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October 26, 2020May 10, 2022

A Conversation with Chris von Zastrow

(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!

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

October 22, 2020

Commodity Conversations Weekly Press Summary

The EU’s agriculture ministers agreed this week that 20% of the new Common Agricultural Policy (CAP) budget which will kick in 2023 should be used for environmentally friendly farming. However, the proposal still has to be voted by Parliament and environmentalists complained that the amount was much too low and translated into massive ongoing subsidies for traditional agriculture. The EU Parliament is also due to vote on a bill proposing that terms such as “sausages” and “burgers” could only be used for products containing meat, even when used with words such as “style” and “like.” An analysis by the BBC said this would take the 3-year old ban on terms like “soya milk” and “vegan cheese” one step further.

The WWF, meanwhile, is advocating moving away from the meat vs plant debate towards a “Planet-based diet.” The idea is to focus on consuming foods that are produced locally and sustainably while providing us with our nutritional needs. The organisation points out that biodiversity loss is caused by different factors depending on the geography and that advocating for a vegan diet doesn’t make sense everywhere in the world. To help us make the right choices, the WWF designed a Planet-Based Diets Impact and Action Calculator.

Going local is not on top of governments’ priorities right now, as they focus on ensuring they have sufficient food supply. An analyst explained that consumers and supermarkets have switched from “just-in-time” inventory management to “just-in-case” in the anticipation of supply disruptions due to the coronavirus. The Bloomberg Agriculture Subindex rallied 20% since June as countries such as China, but also in the Middle East and Africa, stepped up purchases. The additional demand is helping farmers, notably in the US where producers have also benefited from higher buying from China under the Phase One trade deal. Another element contributing to the income of US farmers is the record high USD 51 billion in federal aid they will have received this year, an analysis by Reuters showed. The aid should amount to about a third of farm income in 2020, which will overall be higher than in 2019.

Danone, which lost a quarter of its market value in 2020, could divest from businesses worth as much as EUR 500 million (USD 592 million) in revenue, as well as downsize some units by up to a third, the CEO said. Bloomberg Intelligence suggested that the company didn’t have much of a choice but to shed assets, arguing that Danone was “way behind the curve.” He added that this would not be enough and the group may need to sell more businesses, including some of its water brands.

This is exactly what Nestle is doing. Sources say that the group is looking for bids for its North American water brands which have been losing market share. Analysts estimate that the brands could be sold for anywhere between USD 3-5 billion. On the other hand hand, the CEO said he is planning to keep premium brands like Perrier and San Pellegrino.

The Coca-Cola Company said the coronavirus had contributed to accelerating its portfolio review. It announced it would stop producing a number of drinks, such as Coca-Cola Life, to free resources for higher-margin products. The virus also fast-tracked changes that were taking place in the group’s marketing strategy – an official explained that they were now focusing on more “meaningful” advertising.

The CEO of Unilever warned, meanwhile, that more and more companies were making sustainability commitments to appeal to consumers without any plans to stick to them, also known as “woke-washing.” Ironically, he made the comment just as Greenpeace accused Unilever of “greenwashing.” The NGO conceded that the group has been vocal about becoming more sustainable but argued it needed to do much more.

A study looking at several carnivore species in the US Midwest found that predators were getting close to half of their food from humans, by eating through garbage, foraging fields and even eating pets. One of the scientists told Wired that the presence of corn in their systems revealed the source of their food, explaining that “Human foods look like corn, because we give corn to everything.”

Going back to the subject of eating locally, the coronavirus-led surge in gardening has caused a shortage of Mason jars in the US. Many people have used the time at home to plant food stuff which they have been canning for preservation, causing the shortage in canning containers. A jar merchant called it “Sourdough 2.0.”

This summary was produced by ECRUU

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October 19, 2020October 16, 2020

Coffee and Health

Caffeine was first chemically isolated in a German laboratory in 1819. It is an alkaloid, as is cocaine, that occurs naturally in some 60 tropical plant species, of which cocoa beans, tea leaves and coffee beans are the most well-known.

When coffee leaves die and fall to the ground, they contaminate the soil with caffeine, which makes it difficult for other plants to germinate; it acts as a natural herbicide. But coffee plants mainly use caffeine as an insecticide. It can be toxic to insects and they tend to avoid it. But coffee plants also lace their nectar with low doses of caffeine. When insects feed on the nectar, they get a buzz that makes them more likely to revisit the flower and spread its pollen.

