Greening an agrarian frontier region by introducing coffee production
Climate change was one of the reasons for the Mercon Coffee Group to introduce Robusta coffee production in a poor and degraded area in Nicaragua. Over the years, this project has improved the lives of many farmers and their families. In terms of decarbonizing the agri value chain the results are more mixed: total emissions from coffee plots are negative, but farmers did not shift away from extensive livestock practices.
“Historically, most areas in the Atlantic coast of Nicaragua have suffered from impoverishment”, says Giacomo Celi, Director of Sustainability at the Mercon Coffee Group. “Most development has taken place in the Pacific region. The Atlantic area is characterized by vast areas of degraded land and an almost complete lack of infrastructure.” “Most people from this area don’t even get the opportunity to finish elementary school” adds Soledad Jiron, Investment Officer at FMO, and a Nicaraguan herself. “People have some crops, like maize and cassava, to consume and sell a little bit. That’s it.” The humid tropical zone is a typical old agrarian frontier region. Colonized in the 20th century, there was first a great deal of extractive activities (rubber, timber), followed by slash-and-burn agriculture, which paved the way for extensive cattle holding. The plan to introduce coffee production in this region was rather bold - to say the least. “Nevertheless, we knew this plan could be achieved through hard work and effort. The conditions were suitable for growing Robusta coffee, and we dared to do it”, says Giacomo. “We almost had to start from scratch.”
Nicaraguan coffee had been grown in the Northern Central region of the country, and in some areas of the Pacific region. Mercon has been exporting coffee since decades ago, and through subsidiaries it is also involved in the cultivation itself. Through time, the company has grown into a global leading green-coffee supplier, operating in 10 countries across the world – headquartered in Amsterdam.
With the intention of helping reforestation in this particular area, we began our efforts of cultivating Robusta coffee which is also more resistant to climate change. “The climate is changing, no debate about that", Giacomo says. ”Another reason to investigate the potential of growing Robusta coffee in the Atlantic region was a growing demand in Nicaragua as well as worldwide.”
ONE FULL-TIME JOB FOR EVERY TEN HOUSEHOLDS
average household income above the sustainable living income level
In 2012, commercial Robusta production started in the South Caribbean coast region Nueva Guinea, on several estates of a subsidiary company of Mercon, and on the lands of a handful smallholder farmers. Some ten years later 1,200 farmers are involved in coffee production in this region. According to Giacomo their number could further grow to around 3,000 or 4,000.
A recently completed independent impact study by Wageningen University & Research confirms the improved livelihoods for farmers and coffee workers and their family members in terms of job opportunities, income, and working conditions. From 10,000 to almost 15,000 people have found a job in the coffee production, including temporary harvest workers. This equates to about one full-time job for every ten households living in the region. The average household income for more than 80 percent of smallholder farmers involved in the coffee sector is now above the sustainable living income level. “Compared to six years ago when I left Nicaragua to start working for FMO”, says Soledad, “the area has really been transformed. It’s much more thriving now. For me it was very surprising to talk with small farmers in this area who now know more about coffee than me. They were talking about purchase guarantees by Mercon, interest rates, and more. They were very confident in what they were doing.”
STARTING FROM ZERO
From the start, an extensive training program with complementary services was established to support producers in the managing of coffee crops. Mercon has created its own service platform – called LIFT – to train and support producers in sustainable practices. This was now being replicated in Nueva Guinea. Interested producers were educated about financing models, the coffee market, and the sustainable production of coffee. They were also provided with disease-resistant coffee plants.
Not much later, FMO stepped in. It had been supporting Arabica production in Nicaragua for some time, but now help was desperately needed to bring the Robusta project forward. In addition to infrastructure support, FMO also provided financing for the start-up coffee producers. Loans are normally hardly available to these small farmers because banks consider them risky. “FMO dared to do it. This was because we could demonstrate the interest our customers had in this coffee. Some Premium customers now use the Nicaraguan Robusta coffee in their capsules. And we also brought consultants to help the farmers look for alternatives to glyphosate usage”, says Giacomo.
“We saw that Mercon was doing a good job” says Anton Timpers, manager Agribusiness, Food & Water at FMO. “Our selection of clients is always about the potential of development they have. Mercon works with many partners, including all these producers from whom they buy coffee, and who they assist to get more yields – all in a sustainable and socially-conscious way. We love working with companies like that. They generate impact in society – and that is what matters to us.”
“The importance of Mercon’s own plantations and farms in the region was sizable”, Anton emphasizes. “It served as an example for many of the producers. We financed the new coffee mill at that time, which also contributed to the realization that this could be a successful business in the area. As a result, more and more producers dared to make an investment in Robusta coffee. This total package – with the example effect, the education and financing, the infrastructure, and the access to sales markets – all laid the foundation for the current success in this project” he also said.
From a climate point of view, it is positive that the Robusta farms sequester carbon; the emissions per kilogram coffee decreased further over the past years because of biomass growth. However, climate impact is still limited because most coffee farmers still depend on livestock income. Although we cannot control their decisions, we can provide them with information about the impact this might have on climate change. “We have to accept that transitions are gradual”, comments Giacomo. “That’s why we need to further establish coffee as a very competitive alternative.”
He also emphasizes the potential for selling carbon credits in the area. “Coffee plants can be accounted for credits, because they are part of the land use change.” Several Arabica coffee growing farmers in Nicaragua are already taking advantage of this. “They get a good price, about $50 per ton of carbon captured. We think this could eventually go up, but first the rules of this market need to be more clearly defined internationally.”
Mercon has also been introducing the concept of regenerative agriculture, a conservation and rehabilitation approach that nurtures and restores soil health, protects the climate, water resources and biodiversity, and enhances farms’ productivity and profitability.