Column: Independent Smallholder Farmers are the Silent Majority

by Miguel Zamora of Coffee Gente

This past spring, 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 coffee industry’s sustainability efforts. The 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
• Andrew Sargent from the 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, and I’d like to summarize our discussion.

Independent Smallholders: Why should the coffee industry care?

• The industry’s supply chain is in jeopardy.
• Producer realities: 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 and 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 still provide a great estimate of what percentage of smallholders are part of farmer organizations:

(UW: unweighted; W1: weighted by production; W2: weighted by number of farmers W3: weighted by number of smallholders. Source: HRNS/NKG interviews, 2013. Created by Andrew Sargent.)

Based on the above chart and previous estimates from the Neumann Foundation, here is graph that shows the relative size of independent smallholders:

(Estimated coffee farmers share by size/type. Source: NKG 2010/2013. Graph created by Miguel Zamora.)

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 many 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, and 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 a chance 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 SCAA 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:

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 discussion, 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 disconnect 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 discussion, 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 Coffee Buyers

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.