It’s not just bees that get their buzz from caffeine. In his book All About Coffee, William Ukers writes that the French writer Balzac was a big fan, drinking a reported (but scarcely credible) 50 cups of coffee per day. In his Treatise on Modern Stimulants, Balzac describes the effect that caffeine had on him:

‘This coffee falls into your stomach, and straight away there is a general commotion. Ideas begin to move like the battalions of the Grand Army on the battlefield, and the battle takes place. Things remembered arrive at full gallop, ensign to the wind. The light cavalry of comparisons deliver a magnificent deploying charge, the artillery of logic hurry up with their train and ammunition, the shafts of wit start up like sharpshooters. Similes arise, the paper is covered with ink; for the struggle commences and is included with torrents of black water, just as a battle with powder.’

The author Mathew Walker is less of a fan. In his book Why We Sleep: The New Science of Sleep and Dreams, he describes caffeine as ‘the most widely used (and abused) psychoactive stimulant in the world…It represents one of the longest and largest unsupervised drug studies ever conducted on the human race, perhaps rivalled only by alcohol, and it continues to this day.’

When caffeine hits your brain, it adheres to your brain’s adenosine receptors. Adenosine is what helps us feel sleepy. When caffeine binds to your adenosine receptors, it inactivates them and stops you from feeling tired. Caffeine tricks us into feeling alert and awake despite the high levels of adenosine that would otherwise make us sleepy.

Caffeine is removed from our system by an enzyme in our liver that gradually degrades it over time. Caffeine has an average half-life of five to seven hours: after five to seven hours, about 50 percent of the caffeine you have drunk is still circulating in the body. So, if you enjoy an espresso at 10pm after dinner, as I used to do when I was younger, then half of the caffeine will still be in your brain at 3am.

Some people have a more efficient version of this enzyme than others, allowing them to clear the caffeine quicker. Others have a slower, less efficient version. Unfortunately, aging affects the enzyme’s efficiency: the older we get, the longer it takes to clear our brains of caffeine.

Just because the caffeine is stopping our brain from processing the adenosine, it doesn’t mean the brain stops producing it. When the caffeine inevitably wears off, you’re left with an adenosine build-up which makes you feel even more tired – what is commonly known as a ‘caffeine crash.’

The good news is that roasted coffee does not just contain caffeine; it is full of biologically active compounds like chlorogenic acid, kahweol, and N-methylpyridinium, all of which have been found to reduce inflammation, serve as potential anticancer mechanisms, and improve insulin sensitivity.

In 2017, a review on coffee consumption and human health in the British Medical Journal examined more than 200 previous studies and found that moderate coffee drinkers had less cardiovascular disease and premature death from all causes, including heart attacks and stroke, than those who didn’t drink coffee.

The latest scientific view, as published in the World Cancer Report 2020 confirms that coffee is full of antioxidants that reduce the risk of certain cancers – such as liver and endometrial cancer. The report, published by the International Agency for Research on Cancer (IARC), part of the World Health Organisation, is a collaboration between the world’s most prominent scientists, and is considered the authoritative source on cancer related disease.

The National Institutes of Health (NIH) – part of the US Department of Health and Human Services – has conducted a study of 400,000 people that confirmed that moderate coffee drinking lowers the risk of death overall. The study found that relative to men and women who did not drink coffee, those who consumed three or more cups of coffee per day had approximately a 10 percent lower risk of death. The leader of the research team wrote,

‘We found coffee consumption to be associated with lower risk of death overall, and of death from a number of different causes. Although we cannot infer a causal relationship between coffee drinking and lower risk of death, we believe these results do provide some reassurance that coffee drinking does not adversely affect health.’

© Commodity Conversations ®

This a short extract from my upcoming book Coffee Conversations – Crop to Cup to be published later this year.

October 15, 2020

Commodity Conversations Weekly Press Summary

The UN’s World Food Program (WFP) was awarded the Nobel Peace Prize this week for its work on “bettering conditions for peace”. The award comes as the agency recently warned that the coronavirus pandemic will double the number of acutely food-insecure people and the Nobel Committee highlighted that food and violent conflict often interact as part of a vicious circle. Researchers, however, argued that the link between food assistance programs and peace is not so straightforward, as food aid can in some cases exacerbate armed conflicts. The WFP’s work will need to go hand in hand with conventional peace-building efforts, experts argued.

Food assistance programs have been evolving to better reflect the economic reality of agricultural development. The WFP and others are increasingly donating cash instead of food in order to encourage the local production of food crops. Besides, some argue that ending systematic hunger is a worthy goal in itself. In response to the prize announcement, Cargill said it would match the USD 1 million donation offered to the WFP by the Nobel Committee.

