Empowering Smallholder Coffee Farmers to Better Manage Risk

Photo Credit: Root Capital

Stronger Farmers, Stronger Supply Chains

Program partner Neumann Gruppe GmbH (NKG) — the world’s largest coffee trading group — considers helping smallholders better manage risk essential to its bottom line. With limited access to financing and training, many farmers are unable to make the crucial investments needed to increase their productivity and adapt to the challenges posed by climate change. By 2050, the Inter-American Development Bank estimates that the total land suitable for coffee production will be halved.

Photo Credit: Root Capital

Managing Price Risk Opens Doors

Located far from international coffee markets, smallholder producer organizations (SPOs) and their farmer members face significant obstacles in setting prices for their coffee. As a result, they are regularly exposed to the risks associated with price fluctuations. Ill-equipped with the knowledge to effectively manage these risks, a slight price change in the local and futures coffee market can have a severe impact on these producer groups, ultimately resulting in lower incomes for farmers. The vulnerability of smallholders to price shocks threatens other market actors as well, as SPOs are forced to default on purchasing contracts and loans.

Photo Credit: Root Capital
Photo Credit: Root Capital

Register here for our “Less Risk, More Reward” webinar on June 16, 2021 at 10:00 a.m. EST.

Feed the Future Partnering for Innovation is changing the landscape for supporting agriculture in emerging markets. www.PartneringforInnovation.org