A Fair Deal for Coffee Growers

09/07/21 • 33 min

For decades, smallholder farmers who produce the world’s supply of quality coffee in developing countries have barely earned enough to stay in business. Many have gone under. Millions of those still producing live in poverty and go hungry. Now climate change is threatening their livelihoods as well. The main problem is a supply chain stuffed with so many middlemen, each taking their cut, that only a fraction of the proceeds from pricey specialty-grade beans gets to the grower.

That was the picture in Nicaragua until Rob Terenzi, Noushin Ketabi, and Will DeLuca started Vega Coffee in 2013. On the face of it, their solution seemed simple: Enable the growers to process and ship roasted coffee directly to consumers in the US—thereby cutting out up to a dozen middlemen and retaining the earnings for themselves. It’s not that others hadn’t understood the problem before, but no one else had figured out how to solve it at scale. This episode follows Vega’s story, covering:

Rob’s initial discovery of the coffee growers’ dilemma (0:36);
the structural inequities of the global coffee trading system (4:37);
why Fair Trade and other “certified” designations fail to pull growers out of poverty (6:46);
Vega’s early challenges with roasting ovens (11:31) and transporting fresh beans to the US (13:08);
tapping Nicaraguan growers’ skills (16:13) and prioritizing women to promote gender equity (18:22);
growing the US customer base (22:05);
expansion to Colombia through a partnership with Mercy Corps (26:35);
and the promise of Vega’s model to rectify other broken supply chains of commodities around the world (28:52).

For the full transcript go to: https://ssir.org/podcasts/entry/a_fair_deal_for_coffee_growers

Rob’s initial discovery of the coffee growers’ dilemma (0:36);
the structural inequities of the global coffee trading system (4:37);
why Fair Trade and other “certified” designations fail to pull growers out of poverty (6:46);
Vega’s early challenges with roasting ovens (11:31) and transporting fresh beans to the US (13:08);
tapping Nicaraguan growers’ skills (16:13) and prioritizing women to promote gender equity (18:22);
growing the US customer base (22:05);
expansion to Colombia through a partnership with Mercy Corps (26:35);
and the promise of Vega’s model to rectify other broken supply chains of commodities around the world (28:52).

For the full transcript go to: https://ssir.org/podcasts/entry/a_fair_deal_for_coffee_growers

Previous Episode

The Business of Water

Nothing is more essential to life than clean drinking water. Where it’s in short supply—as in much of Africa and other developing regions—there’s opportunity for promoting good health, improving livelihoods, and making money. Jibu seeks to achieve all three through its franchises that treat, package, and distribute affordable water in the major cities of East Africa. For Jibu, selling water is ultimately a means to the end of spreading economic opportunity for the continent’s aspiring entrepreneurs.

A father-and-son team, Randy and Galen Welsch, started Jibu in 2012. The social enterprise is now a leading purveyor of bottled water in four countries and growing rapidly in three more. This episode traces the venture from:

their early brainstorming sessions (03:59) to the failure of their pilot project in all three initial countries (05:54), the design of compact equipment tailored for developing markets (11:29),
their priorities on recruiting women franchisees and employees to promote gender equity (17:24),
structuring payment terms to make the franchise opportunity affordable to African entrepreneurs (25:52),
and empowering local owners to make decisions that are key to growth and sustainability (29:36).

Additional Resources:

Source articles for this episode include:

Progress on Household Drinking Water, Sanitation and Hygiene, the WHO’s latest data on water access around the world.
Africa’s Cities: Opening Doors to the World, a World Bank report on the challenges faced by the continent’s urban centers.
Africa’s Urbanization Dynamics 2020, an analysis by the OECD of policy options for the development of African cities within their local contexts.

The full transcript of the episode can be found at https://ssir.org/podcasts/entry/the_business_of_water.

Next Episode

From Plow to Prosperity

Smallholder farming in Africa is a precarious existence. Low economies of scale, commodity price swings, out-of-date agronomic practices, and the effects of climate change conspire to trap farm families in a never-ending cycle of poverty. At the same time, Africa’s booming youth population is entering a saturated workforce without enough jobs to absorb them. In Nigeria, the continent’s most populous nation, that has led to a surge of gang violence and a wave of insurgencies over the last two decades.

Kola and Lola Masha, a Nigerian-born and US-educated couple, set out in 2012 to help mitigate the spread of both economic and physical insecurity. Their social enterprise, Babban Gona (“Great Farm” in the Hausa language), offers a rare model that not only makes farming lucrative and an attractive opportunity for Nigeria’s youth. It also has become a profitable and bankable business for commercial lenders. For the first time, they are committing capital to support smallholder agriculture at large scale—and in the process, potentially creating a pathway out of poverty for millions. Highlights of this episode include:

why smallholder farming is central to the poverty problem in Africa (3:42)
the wave of violence in Nigeria fueled largely by unemployed youth (7:21)
the Mashas’ rigorous process to identify agriculture as a job-creation engine (9:44)
Trust Groups, or mini-cooperatives, and other core elements of the Babban Gona model (14:22)
the impact on the lives of farm families (25:39)
how Babban Gona is raising capital to super-scale the model (32:36)
and how it mitigates climate change and other risks (39:39).

For the full transcript go to: https://ssir.org/podcasts/entry/from_plow_to_prosperity