In Brazil, the less-talked-about Pantanal region is suffering from fires that have destroyed 22% of the whole area since January, a NASA scientist estimated. The destruction and uncontrollable fires were caused by a complex combination of drought, more ranchers clearing land, bureaucratic inaction and climate change. Even the fires in the Amazon are affecting the region by limiting the amount of water available.

As the deforestation rate in Brazil keeps accelerating, experts doubt whether or how food corporations will be able to completely monitor their supply chain. One investigative piece looking at COFCO’s soy supply chain in the Cerrado highlighted a lack of transparency. Moreover, COFCO only pledged to monitor its direct soy supply chain entirely by 2023, without mentioning indirect suppliers. In response, COFCO said it was also looking to monitor indirect suppliers, just as observers noted that the Chinese group recently received a USD 2.3 billion loan linked to its sustainability performance.

France announced new restrictions on the use of glyphosate as it prepares for a full phase-out by 2021. A few days later, the European Court of Justice ruled that EU nations were indeed allowed to ban pesticides or regulate their use even if they are allowed at the EU level. Activists hope this will encourage more member states to impose their own bans.

Going further, civil groups are looking to ban the production and exports of pesticides in the EU. Some 41 pesticides banned in the EU were exported by the bloc in 2018 to countries with weaker environmental laws. Lawmakers argued that exporting dangerous pesticides was not only hypocritical but could also lead to pesticides being imported back into the EU via food imports.

After glyphosate, Bayer and BASF are now fighting to maintain the authorisation to use dicamba in the US. The herbicide was found to drift to neighbouring farmlands and Bayer has already paid USD 400 million to settle legal claims. The two German groups are now saying that dicamba can be mixed with other products to stop it from spreading.

The IEA commented that the global demand for oil will not peak but plateau by 2040, in part because some of the changes caused by the coronavirus pandemic could actually encourage oil consumption. Regardless, some food activists have now turned to another concept: peak meat consumption, as they note that growing environmental concerns could lead to an overall long-term decline in meat demand. Some were quick to point out key differences between oil and meat, however, like the fact that sustainably produced meat can actually help the environment by sequestering carbon or improving soil health.

In the same vein, the World Sustainability Organization launched a certification program to ensure that plant-based seafood is sustainably produced. The segment has huge growth potential especially in Asia, the organisation noted, as it highlighted the importance of building trust with consumers surrounding the environmental benefits of plant-based alternatives.

Beyond the environmental credentials of plant-based alternatives, the sector is facing a bigger challenge when addressing potential nutritional advantages, as many products are being criticised for being highly processed and high in additives. Nevertheless, experts explained that consumers these days are more focused on taste and protecting the Earth. In the long-term, some say plant-based meat should merely act as a tool to help people cross-over to a conventional plant-based diet which can have significant nutritional advantages.

In the meantime, food and drink producers are looking for creative ways to deal with the immediate consequences of climate change. The wildfires in California, for example, are giving grapes an unwanted smoky flavour, making it unsuitable to make wine. In response, one winery is using the grapes to make brandy which should benefit from the smoky aromas. Whether the idea works will only be known by the end of 2021 as the brandy is still undergoing its ageing process.

This summary was produced by ECRUU

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October 12, 2020October 11, 2020

A Conversation with David Griswold, Founder & CEO of Sustainable Harvest

Good morning, David. First question: what coffee are you drinking?

I’m drinking an estate coffee called “Finca El Valle” from Antigua, Guatemala. Finca El Valle was the first direct trade estate partner I worked with, going back more than 25 years now, and it is a coffee I still buy for the same roaster. It was from a small specialty farm nestled at the foot of three volcanoes, owned by a determined woman, Christina Gonzales. She was supported by her husband and three sons. It has been a favorite of mine, in part because through this sourcing relationship I’ve come to create the elements of transparency and trust that are core to the Relationship Coffee model. It is a delicious coffee, with intense sweetness, with notes of brown sugar, nougat, and molasses.

Why are there so many women coffee growers?

We started our first women’s coffee program in 2003 in Nicaragua. While far from perfect, some of the economic reforms following the Sandinista Revolution provided women with the ability to seek joint ownership rights to the land they worked with their husbands. Many women have since been able to grow their coffee separately from their spouses. One group of about 140 women growers came together to form a cooperative, and we found that their coffees scored consistently higher in cup quality.

