Coffee Roya Re-building from the ground up Lee Byers, Senior Advisor Coffee Fairtrade international 4th Nov 2013
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1 Coffee Roya Re-building from the ground up Lee Byers, Senior Advisor Coffee Fairtrade international 4th Nov 2013 Fairtrade Fairtrade Unlocking the Power of the Many Unlocking the Power of the Many
2 Agenda Sustainable Coffee? Key learning Roya Fairtrade supply & demand What shall we do? -Some suggestions. -Case Study (film) 2
3 Sustainable Approach Resilient People, Resilient Planet
4 Global Coffee price volatility continues Sustainable Coffee cannot be at any price (NY C price now below cost of productioncomposite price $1.05 1st Nov)
5 FAIRTRADE SMALL FARMERS AFFECTED BY CLIMATE Affected by Climate Change - Yields Not able to access adaptation/ mitigation Knowledge about changes in purchasing requirements Carbon Footprint requested Source: Flo Cert 76% 83% 64% 20%
6 Diminishing Returns cutting into growers income Small-holder coffee farmers globally have seen average income, per farm unit, reduced 25-50% in past 10 years, a combination of smaller farm plots and lower productivity*. Perhaps 50-70% of small coffee farms semi-abandoned *MAJA WALLENGREN - INDEPENDENT ANALYST AND REPORTER, AFCA Conference, Uganda, February Small-holder coffee grower s income in 2001 with 1.3 hectare of land and av. yield10-14 qq of coffee per hectare 100% Small coffee grower s income in now based on average 0.5 to 0.7 hectare of land 50% Small-holder coffee grower s income in further reduced by 50% because of average yields of 5-7 qq of coffee per hectare 25%
7 Agenda -Sustainable Coffee? -Key learning Roya (FT London) -Fairtrade supply & demand -What shall we do? -Some suggestions. -Case study (film) 7
8 European event attended by: FLO, TWIN, FT Foundation, Peter Baker, CLAC, Responsability, Incofin, Shared Interest, Triodos, Rabobank, Neumann Foundation and Fairtrade Roasters and Coffee Traders. Presentations and learning materials will be published very shortly via Fairtrade Foundation and Fairtrade International See our case study video also
9 Coffee Rust: Learning (London workshop) i) Accident waiting to happen Impact large/significant, 30 to 40% crop $1,450 per farmer* Rust likely to re-occur. No quick fixes -cause is systemic weakness Need to change way of farm working Too many farms poor nutrition & maintenance (but lack of incentives/motivation if prices low) Immediate needs: Awareness, dissemination of skill/knowledge, supply of materials and funds for renovation and investment. * CLAC survey 2013, 45 farmer organisations 9
10 Coffee Rust: Learning (London workshop) ii) Change at farm level requires motivation: current coffee business model fundamentally flawed(nyc!). Farmers need resilient organisations capacity building required. Strong agro technical, micro credit and commercial capabilities. Step change requires innovative finance models -shared risk along the value chain Co-ordination is key to progress (we likely all want same things) local to global Fairtrade networks and farmer organisations a useful route (for scale & pace) 10
11 Agenda -Sustainable Coffee? -Key learning Roya (FT London) -Fairtrade supply & demand -What shall we do? -Some suggestions. -Case study (film) 11
12 2012: Fairtrade Vol. MT GBE in rust- affected countries (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru) 450, , , , , , ,000 FT in Rust countries 200,000 FT global (worldwide) 176,942 (42% 142, ,784 (48%) 150,000 92,641 (65%) 100,000 50,000 0 Produc6on Total Exports FT Exports 45% of global exports by FT producers under FT terms -versus 62% in rust affected countries 12
13 Overall likely enough Coffee, ut SPO volumes will vary greatly In everyone s interest to ensure secure and sustainable supply Rust damage to Fairtrade Production assuming 15% damage assuming 30% damage assuming 50% damage Calender 2013 FT Production FT Exports F'cast 2013 surplus/deficit 150, , % 123, , % 88, ,000 88% Estimates based on CR, Dominican, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru 13
14 Agenda -Sustainable Coffee? -Key learning Roya (FT London) -Fairtrade supply & demand -What shall we do? -Some suggestions. -Case study (film) 14
15 Empowering via FT Minimum Price Fairtrade minimum price (revised April 2011) Washed Arabica Conventional Coffee $1.60 inclusive of 20 ct. premium Organic Coffee $1.90 inclusive of 20 ct. premium Current NYC Arabica price Other Mild s (31st Oct $1.23)
16 Empowering via FT Premium investment Fairtrade Productivity & Quality Premium (April 2011) 5 ct. of US 20 ct. lb FT Social Premium for quality and productivity investment by cooperatives Projected 2013 FT funds for productivity investment, $15 million+* (Av. $38,000 per SPO). A good start, but unlikely enough
17 Partnerships shaping the future Fairtrade is a sustainable journey. not there yet Knowing and understanding own supply chains Compliance Certifying products as Fairtrade to Investing into the sustainable future of supply Commitment Applying Fairtrade in all areas of supply (where applicable)
18 Agenda Sustainable Coffee? Key learning Roya Fairtrade supply & demand What shall we do? -Some suggestions. 18
19 Coffee Rust 10 things we can do. A) Raise awareness of price of cheap coffee (FLO) -hunger /human cost of race to the bottom vs. sustainable -lobbying of Government and International bodies (FLO) (living wage already agenda item for Gov t & Certifiers) B) Farm agro risk assessment tool (CABI, Twin, Others) (soil analysis, landscape and natural resource assessment) C) Coffee business model (FLO & Others) software tool to assess inputs/outputs, risk and return at farm and farmer organisation level enabling sensitivity analysis-under what conditions are farms viable/not viable? 19
20 Coffee Rust 10 things we can do. D) Innovation in finance (Alt. Lenders, Buyers, FLO) Rolling commitments, defining best practice, supply plans, loan surety, micro credit & disbursement tools, better modelling, collective know how (funders and SPO). E) Create platforms of expertise/best practice (All) Global: ICO, WCRF, Local: FT & country networks F) Leverage FT producer networks shared learning/delivery at pace & scale (FLO/CLAC/experts at Origin 20
21 Coffee Rust 10 things we can do. G) Strengthen producer organisation (FLO,Twin,SH,others) learning/training good governance, PRM, Agro technical skills H) Develop at least 1 country pilot (FLO & Others) needs assessment, develop and deliver joint funding proposals for farm and farmer organisation development. I) Combine funds/projects where appropriate (All) J) Establish FT Roya network of interested parties for advice/follow-up/potential joint projects. (FLO/SH/Others) 21
22 Fairtrade Roya case study FT, Twin project funded by Lidl German discount retailer & consumers -end to end value chain approach Encouraged by this, FLO has now committed initial Roya funding of $50,000+ Fairtrade already has interest from roasters concerned about their supply chains. what will you do? Show film 22
23 Thank You Lee Byers, Fairtrade International Global Product Management
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