The future of coffee: ofi tackles income gaps amid “perennial” economic and sustainability woes

Leading F&B supplier ofi has released its 2023 impact report for Coffee LENS (Livelihoods, Empowerment, Nature at Scale), highlighting advancements in farmer livelihoods, coffee community development and 2030 climate action targets across several countries in the Americas and West Africa.

Food Ingredients First sits down with Jeremy Dufour, head of Sustainability Execution, Coffee at ofi, to discuss the report’s findings and the “perennial challenges” posed by climate change, inflationary pressures driving up food production costs and economic hardship. These, he underscores, are making it increasingly difficult for coffee farmers to afford a decent standard of living.

Amid multifaceted challenges, the company aims to respond to smallholders’ needs with “customized programs, training and material benefits that help increase their yields, quality and incomes.”

Social capital impact evaluation in Honduras

Key programs include the implementation of ofi’s first social capital impact valuation to assess the value of customized support delivered to approximately 1,000 coffee farmers as part of a living income project in Honduras with partner Aldi South Group.

“It was identified that the scale at which the Living Income gap would close would differ considering farmers’ typology and the type of interventions provided. Therefore, ofi’s team conducted a farmer segmentation exercise, covering around 400 farms, which categorized farmers into four clear groups based on differing socio-economic characteristics,” explains Dufour.

The company then tailored services and support to the different farmer segments.

Roughly 44% of global coffee producers live in poverty, according to the World Bank.A Social Return on Investment analysis for crop years October 2021 to September 2022 and October 2022 to September 2023 revealed that every dollar invested generated eight dollars in social value.

“For instance, for Group A, who are typically more entrepreneurial farmers with larger plots and higher-than-average yields, interventions included financial literacy training and assistance in setting up solar dryers and training on post-harvest practices to elevate quality,” explains Dufour.

“Meanwhile, for Group D — representing the poorest farmers, often with insufficient knowledge of coffee production and struggling to produce large yields due to smaller plots, we focused on Good Agricultural Practices training, distributing coffee seedlings and distributing basic harvesting equipment such as collection bowls and machetes.”

He shares that farmers in segments C and D recorded increases in their yields following the program interventions, amounting to an annual income increase of approximately US$6,009 per farmer and US$1,132 per farmer, respectively. 

Segments A and B didn’t report a higher output but could attract a price premium because of certified production.

“This additional income can support farmers in various ways, including helping them save for unexpected costs, cover labor fees or strategically re-invest in their farm to support productivity and quality in the long-term.”

The initiative has led to similar living income gap assessments globally. Mexico and Guatemala are identified as critical hotspots where over 75% of the farmers surveyed earn below the living income threshold. 

Cocoa and coffee-linked deforestation

Côte d’Ivoire, one of the world’s largest cocoa producers, is estimated to have lost more than 90% of its forest cover since 1950. Despite having anti-deforestation policies or commitments in place, efforts in the cocoa industry are often restricted by either scope or geography, according to a 2024 traceability report by Retailer Cocoa Collaboration.

In January last year, ofi joined a three-year Sustainable Forest Management program with IDH and customer JDE Peets in the West African country, which, Dufour says, is one among seven landscape-scale partnerships “to generate holistic and long-lasting change.”

“They’re designed to scale program impacts beyond the farm and supply chain, [potentially] resulting in better governance and effective protection of nature while supporting community needs for essential services like nutrition and health.”

ofi is training  thousands of farmers in sustainable agriculture techniques. The company is also eyeing 20 living landscape partnerships by 2030 as part of its overarching strategy, with six of these to be set up in coffee origins to ensure the program’s long-term success.

So far, the company says it has trained over 3,400 farmers on good agricultural practices such as integrated farm management and water protection.

Reshaping agriculture amid EUDR

As the implementation deadline for the EU Deforestation Regulation looms, F&B companies are improving traceability infrastructure to ensure compliance and prove that their goods did not contribute or were linked to deforestation in any form.

ofi’s internal digital traceability solution system is “designed to facilitate the transparent tracking of our coffee and cocoa supply chains from farm plots to customer doors, integrating information from ofi’s on-the-ground digital apps,” notes Dufour.

The report mentions an additional 16,000 farmers registered to the company’s direct sourcing network last year.

“Data from the apps, including farm management, farm geolocation, direct from farmer or local buying agent procurement, will appear as unified traceability data.”

An effective EUDR implementation will involve a conscious effort to prevent and reverse deforestation and related impacts through agroecological practices.

As part of its longer-term goals, ofi aims to apply regenerative agricultural practices to half a million hectares by 2030. The company has seen reduced chemical input use in regenerative projects, such as Brazil, where precision-based nutrient and pest management has helped coffee farmers build soil health.

“The positive change from implementing regenerative agriculture can take several years to realize. It’s about slowly rebuilding natural capital by working with farmers and their communities. It needs to be context-specific and promote nature-friendly practices that also help farmers improve their incomes,” he concludes.