In fact, women-owned collectives score higher across the board than mixed-coffee collectives, and this data point is true in most origins. When you ask the women, they’ll tell you that they take better care of growing, picking and processing their coffee than the men.

In addition to quality, our buyers prefer purchasing coffee grown by women because of their higher impact. The purchase premiums go directly to the women’s groups, and World Bank studies have shown that, on average, 90 percent of their increased income is invested into the household. If you want to impact families and lives, supporting entrepreneurial women coffee growers is a really good way to do it.

You were somewhat of a pioneer in sustainability when you started Sustainable Harvest in 1996.

That’s true. It was an unusual approach to business at the time. When I would share my sustainable business concept three decades ago, I would typically have to first define the concept of sustainability. People were sceptical, as though I were trying to cover up a badly produced coffee with a lovely story.

But then buyers would call me a week after I had left them samples and say, “Wow, that coffee tastes incredible! Please tell me the story behind it!”

How would you define your Relationship Coffee business model?

Relationship Coffee is a business model that is about stakeholders working collaboratively toward a common good that benefits all of the many actors that make up the supply chain. The core values in Relationship Coffee are empathy, communication, transparency, and trust. It considers the needs of all the stakeholders, not just maximizing the profits of one party. It puts people ahead of profits and takes into account both sides of the coffee equation.

Isn’t this just stakeholder, rather than shareholder, capitalism?

We are a big proponent of stakeholder capitalism. We were the first coffee company certified as a B Corporation. We are not just concerned with shareholder value, but also the needs of other stakeholders. This includes our suppliers, our employees, the community, and the environment.

The Stanford Graduate School has conducted case studies analysing our Relationship Coffee model. They noted that where a traditional model only focuses on a buyer-seller approach, the collaborative model of Relationship Coffee brings more actors to the table. Because more actors have a vested interest in how the community will be impacted by a business decision this often means that they can bring other resources. We must find new and innovative ways to bring a wider group of diversified stakeholders to the table.

Are coffee farmers better off now than when you started 30 years ago?

I want to say we’ve made progress, but we’re nowhere near declaring mission accomplished. Recent data shows the current generation of coffee farmers makes less than half of what their parents made. For millions of producers, the coffee industry is still broken.

If farmers are worse off, doesn’t it mean that only the coffee quality has increased, and that all your efforts have benefited the consumer and not the producer?

You are right; the producers have not received their fair share of the benefits that the specialty coffee market has generated. That has stayed up in the North, and the most recent data tells us that producer nations’ slice of the pie is a mere 10 percent of the total coffee market value. That is not sustainable for a global market. The coffee market is not serving all its members, and we’re putting our supply chain at risk if we don’t take serious action as individual companies to reverse this trend.

So, I’d ask the question a different way. Are your coffee farmers better off than they were 29 years ago – the ones that have relationships with?

I would hope that they are better off because of the investments we’ve made. We are now sourcing from almost 20 countries, we’re training leaders from over 100 cooperatives, and we are impacting over 200,000 smallholder coffee farmers and their families.

Thank you, David, for your time and input!

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

October 8, 2020

Commodity Conversations Weekly Press Summary

European and UK negotiators have reportedly made some progress on reaching a free trade agreement although EU officials note that some open issues still need to be addressed, such as fisheries and state aid. The UK has set a deadline of October 15 to reach an agreement and the Prime Minister said he was open to a deal in line with what Australia has with the EU. However, commentators pointed out that there was no trade deal between Australia and the EU, while Australia has been looking to sign a full trade agreement with the block for years.

The UK did report a trade win this week as the country exported its first shipment of beef to the US in 20 years. The US banned imports in 1996 following issues with the mad cow disease but ruled that safety standards were acceptable again in March this year. The UK government estimates that this could generate USD 85 million annually over the next five years. This remains only a small victory, however, as the UK could lose USD 174 billion every year for 10 years with the combined impact of a no-deal Brexit and the coronavirus pandemic, according to Baker McKenzie.

Food imports into Iran might become even more difficult if the US moves ahead with a plan to extend its sanctions and cut the country off from the global financial system. Essential goods should be exempt from the sanctions, in theory, but banks are reluctant to facilitate deals because of the fear of facing penalties. Besides, EU and Swiss efforts to set up alternative payment channels have only had limited success. Iran has been focusing on trade with the UAE and China in the meantime.

