co-operatives are also being supported to increase quality crop yields through the expertise of the Foundation for Agricultural Technology Development and Forestry of Nicaragua (FUNICA), the University of Zamorano and UTZ Certified. The combined efforts of these players across six regions in Nicaragua is bringing smallholder producers into the value chains and earning them a better income.
“By having good coffee, we have better prices and the farmer benefits”, says Juan, an SNV-supported coffee farmer in Nicaragua. Our programme looks across the whole value chain to understand what interventions are needed to improve product quality and reduce constraints that limit competitiveness. Poor resources beget poor quality, leading to low prices which keep farmers in poverty. Therefore our interventions range from educating farmers in better agricultural techniques to farm management to coffee appreciation and marketing. We also strengthen farmer co-operatives in management, administration, decision- making and business alliances. “The main goal is that farmers can increase productivity to make high quality products and have an easier way to access high value markets. To achieve this we not only work with farmers to help get them certified and to implement good practices, we also work with co-operatives and their staff to strengthen them on every level”, explains Silvia Amador of SNV in Nicaragua.
One of the leaders of La Campesina, a small co-operative of cacoa producers comments. “Our co-operative is going to develop with help from SNV. The clients demand 100 tons per month. We produce only 250 tons per year. Improving productivity is one of our challenges. And we know that, with SNV, we are going to get to this goal. We strengthen productivity, the operation and the organisation and SNV helps us access better markets”. La Campesina is also working with SNV to increase the number of women in the co-operative. The co-operative members see the benefits of this Inclusive Business approach. ”We did not know anything about cacao, but La Campesina helped and motivated us and showed us how to start. This has made us feel very good and generated good money for us “ adds a co-operative member.
This programme is also helping develop the next generation of coffee and cacao producers. Low prices and unstable markets often drive poor farmers to seek alternative crops. Working with the sons and daughters of farm families sus- tains the economies of rural communities.“I’m the son of a producer. We know some things about farming. But the expertise that we have from the SNV courses, helps us to improve our knowledge.” says one young coffee farmer.
These young people are learning skills from climate-smart agriculture techniques to chocolate and coffee processing. “I studied a course of coffee tasting from the SNV development program. Before, all I knew is that we cultivated coffee and drank it. I didn’t know about different smells and tastes. Now that I have studied this course, I have a better vision about coffee. My ambition is to be a professional coffee taster.” says a coffee student.
These smart interventions are integral parts of this Inclusive Business model. As producers of quality coffee and cacao, 5,000 small family farms are now part of the Exportadora Atlantic value chain, securing access to a stable market that pays fairly. Exportadora in turn benefit from the reliable sustainable supply of a high quality product. From bean to brew, these farmers are earning a better livelihood for themselves and their families, and nurturing a fruitful future for coffee and cacoa in Nicaragua.