DEC 4, 2018 Toward a Sustainable Coffee Value Chain
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Toward a Sustainable Coffee Value Chain The World’s Coffee in Numbers Contents In the decades to come, business will play a We have so far focused our coffee vital role in moving the world towards more sustainability activities on top In 2018/19, coffee Of this global Foreword 01 sustainable practices, while contributing to producing countries such as Vietnam, LDC Coffee Operations 02 Brazil, Colombia, Indonesia and farmers produced production social and economic progress. However, it Contributing to the UN Mexico. In 2018, we extended our a record crop of volume, about Sustainable Development Goals 06 must also deal with the complex realities of sustainability programs into East climate change, shifting consumer demand and Africa too. Increasingly, our projects almost 172 million 60% is Arabica, Our Approach to target entire families in coffee Sustainable Coffee 08 geopolitical uncertainty. These challenges are producing countries, including women 60kg bags 40% is Robusta Boosting Production of even more relevant for agriculture, the world’s who are often the most vulnerable Certified/Verified Coffee 10 largest employer. and have the least access to training Supporting Farmers Through and tools. Projects & Initiatives 12 And coffee is no exception. Each year, the world exports Sourcing Responsibly Grown Coffee 13 more than US$20 billion of coffee, of which the overwhelming Impact measurement is a necessary Acting on a Global Scale 14 majority (70%) is produced by smallholder farmers in remote and crucial dimension of each project, tropical regions. Its production generates income for millions Asia 16 ensuring that we adjust these for of people. Latin America 20 maximum impact. We estimate that Around 75% of Some 10.5 million East Africa 24 five consecutive years of monitoring But coffee production is increasingly challenging. Some are necessary in order to properly global coffee hectares are Partner Contributions 26 analyses predict that by 2050, climate change will reduce evaluate a program. Lavazza: The SDGs Were a the global area suitable for production by as much as 50%. production is currently used for Breakthrough 28 Warmer temperatures may also bring more pests and This coffee sustainability report, IDH: Building Competitive and diseases. Consumer demand may be growing, but LDC’s first, outlines the ways in exported coffee production Sustainable Sourcing Models 29 more and more farmers are no longer able or willing which we are making our coffee The Enveritas Mission 30 to continue production. supply chains more sustainable, WIPO: Rethinking Economic working with a range of partners Sustainability 31 Driven by consumer preferences, the coffee industry from businesses to NGOs. For once put certification schemes at the center of its that reason, we strongly believe sustainability approach. With time, however, and as that collaboration is at the heart the scale of the challenge becomes clear, LDC has of the solution to many common started to look beyond certification. In particular, we challenges. In this spirit, we hope now support producers for whom certification remains this publication will encourage out of reach, working through local projects and dialogue and pave the way toward Approximately World coffee prices initiatives with our partners. In many cases, these potential new partnerships. also aim to help farmers obtain certification. But 100 million people have fallen by two with or without the stamp, we want our coffee to be responsibly grown and sourced. This is how are involved in the thirds in real terms we protect our long-term supply. production and since the early processing 1980s, and the real of coffee earnings of coffee farmers have halved in that time Source: Coffee Barometer 2018 & LDC Research Louis Dreyfus Company Toward a Sustainable Coffee Value Chain 1 LDC Coffee 19 85% We operate 19 coffee LDC covers 85% Operations. processing plants of all coffee origins Top 5 around the world Louis Dreyfus Company merchandizes all major We are one of the Arabica and Robusta qualities and serves a diversified Top Five global range of customers, from specialty roasters to coffee merchants multinational food companies across the globe. Espresso or macchiato, flat white or long black, latte or cappuccino. In 2016/17, the world drank its way through nearly 9.5 billion kilos of coffee1, up 2% from 5 12 the previous year. Its appetite for coffee appears to be insatiable. Five marketing offices 12 origination As one of the world’s top five green coffee merchants, LDC works hard to meet (Singapore, Geneva, offices that demand. Our operations cover around 85% of the world’s coffee producing Madrid, Wilton, areas, and we are always looking for new opportunities to source and offer our São Paulo) customers a complete range of coffee qualities and origins. That means expanding our geographical sourcing footprint, while investing in research, marketing and – most importantly – sustainability. 