As countries look to negotiate new trade agreements, industry members are busy trying to reduce the environmental impact of transporting commodities by ship. Sea Cargo Charter was launched by a coalition of 17 companies, including ADM, Bunge, Cargill, COFCO and Louis Dreyfus. The group set up a standard to transparently report shipping emissions to help meet greenhouse gas targets. In the same vein, Cargill will let its customers access CocoaWise, a portal set up to centralise the sustainability data of the cocoa supply chain. The solution includes a map with details on 128 cooperative offices in Cote d’Ivoire, 7 buying stations in Ghana and 11 stations in Cameroon.

Campaigners submitted a petition with 300,000 signatures urging Nestle to reconsider its decision to stop using Fairtrade cocoa and sugar in its Kit Kat bars. In response, Nestle highlighted that they are now sourcing Rainforest Alliance certified cocoa instead. They also argued that, along with its own Nestle Cocoa Plan, they are now in a better position to help improve the livelihoods of farmers.

In the plant-based food world, oat milk just overtook soy milk to become the second most popular non-dairy milk. Oat milk has been gaining in popularity because of the low amount of water it needs to grow and the high protein and fiber content but almond milk remains the most popular in part thanks to its health advantages: it is low in calories, fat and carbohydrates.

Shoppers might be seeing a lot more plant-based products on sale following pledges by Tesco and Asda to boost sales. Tesco partnered with the WWF to increase sales of plant-based meat by 300% by 2025, while Asda is launching 104 new plant-based products. The move was not welcomed by the head of the National Sheep Association, however. He highlighted that it was based on an incorrect assumption, as meat can, and often is, produced in a sustainable way, while plant-based products are often mass-produced, highly industrialised and highly packaged.

Other experts are also questioning whether overselling the potential benefits of agricultural practices can actually undermine the fight against climate change. Environmentalists have recently been eagerly promoting the idea of regenerative agriculture to sequester the carbon in the atmosphere into the soil. But some proponents argue that the practice could actually absorb all of the carbon we currently emit. Such a claim is not only baseless, some experts say, but can also overpromise and simplify a complex problem that will require a whole suite of changes to solve.

Talking of smart technological solutions to fight climate change, farmers found two clever ways to use agricultural products in surprising places this week. The first is in the Netherlands where researchers made bitumen – usually produced from fossil fuels – using lignin. And in the UK, the largest dairy cooperative, Arla, started converting some cow manure into methane and biofuels to power its trucks.

This summary was produced by ECRUU

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October 5, 2020October 4, 2020

A conversation with Jorge Cárdenas Gutiérrez

Jorge Cárdenas Gutiérrez has been the leading figure in the Colombian coffee industry for over half a century. Born in 1930 in Medellín, he studied Law and Political Science in his hometown, then he completed a master’s degree in Administration at the University of Syracuse. He has held various public positions in his country, but his lifelong passion has been the promotion of the Colombian coffee sector, both domestically and internationally.

For many years he was head of the Colombian Federation of Coffee Growers where he fought to improve coffee cultivation in Colombia, to improve the quality of life for the country’s coffee growers and the quality of coffee for consumers.

Good morning, Jorge. How important is coffee to Colombia?

Coffee has been a leading product in the Colombian economy for 120 years. For many years it was 10 percent of the gross domestic product, 30 percent of the agricultural product and 40 percent of the external income.

Revenues from coffee exports have enabled Colombia to develop its industry, railways, ports and a good part of the national infrastructure.

Today coffee’s economic importance to Colombia is lower, but it is still the country’s most important source of rural employment: 500,000 families on one million hectares produce a coffee harvest worth US $ 2.5 billion, which is 3 percent of Colombia’s GDP. Its social impact is fundamental.

What role has the National Federation played in maintaining the competitiveness of the sector?

The government of Colombia has worked since 1927 in full agreement with the National Federation of Coffee Growers in the development of public policies that build progress in the coffee growing areas with road services, potable water, electricity, health and education.

The Federation administers the National Coffee Fund, which has existed since 1940. The Fund is for the development of these public policies and for the promotion of coffee cultivation, its modernization and the international promotion of its consumption. The National Coffee Fund is a very important instrument of all coffee policy.

The Federation has 350,000 affiliated producers; since 1930, all producers pay a parafiscal contribution by Law of the Republic of Colombia.

To what extent has coffee had to compete with cocaine in Colombia?

The Federation has carried out extensive campaigns to combat illegal crops, and there are really no significant coca crops in the coffee growing areas. The farms are small in the coffee zone. Coca crops are in areas of little agriculture and very far from population centers.

What are the main problems that the coffee sector faces in Colombia?

