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Good morning Michelle, could you please tell us a little about yourself and how you ended up in coffee with the Rainforest Alliance?

I joined the Rainforest Alliance in 2008 and, throughout the years, I have managed a range of coffee projects in Latin America, Asia and Africa, focusing on the development of the Rainforest Alliance Certified coffee supply at the origin.  I am now the organisation’s sector lead for coffee.

Rainforest Alliance has merged with UTZ. Why?

Having a single certification programme will simplify certification for farmers and help companies to build more responsible supply chains and drive innovation more efficiently. Creating a single auditing process and streaming the certification process will not only help the more than 400,000 coffee farmers currently certified under both standards, but it will also help new farmers to certify.

It will also help to expand our advocacy efforts.

I understand you have a new strategy called ‘Reimagining Certification’.

‘Reimagining Certification’ is our long-term vision for the future of certification. It is part of our broader strategy at the Rainforest Alliance to drive change.

Certification has had a significant impact, but it must continue to evolve to drive further improvement for people and nature and provide more value for farmers and companies.

We are moving away from the idea that certification is a series of pass/fail requirements. Instead, we are adopting a continuous improvement approach that drives change from a set of core criteria.

What does this mean in practice? It means first ensuring that all workers receive a minimum wage – but continuing to drive improvements towards a living wage. It means working to stop deforestation–and then going beyond that, towards reforestation or regenerative agriculture.

Could you please explain the economic elements in the new criteria?

Our 2020 Sustainable Agriculture Standard outlines two financial requirements for the buyers of Rainforest Alliance Certified commodities: The Sustainability Differential (SD) and Sustainability Investments (SI).

The Sustainability Differential is a mandatory additional cash payment made to certified producers over and above the market price of the commodity. We don’t set the Sustainability Differential in the coffee sector; the grower and the first buyer will negotiate it between them.

The Sustainability Investments are mandatory cash or in-kind investments from buyers of Rainforest Alliance certified products to certified producers for the specific purpose of helping them meet the farm requirements of our Sustainable Agriculture Standard. The investments must go towards the needs identified by producers in their investment plans, and buyers must report the investments they make.

Besides these new criteria related to shared responsibility, our 2020 Sustainable Agriculture Standard also enhances practices which promote improved efficiency and farm-based profitability as the basis for an improved farm income.

How has the Rainforest Alliance changed its approach to child and forced labour?

Child labour, forced labour, discrimination, and workplace violence and harassment have never been – and will never be – tolerated by the Rainforest Alliance. However, what we have learned through many years of experience is that merely prohibiting these human rights violations in our standard is insufficient. Automatic decertification as the response to any incident of child labour is more likely to drive the problem underground, making it harder to detect and address. That’s why our new certification programme promotes an ‘Assess-and-Address’ approach to tackling these human rights issues.

The ‘Assess-and-Address’ approach puts the interest of children and workers at its centre. Without solving the root causes of child labour, forced labour, discrimination, and workplace violence or harassment, the problems will not go away. That’s why the Rainforest Alliance promotes collaboration between certified farms, governments, civil society and supply chain partners to solve these issues together.

How can you increase the demand for certified coffee?

Our market team works with brands, roasters and retailers to develop demand, and they have been successful in their work in the sense that both of our certification programmes have continued to grow since the merger. It has even been the case in 2020 in the context of the COVID-19 pandemic.

Besides that, you need to look beyond the data of one single certification system to get to the full understanding of supply-demand data. Many farms are double- or sometimes triple-certified. If they sell their coffee through one certification system, it is not available to sell through another certification system.

Last question: what is your favourite coffee, and how do you prepare it?

My favourite coffee comes from a sustainably managed small farm in the Tarrazú mountains of Costa Rica, at 1,700 meters above sea level. A young family manage the whole process from cherry to roasted bean, selling the coffee at the local market of the village where I live. I prepare it with a Chemex coffee maker to obtain the full flavour!

Thank you, Michelle, for your time and input!

You are welcome. Thank you for your interest in the Rainforest Alliance!

© Commodity Conversations ® 2020

This is an extract from my new book ‘Crop to Cup – Conversations over Coffee’ to be published shortly.

Good morning Soren. Could you please tell us what you have been doing since you left Bunge?

I left Bunge in June 2019 after six years as CEO, and after 36 years in traditional agricultural trading and processing with Continental, Cargill and Bunge.