37 With headquarters in Geneva and representatives around the world, our coffee A Coffee Sustainability sustainability teams help farmers to improve both the quality and quantity of team of 37 people their yield in a way that is economically, socially and environmentally sustainable. To do this, we work with various stakeholders, including the Louis Dreyfus Foundation, independent certification and verification programs, non-profit organizations, and our supply chain partners. 1 International Coffee Organization – http://www.ico.org/prices/new-consumption-table.pdf Coffee Value Chain Origination Purchasing Processing Quality Control Transporting & Research & Storing & Shipping Agronomists and purchasers We buy directly from Once we have purchased We control the coffee quality We organize transport, visit producers, get to know farmers or through the coffee, we either store (defects, bean size, humidity) delivering the coffee to the suppliers and their coffee. cooperatives and it or process it depending on and cup profile to offer destination. We collect it By nurturing relationships with local traders. whether it is green bean or the optimized blend to our directly from suppliers and producers, we originate from parchment. customers. Understanding have warehouses around all around the world. customer needs is key to the world. This gives us our success. the flexibility to follow strict instructions from our customers. 2 Louis Dreyfus Company Toward a Sustainable Coffee Value Chain 3 LDC Coffee Operations. continued LDC’s operations cover 85% of the world’s coffee producing areas. Europe, Middle East & Africa Antwerpen Storage Belgium North Geneva China America Wilton Madrid North Asia • 2 warehouses located in Peru, Honduras & Kunming (Yunnan), bonded Mexico and domestic, with an Kunming Warehouse excellent port connection. Mexico India • Honduras: Merchandizing, logistics Perote Mill Pleiku Mill & Processing Ðắk Lắk Warehouse & Mill and quality control, 1 dry mill and Villanueva Mill & Processing Honduras Koppa Vietnam ng Warehouse warehouse close to San Pedro Sula, Letras Warehouse Processing ồ Colombia Indonesia & India 5 buying agents and an office in Pereira Mill, Processing & Warehouse Nairobi Warehouse Medan Warehouse Molenbergnatie Warehouse Comayagua. Ibague Mill & Processing Uganda Kenya Medan Mill & Processing • Indonesia: Mill in Bandar • : Merchandizing, logistics Cundinamarca Warehouse Kampala Warehouse Singapore Mexico Lampung, and Arabica mill and quality control in Mexico City, Jaen Mill & Processing Lampung Processing Moyobamba Warehouse Lampung Warehouse and warehouse in Medan. 1 dry mill and warehouse in Perote Indonesia Tarapoto Mill & Processing Peru Ability to source both (Veracruz) at an altitude of 2,500m. Brazil La Merced Processing Nova Venecia Asalan raw and export- • : Merchandizing, logistics and São Paulo Warehouse & Mill Peru South & ready coffee of all grades. quality control in Lima, 1 dry mill and South & West ati Southeast Warehouse & Mill Asia • India: 2 warehouses/ warehouse in Jaén (Cajamarca) and Latin America mills in Kushal Nagar and 1 dry mill in La Merced (Junín). Varginha Warehouse & Mill Chikmagalur. Sourcing network covers 95% of Indian coffee production. Colombia • Bogotá: Merchandizing, logistics and quality control. • 2 warehousing/milling plants in Pereira and Ibagué. East Africa Vietnam • 2 high altitude warehouses in Cundinamarca and Páramo de Letras, • Ethiopia: Commercial representative in • 1 warehouse and 1 milling at 2,600m and 3,800m for optimal Addis Ababa. Handles purchases, quality plant in Lâm Ðồng. storage conditions. Brazil control and logistics for all grades of • 2 warehouses and • 3 milling plants owned by partners. washed and natural coffees. 2 milling plants owned • Buying stations across the main • Merchandizing in São Paulo (SP) • Kenya: Merchandizing, logistics, by partners. producing regions. and logistics and quality control in quality control, milling and Santos and Varginha. warehousing in Nairobi. Sourcing • 3 warehouses/mill plants in Varginha network covers 95% of Kenyan (MG), Matipó (MG) for Arabica, and production. Key in Nova Venecia (ES) for Conilon. • Uganda: Merchandizing, logistics and Mill / Processing • 6 buying stations across the main quality control. 2 warehouses and a Storage / Warehouse Arabica (South of Minas, Forest and dry mill in Kampala. Direct supply from Tolling agreement, off-take contract, minority Mountains region, Cerrado) and Conilon middlemen for all grades of Arabica stake, land lease, facility lease (Espirito Santo state,