The main problem of coffee cultivation in Colombia is the size of the farms: most plots are of 1 to 3 hectares. The production costs in these small farms is high compared to that obtained in larger areas.

What is the Federation doing to improve things?

The Federation of Coffee Growers has a Coffee Research Center (Cenicafé) that carries out permanent research on innovation. It has helped introduce coffee varietals that are resistant to pests and are higher yielding. This has helped Colombia to maintain a production of between 12 and 14 million bags of 60 kg for the past several years.

What lies behind the success of Colombian coffee?

The competitiveness of Colombian coffee is due to its quality that is in turn a result of the care with which it is grown and processed.

With the image of Juan Valdez, the Federation of Coffee Growers created a special niche in the world market since 1960. He gave a name to a generic product, that’s the reality.

How does the Colombia maintain a sustainable living for its coffee growers?

From 1940 to 2000, Colombia had an internal price for coffee that did not change more than three times a year. A sustainable and stable price was financed with export earnings and contributions from the producers themselves to the National Coffee Fund. In addition, the various international coffee agreements provided price stability to international prices.

Since 2000, the domestic price reflects the international price of coffee. Only in times of very low international prices the Government and the Federation have given growers a special premium as part of the internal price of coffee.

The Colombian government has recently introduced a new Stabilization Fund which seeks price stability as in previous years; for the time being it does not yet have the necessary resources.

Are you optimistic for coffee in Colombia?

The National Federation of Coffee Growers continues in its task of innovating in the cultivation and harvesting and the producers accompany these efforts. The Federation celebrates 93 years of its founding and continues to be a leading rural service organization. It has the support of the Government and the backing of producers.

Roasters the world over continue to view Colombia as a highly reliable supplier. Today’s consumers are increasingly moving towards high quality coffees, which is very favorable for Colombia. The future of Colombian coffee is bright.

Thank you, Jorge for your time and comments!

This is an extract of an interview from my new book Crop to Cup, to be published later this year.

October 1, 2020

Commodity Conversations Weekly Press Summary

Germany has gone all out to contain the African Swine Fever (ASF) which was detected this month in a few wild boars but already cost the country a ban on exports to China. Even though no commercial pigs have tested positive, one expert estimated that Germany lost a USD 1 billion market in just one day from import bans. He calculated that the world’s pig population dropped by at least 25% because of ASF, whereas China lost about a third of its pig population since 2018. The US and Spain could fill in the gap but an analyst warned that the situation was very volatile. A second Covid-19 wave could have a drastic impact on both pork consumption and supply.

China is also asking importers to be careful about sourcing frozen food and seafood from countries with big Covid-19 outbreaks. The government said it had found the virus in imported cold-chain food. The WHO still maintains that one was unlikely to catch the virus through food.

The growing demand for salmon has led to its wild population dropping by half in the last 50 years. Beyond overfishing, sea lice, which spreads from fish farms to the wild, also contributed to the fall in population. US startup Wildtype is working to solve the issue with their lab-grown salmon. For the moment, it cost them USD 200 to make a spicy salmon roll but they hope to commercialise their salmon within the next 5 years.

US-based plant-based protein company Puris is hoping to solve the issue of the high sodium content in alternative burgers with its new low-sodium pea protein. The CEO explained that plant-based burgers have much more salt than meat burgers, with one Beyond Burgers containing 16% of our daily allowance. The group, which will be doubling its pea protein production by next year, is also launching lupin flour and pea syrup, to be used in keto products and as a substitute for corn syrups. Similarly, ADM launched a series of plant-based proteins designed to improve the “sensory appeal” of plant-based meat, including textured pea proteins and textured wheat protein.

The British Retail Consortium calculated that new import tariffs as a result of a no-deal Brexit could cost households an additional GBP 112 in food expenses, and probably more once the administrative costs are also taken into account. It explained that the UK’s food supply chain works on very little margin, which means most of the additional costs would be passed on to consumers. Besides, the recently launched Future British Standards Coalition is lobbying against any lowering of food standards after Brexit. A specific point of contention is the import of chlorinated chicken from the US – something opposed by many in the UK.

Some 200 global food suppliers joined a voluntary coalition committing to reduce their food waste by half by 2030. An insight by Food Dive, however, points out that 80% of the world’s food waste happens in supermarkets, restaurants and with the end consumer. Nevertheless, it expects the commitment to eventually happen as it will help boost these companies’ bottom line. One solution is being tested in Kenya, where a farm is feeding food waste to black soldier fly larvae which will then be used for animal feed.

