The North American arm of Swiss green coffee trading company Sucafina is launching a program called Farmgate Initiative that gives coffee buyers the ability to tack on additional farmgate payments directly to coffee farms.
The initiative follows an approximately 15-month period during which the commodities prices for green coffee have been at historic lows, threatening the viability of coffee farming for untold numbers of smallholder farmers. Though prices have rebounded significantly over the past two months towards the historical mean, roasters are continuing to look towards importers for improved traceability and the facilitation of more direct connections in order to support coffee farmers — and their coffees — who may be in financial peril.
As opposed to the commodities market for arabica, which is primarily reflected in the Intercontinental Exchange (ICE) prices for futures contracts using the free on board (FOB) price, the Sucafina initiative is importantly concerned with delivering extra farmgate income directly to farms or individual farmers.
“Farmgate payments typically equal one-off cash distributions to growers, leaving many farmers with little to rely on the rest of the year,” Sucafina North America said in an announcement of the new program. “Through Sucafina’s new initiative, this cycle is disrupted. The initiative invites roasters to add a second payment to coffee producers directly through their sales contracts.”
Sucafina listed a number of notable specialty coffee roasters throughout the United States and Canada that have already committed to extra farmgate distributions — collectively totaling more than $95,000 thus far — including Reunion Coffee Roasters, Allegro Coffee Roasters, Intelligentsia, Kickapoo, Amavida, Ozo, Joe Coffee, Counter Culture, Sightglass, Onda Origins, Anodyne and more.
When possible, the program facilitates payments as direct cash distributions to farms or farmers. When such distributions are not possible, the company plans to facilitate alternative farmgate interventions such as livestock, health insurance or solar power.
The program is launching with Sucafina supply chains in Ethiopia, Kenya, Burundi, Rwanda and Papua New Guinea (PNG). Moving forward, Sucafina plans to link the Farmgate Initiative with the IBM blockchain technology-based Farmer Connect traceability and trading platform, which is expected to be widely released in 2020.
“Supply chains can be remote, complex, and opaque,” Sucafina North America’s Kat Nolte said in an announcement of the Farmgate Initiative. “Transparency means creating visibility from farmer to roaster so it’s clear where value is being added and where money is being paid. It takes work with willing partners who are engaged in the buying and selling of cherry and parchment and who are involved in the physical transformation of coffee.”
[Editor’s note: An earlier version of this story incorrectly referred to the blockchain-based trading platform as Farmer Direct. The platform is called Farmer Connect.]