Over the past year, I have been trying to use my experience to help emerging companies across the full spectrum of the agricultural value chain. I have provided advice, directorship and, in some cases, capital to support these new companies in plugging into the existing food chain, to avoid mistakes, and to develop their thinking and their products.

I started with a blank page, but my premise was that food and health are inseparable and that agriculture should not only be sustainable but regenerative.

Where did you start?

I started with Vindara, a company that produces seeds for indoor agriculture. It is a sector that is snowballing. For example, Singapore has a project called ‘30 / 30’ whereby the city-state aims to grow 30 per cent of their nation’s food by 2030. They can only do this through investment in vertical agriculture.

The technology in the indoor sector is changing rapidly. For example, Vidara has reduced the breeding cycle for new seeds from 5-7 years to 18 months and can essentially tailor-make seeds to suit a specific outcome.

What other companies have you become involved in, either as an investor, director, or external advisor?

I am an advisor to Gro Intelligence, a company that curates and assembles global digital data around agriculture and food and provides sophisticated analytical tools to help draw supply chain conclusions. It is my ‘go-to source’ for market intelligence and analytics. The company is also developing various indices relating to climate disruption.

I am on the board of Kultivat, a company that has developed the technology to extract high-quality latex – natural rubber – from dandelion roots. It is a sustainable and economically competitive alternative to synthetic and plantation-grown rubber. Remember, synthetic rubber is produced from fossil fuels, while natural rubber is currently grown on plantations in South East Asia; it has the same environmental challenges as palm oil. Dandelion is an excellent alternative crop for farmers.

I have worked closely with Locus Agriculture Solutions, a company that makes micro-biological products that improve yields, reduce the need for inputs, and increase the ability of plants to capture carbon. They recently completed the first circular deal in carbon capture in row crops. The $250,000 sale was between a prominent Iowa farmer and Shopify, a Canadian-based technology firm. They did the deal in partnership with the Nori Carbon Removal Marketplace.

I’m on the board of  Telesense, a company that has developed low-cost, remote sensor equipment that monitors grain quality. It uses data and AI to predict how grain quality will evolve during storage, helping to reduce spoilage. It also allows you to optimise merchandising decisions and improve processing yields for a range of raw materials from malting barley to oilseeds.

You have several diverse but complimentary themes here. What other arrows do you have in your quiver?

The one thing that all these companies have in common is that they are about optimising existing agriculture using modern technology.

Tilray, where I am on the board, is a publicly listed Canadian company that grows, processes, and distributes hemp and cannabis products.  I learned about the efficacy of medical cannabis through close friends who have been able to improve their quality of life through the use of medical cannabis. The applications are wide-ranging – from pain management to epilepsy. It has had a significant impact on me.

The Hemp plant, which is in the same family as cannabis, produces seeds and what are called “hemp hearts”, protein-rich superfoods in the same category as chia, flaxseed or chickpeas. The world is moving quickly towards plant-based proteins and healthy oils. Hemp is right on-trend.

Tilray is a pioneer in Cannabis and Hemp. It is still ‘day one’ for the industry, but the company is well-positioned for the significant growth which lies ahead.

Many trade houses have been investing in start-ups in high-growth areas, while at the same time running their legacy trading businesses. Does starting with a blank page give you an advantage?

Yes, although it has been a massive advantage having the understanding and appreciation of traditional agriculture and food. Those traditional value chains will still dominate the way we produce and consume food for many years. These other areas will initially develop in parallel, but they will eventually converge.

Do publicly quoted trading companies have more of an incentive than private companies to seek growth in new areas?

Public companies have to balance short-term results with long term strategy and investment. There can be a conflict between these two goals, whatever sector you are in. The cyclicality in agriculture and food can amplify this pressure, which is why many try to diversify into more added value activities.

Being public does have its advantages. You can access capital in a way that you can’t when you are private. As long as your investors understand what you are about, and they know the industry, being public does not have to be negative.

I am concerned that investors are looking to ‘revolutionise’ agriculture without realising that agriculture has been in a state of continual revolution for the past 75 years. Won’t investors in these new sectors ultimately be disappointed?

Over the past 75 years, the focus has been on increasing agricultural yields, while at the same time reducing costs. It has been about growing enough calories.

We still want to grow enough calories, but we now want to develop the right kind of calories in a way that doesn’t harm the environment, repairs the soil and produces nutrient-dense food.