If fighting waste was not enough, Walmart declared its commitment to becoming a “regenerative company.” The CEO Explained that “Regenerating means restoring, renewing, and replenishing, in addition to conserving.” Concretely, the target is to reach zero net emissions by 2040, restore 50 million acres of land and 1 million sq m of ocean by 2030.

Funding and incentivising sustainable farming is a growing issue, one that a new fund hopes to solve in Brazil. Saff, the product of a public-private partnership, will start with USD 68 million in 2021, aims to reach USD 1.4 billion by 2026 and will target farmers who follow the crop-livestock-forest integration on at least 5% of their area. In the UK, McDonald’s tied up with McCain to set up a GBP 1 million fund, called the Sustainable MacFries Fund, to help potato growers become more sustainable.

We live in an era where we are used to questioning the things we’ve been doing but here’s one you probably didn’t see coming: you shouldn’t use boiling water to make tea. An expert explained that the habit of boiling developed when water was unsafe to drink. Instead, he suggests using water at 50-65 degrees for green tea and 80 degrees for most breakfast teas. Otherwise, he warned, your tea will taste “no better than cabbage water.”

This summary was produced by ECRUU

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September 28, 2020September 28, 2020

A conversation with Benjamin Baptiste

Hello Benjamin, could you tell me a little bit about yourself?

I’m currently Head of Risk Management and Data Science for Roquette, based in Geneva.

I have an analytical background with an engineer diploma in applied mathematics and informatics from ENSIMAG, and a master’s in quantitative finance from Grenoble IAE.

I have more than 10 years’ experience in Risk Management. I started my career with BNP Paribas, then into software with Murex, and now plant-based ingredients for Food, Nutrition & Health markets with Roquette.

I joined Roquette as front office treasurer, managing the whole FX portfolio and dealing with all OTC operations on raw materials and energy for the group. I was promoted to Head of Risk Management and asked to set up the Risk & Control Department Function in France.

When did you move to Geneva?

I moved to Roquette CH in 2015. I worked on the business plan as well as the restructuring of the Risk and the Margin Management activities. That involved setting up a new risk framework from scratch, building tailor-made Key Performance Indicators (KPIs) and analysis suitable for Roquette’s ongoing business, as well as the company’s new activities implemented in Geneva.

I love new challenges.

Such as…

I was asked a couple of years ago to create a new Data Science Department for the company; I found it fascinating. I’m also member of the advisor board of ComRisk after having been a speaker during the last 2 years.

Could you tell us more about Roquette?

Roquette is family-owned company. We are a global leader in plant-based ingredients, plant proteins and pharmaceutical excipients. In collaboration with our customers and partners, we address current and future societal challenges by unlocking the potential of nature to offer the best ingredients for food, nutrition and health markets.

We have customers in more than 100 countries with 25 industrial sites across the world. We have more than 8,600 employees and in 2019 our turnover was around 3.7 billion euros.

What plant-based raw materials do you buy and process?

Using plant-based raw materials such as corn, wheat, potatoes and peas, we develop specialty ingredients that respond to unique and essential needs to better feed and cure people, to enable healthier lifestyles.

What will you be talking about at ComRisk 2020?

The panel is called ‘Managing Currency Risk Efficiently’. Most presentations on FX risk management tend to concentrate on managing commercial and M&A transactions in the current market. I will take a slightly different approach and talk about the processes involved in choosing the right financing and the right functional currencies. I would like to share my experiences in dealing with some complicated cases, such as when local, group and main business currencies are different.

This issue is important as the choices made can strongly affect the way that foreign exchange is evaluated in financial statements, and it is hard to modify without structural change. This can have a big impact on the profitability of the company.

Roquette is a global group. What are the main risks you are exposed to as a plant-based raw material consuming company, especially during this hard time of Covid 19 crisis?

The major risk for an industrial company such as ours is a business interruption due to industrial issues or raw materials shortage. It is one of the most critical matters. In addition to the direct financial loss, a delay or a cancellation in deliveries could have an important impact on customer’s satisfaction – our top priority. This has been the case more than ever during the Covid crisis as we serve both the food and the pharma markets, which are both considered as priorities. We are really committed to deliver our customers in this difficult time, and thanks to the efforts of all Roquette employees and partners such as suppliers, we succeeded.

As a key actor in Food, Nutrition and Health, our responsibility is to ensure the continuity of our essential activities while protecting our employees.

We should never forget that before managing prices, the first objective of our Purchasing Dept is to ensure that we have physical raw materials with the required quality delivered on time to our different plants. We have had to be agile to adapt across all geographies, such as renting new storage capacities.