It is a new revolution: using technology to find ways to improve existing production techniques and to regenerate soils. If you haven’t already read it, I recommend the book An Agricultural Testament by Howard Albert. It was first published in 1940 and explained the power of regenerative practices known already then. Imagine those ideas powered with current technology. The goal is to harness the power of ‘Production Ag’ without all the adverse side effects.

Will farmers buy into this?

Yes. Farmers love what they do, and they love their land.  Contrary to popular opinion, farmers are open to change. When you present them with a suitable alternative, they will go for it. The Locus-Nori deal is an example of that.

Up until now, many farmers have not had many other choices than improving yields and lowering costs. There is a way forward where farmers can get the results they need while consumers get the quality of calories they want. It is about producing sustainable, nutrient-dense products.

That’s one side of it. The other side is that investors are looking at the interface between food and health – the notion that you are only as healthy as the food that you eat.

The 15 to 35 age bracket is driving this movement; they will ultimately dictate the future of agriculture. There is a lot still to be done. There is room for a lot of investment, and the future is full of promise.

Thank you, Soren, for your time and inputs! And good luck with your presentation to the Geneva Grain Conference!

© Commodity Conversations ®

Good morning, Olumide. Can you tell me a little about yourself?

I am Nigerian, and I live in Lagos. I have a background in Economics, spending 17 years in banking, majorly financing small and medium businesses. I saw that there was a need in Nigeria to build capacity (Institutional and Infrastructure) for our country’s grain sector in West Africa – to make sustainable structures to increase trade within Africa and other markets, and I left banking to set up a consultancy company called Firstling.

Its goal is to facilitate trade, to improve the supply chain through better access to financing, better logistics and industrial investment – adding value in rice, wheat and soya in particular, as well as other critical commodities.

I am quite passionate about Public-Private Partnership models and structures as a panacea for spurring growth and development in Sub-Saharan Africa.

I am also an executive director in Cargo Marketing, a fifty-year-old company that handles cargo logistics and also involved in warehousing and other supply chain services.

Is the government supportive in helping you facilitate trade?

Not as much as we would like. There is a considerable gap; our government could do so much more in creating an enabling environment for trade facilitation.

On an international level, the African Free Trade Agreement (AFTA) should come into force next year. It should, over time, drive an increase in intra-African trade and services and act as a vehicle for West Africa to catch up with Southern and Eastern Africa. It should be the catalyst that we have been waiting for in terms of aligning policies over tariffs, documentation, standardization and certification. It will foster integration and facilitate inter-African trade, especially for agribusiness. It could be transformational.

We are also excited about the possibility of Nigeria’s Dr Ngozi Okonjo-Iweala becoming the new Director-General of the World Trade Organization. If she is selected, she will be the first woman, and the first African, to lead the institution. She understands Africa and the challenges we face, and she is well-suited to turn the searchlight on Africa and trigger support to overcome challenges trade-related.

Unfortunately, the US is for the moment holding up her appointment, but we are keeping our fingers crossed that her appointment will go through.

What are the biggest challenges that you face in your day to day business?

Lack of physical infrastructure: the road network and the seaports need to be updated to international standards to meet and increase import and export capabilities

Lack of skill and technical know-how: there is tremendous scope for improving or digitalizing the whole trade process in terms of IT, documentation process and generating/analysing data. We have to improve our systems across the spectrum.

Lack of capital: fixing the gaps in physical and knowledge infrastructure would give financiers more confidence and increase the availability of capital. More like asking, which comes first, chicken or the egg?

We need 10 -15-year consistent long-term funding to invest in the infrastructure necessary to build capacity for the medium and long term effect, but getting that is a challenge.

There is a tremendous opportunity here. Africa can leapfrog existing technology, and, in that sense, we are better placed that many parts of the developed world that have a pool of existing and limited ability to expand infrastructure. The developed markets are quite saturated, and diminishing returns might have set in.

If Dr Ngozi Okonjo-Iweala is appointed, what would be the first thing that she should do?

She should bring all African countries together to push for the right political will to implement the AFCFTA. We have everything that we need in terms of raw materials and natural resources; what we are lacking is the political will to realize our potential. She has to get political leaders to dismantle various bottlenecks and drive the private sector to operate optimally

What messages will you try to get across when you address the Geneva Grain Conference?

 Most markets around the world now are what I would call ‘mature’ markets. Whether you look at it from the production or the consumption side, African markets are not mature. That gives us all a tremendous opportunity to invest and to build the necessary infrastructure for production and distribution, and at the same time to develop consuming markets.

My main message will be that we all have to look at the African market from a different perspective. We have to re-evaluate the risks and how we manage them. For me, diversification is the key to manage risk across the whole grain value chain. And of course, we have to look at what has worked and what hasn’t worked. We have to learn from that.

My second message is that there is a big focus now within Africa on healthy living and diet. Our population is consistently growing, and so also is our middle class. Africa is a vast market and a huge opportunity, but local knowledge is essential as each country is different. So, my final message to investors, partners and interested stakeholders would be to think local but to act global!

Thank you Olumide and good luck with your presentation!

© Commodity Conversations ®

 

(Chris recently retired from Starbucks where he was coffee sustainability director. All views are his own and not necessarily those of Starbucks.)

Good morning Chris. Thank you for taking the time to chat. I think you grew up on a coffee farm. Can you tell me a little about that?

My father managed coffee farms in Kenya and Tanzania before buying his own farm on the slopes of Kilimanjaro in Tanganyika (Tanzania) in 1959. I was born in Kenya in 1953, and apart from my time in boarding schools in Tanzania, Ethiopia and England, the farm was my home until I was 19 years old.

We had 150 acres (60 hectares), but soils were poor and the land rocky. Mechanization wasn’t possible, and all the work was done manually. Operating costs were horrendous. We grew arabica coffee under rather heavy Gravilea robusta shade canopy, as was the custom at the time. The coffee was sold through the local auction system. There were very few direct sales back then.

My parents’ farm was nationalised in October 1973.

What are the main environmental challenges that now face coffee production?

Climate change.  Areas that were good for coffee 20-30 years ago are now becoming marginal. Coffee production is tending to move higher up mountains, especially smallholder production in Central America, but also in Colombia, Peru and Ecuador. This leads to deforestation – in many cases deforestation of primary forests, which in turn leads to changes in weather patterns, landslides, long-term soil infertility, etc.

Water is another challenge. Washed coffee uses a lot of water. I don’t believe that we should necessarily be retaining the washed coffee method; it can have quite a negative impact on the environment and water quality. Although washed coffees certainly tend to be much better in the cup, I do believe there are alternative methods such as pulped naturals or de-mucilaging machines that use much less water.

What are the main issues on the social side?

I would say child labour, and that goes back to general economic issues and poverty levels in producing communities. Low coffee prices haven’t helped.  The kids are working on the farms due to the high poverty levels in coffee communities; adult workers are unable to achieve sufficient income levels to feed and educate their families. They have no choice but to send their children into the fields to make up the deficit.

If you stop the kids from working, you are taking food away from desperately poor families. This is a problem that many coffee producing countries are confronted with – and not just in Africa. If consumers want to enjoy a product, then a living-wage price needs to be paid that can help alleviate the problems. Consumers can’t just mandate that there is no child labour without providing and supporting alternatives. The underlying issues need to be tackled.

That brings us on to economic sustainability…

Prior to the lapsing of the International Coffee Agreement (ICA) in 1989, the minimum trading reference price the ICA sought to protect through the quota system was $1.15 per pound; from a relative purchasing power perspective, that would be the equivalent today of around $2.45. The C market price currently is $1.10 – $1.20 per pound. That said, differentials have improved, but nowhere near enough to make up the difference.

In spite of all the aid, social and economic programmes that have over the years been implemented in producing countries by industry and governments, coffee farmers are half as well off today as they were 30 years ago.

Admittedly, they have found ways of cutting their costs, such as higher use of relatively cheaper pesticides, herbicides, etc. to increase production – not healthy for humans, wildlife biodiversity or the environment.

The wealth in the coffee supply chain now sits with the trade houses, the roasters, and the coffee shops. It’s not at the farmer level.

What coffee do you drink now?

Starbucks coffee of course! I make it in a French press or in a stove-top espresso. I enjoy House Blend, and particularly the single origin coffees from Guatemala, Ethiopia and Colombia.

Thank you, Chris for your time and input!

 © Commodity Conversations ®

This is an extract of an interview from my upcoming book Crop to Cup – Conversations over Coffee to be published later this year.