Supply issues have been our most critical risk during the Covid period, but they are less of a concern in normal times when our priority is price risk management. A large part of our costs are variable costs: mainly raw materials and energy.

As you can imagine, price variations on our plant-based raw materials and energy inputs have a strong direct impact on the financial performance of the company. Market prices have been more volatile than usual during the Covid period; this has allowed us to test the robustness of our current risk framework and organization in terms of managing market risks.

Thank you, Benjamin for your comments – and good luck with your presentation!

September 24, 2020

Commodity Conversations Weekly Press Summary

New York hosted the annual UN meeting last week, along with Climate Week, and the Brazilian President used his speech to highlight that Brazil successfully ramped up food production to meet a growing export demand. He also claimed that his government was a victim of “brutal disinformation campaigns” concerning the Amazon and Pantanal, as he highlighted new measures taken to protect the environment. Nonetheless, local experts were quick to highlight that these rules were rarely enforced, while Brazil’s own space agency published data suggesting that deforestation in the Amazon reached a 14-year high in the year ending in July.

Fires in the Amazon and Pantanal could potentially lead to the end of trade negotiations between the EU and Mercosur. The French government issued a list of three demands before it would agree to continue negotiating a free-trade deal. The list highlights the importance of meeting the Paris agreement and fighting deforestation. Other EU nations, namely Germany, Ireland, Austria, the Netherlands and Belgium, have also expressed concerns.

Food producers in the region are being proactive to protect their image on the international stage, however. The world’s largest meatpacker, JBS, announced a USD 183 million investment to help develop the Amazon and fight deforestation. The company also pledged to eventually monitor 100% of its indirect cattle supply chain, as it noted that no company currently does so. Seventeen brands behind the Consumer Goods Forum (CGF) also used Climate Week to announce the creation of the Forest Positive Coalition of Action. Food firms like Mondelez, Nestle and Unilever, pledged to intensify efforts to end deforestation.

Supply-chain traceability has been a goal of the industry for a while now but it can take years to achieve because of “fragmented farming systems and lack of infrastructure”, according to the CEO of Olam Cocoa. The firm published an update to its 5-year old effort to increase traceability across nine cocoa-producing countries. Olam can now trace 100% of its direct supply chain and 12% of the global cocoa supply to an individual farm or community. The topic might actually gain traction with the coronavirus pandemic, as a Kellogg director said the firm had noted that interest in the environment and social issues was accelerating.

The coronavirus pandemic will lower the volume and value of Australian exports because of the lower demand for certain products, according to a government agency. Moreover, trade relations with China have been deteriorating, with the country imposing prohibitive duties on Australian wheat and increasing inspections. Australian producers are hoping to adapt by finding new markets, like Indonesia and Thailand. Soybean processors in Brazil are facing the opposite problem, meanwhile, as a surge in export demand is putting pressure on stocks despite a bumper crop. As a result, Brazil’s soybean imports might reach the highest since 2003. Sources reported that Bunge was now buying soybean from Uruguay to supply its plant in Rio Grande, Brazil.

The EU is looking to create financial incentives to push farmers to focus on carbon-capture crops. The Commission recently argued that while agricultural emissions “can never be fully eliminated under existing technology and management options, they can be significantly reduced”. Some of the proposals include financing crop rotations and afforestation. Norway is also doubling down on its carbon-capture ambitions, as it will spend EUR 1.54 billion to fund two-thirds of a massive project, which had failed a decade ago because of cost issues.

Tech enthusiasts are highlighting the potential of vertical farming to lower the carbon footprint of agriculture. Some firms, like Square Roots, also emphasise that container farming allows them to perfectly control temperature, light and fertiliser application to create the best tasting products. Nonetheless, this investigation concluded that the claim was “more marketing than science”, mostly because sensory scientists are still working on what makes food taste good, while focusing only on taste could negatively impact yields or shelf-life. In the end, an expert reiterated that “if you just leave a consumer panel to their own devices, they’ll typically choose whatever is sweetest.”

Beyond creating the best tasting products, supporters of vertical farming argue that the technology will be key in the age of space exploration. At the same time, scientists are making impressive progress in farming crops on simulation Martian and lunar soils. Unlike what some Hollywood movies would like us to believe, however, potatoes actually struggle in space soils, while kale actually grows better than on Earth soil. And in case you were wondering, yes, the researchers are experimenting with growing barley and hops that could be used to make space beer.

This summary was produced by ECRUU