October 2016

Case Study Partnership for Sustainable in Working Group The Journey Grow Asia Case Study PSAV Coffee Working Group Journey 2 Grow Asia Case Study PSAV Coffee Working Group Journey 3

Introduction

Contents Grow Asia This case study explores the process The partnership models that have emerged of operationalizing the Partnership for from these efforts are diverse, but they are Introduction 3 Grow Asia is a multi-stakeholder Sustainable Agriculture Vietnam (PSAV) built upon a shared vision, a set of core partnership that aims to reach 10 million Coffee Working Group (WG), from its initial principles, and series of key tactical steps 1 Engage 4 smallholder farmers by 2020, helping genesis to project implementation. This that are similar across many countries. them access knowledge, technology, case study is meant as an accompaniment These elements have been captured 2 Align 5 finance, and markets to increase their to the Business Model Overview on here and described as the NVA Country productivity, profitability, and environmental the PSAV Coffee WG, which presents Partnership Model. 3 Structure 6 sustainability by 20%. Grow Asia brings the structure of the WG and the core together Asia’s smallholders, activities of each partner. Grow Asia Building on the thought leadership 4 Plan 7 governments, companies, NGOs, and documents the Coffee WG’s journey by provided by the World Economic Forum, other stakeholders, to develop inclusive adapting the framework developed by the Grow Asia has organized this case study 5 Implement 8 and sustainable value chains that benefit World Economic Forum’s New Vision for according to the NVA 8-step Framework farmers. Value chain projects, or Working Agriculture (NVA) in A Guide to Country-led for Action. While presented in a linear way, 6 Advance 9 Groups (WGs), are locally-driven, often Action. it is important to note that the partnership private-sector led, and bring together has and continues to evolve, with multiple 7 Scale 10 stakeholders from different disciplines to steps occurring concurrently and at times leverage their expertise. NVA’s 8-Step Framework for Action re-occurring. These steps presented by the 8 Review 11 World Economic Forum are an excellent To meet the challenge of sustainably framework to better understand the core Conclusion 12 Purpose of the Case Study feeding 9 billion people by 2050, the set of activities that this successful WG has agricultural sector will need to undergo undertaken during its journey. As part of a series, this case study is a major transformation. Achieving this Copyright tool to help new and prospective partners transformation will require new approaches better understand how inclusive value chain and extensive coordination among all Grow Asia Singapore partnerships are launched, evolve, and stakeholders in the agricultural system. Copyright © 2016 by Grow Asia. function. It documents the journey of how Market-based approaches, while not the multi-stakeholders come together to co- only answer, will be an important tool in All rights reserved. No part of this create value chain projects on-the-ground. the “toolbox” to drive change – providing publication may be reproduced, stored in a The case study also highlights partners’ the efficiency, scalability and market-based retrieval system, or transmitted, in any form contributions and leadership and provides incentives to power a large-scale effort. or by any means, electronic, mechanical, anecdotal evidence of the benefits derived photocopying, or otherwise without the from working in partnership. prior permission of Grow Asia.

Grow Asia 74B Tras Street, Figure 1 Singapore 079013 NVA’s 8-Step Framework for Action +65 6221 9528 [email protected] www.growasia.org 1 2 3 4 5 6 7 8 Engage Align Structure Plan Implement Advance Scale Review

Identify and Develop Establish the Define specific Implement Leverage Scale and Review the engage a shared partnership goals and action plans milestones institutionalize partnership influential partnership structure action plans to drive proven strategy and champions agenda progress models structures

Grow Asia Case Study PSAV Coffee Working Group Journey 4 Grow Asia Case Study PSAV Coffee Working Group Journey 5

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1 2 Engage Align Convene to establish the Brainstorm and prioritize challenges facing value chain working group smallholder farmers, align expectations, and define common goals

Direction setting by government Ensuring multi-stakeholder As such, the Coffee WG would not Preliminary landscape analyses Setting reasonable targets representation have functioned well without the active During the meeting organized by the engagement of its various administrative Once engaged, coffee stakeholders in Working together, the group set objectives NVA for partners engaged in agriculture At the onset, champions within the WG units (MARD, WASI, IPSARD, and NAEC). Vietnam moved methodically to determine that aligned with the GOV’s 10-year national development in Ho Chi Minh City in June (particularly from Nestlé) made strong From the private side, WG membership WG priorities, which focused on making agriculture strategy. These objectives rest 2010 at the World Economic Forum on efforts to broaden industry participation, comprised input suppliers ( by Vietnam the standard for Robusta coffee in on four key pillars and priorities: coffee ASEAN, the (GOV) in efforts to promote the WG as more Yara, crop protection by Syngenta), traders, the world. Yet, the sector faces challenges quality, coffee output, coffee sustainability, urged participants to join forces in finding than just a value chain project of any one roasters, and exporters. These companies to coffee’s long-term sustainability. During and farmer income. Leading the meetings, more sustainable ways to grow coffee. company. Partners were engaged from already maintained a fairly developed this phase, the Coffee WG identified the WG co-leads (initially Nestlé for the In response, a group of international the GOV (national and local authorities), network of partnerships to promote their potential threats to the long-term viability of private sector and its GOV counterpart, companies and organizations (such as farmer groups, academics, civil society, businesses in Vietnam, with many (Nestlé, the sector and livelihood of farmers: the Crop Production Department at MARD) roasters, input suppliers, coffee traders, and others with field-based expertise Yara, Syngenta) having existing links with — Ageing coffee tree stock guided WG discussions. Eventually, the WG and NGOs) mobilized to establish a public- and broad perspectives across the coffee farmers (via demo plots to showcase the (and an emerging replanting crisis). reached consensus on high but realistic private partnership for the coffee sector sector. Starting out as an informal structure, value of their products or control output — Depletion of groundwater supply targets, to engage 20,000 Vietnamese in Vietnam. With strong GOV support, this the WG currently includes close to 30 core quality). (from unsustainable ). coffee farmers by 2020. By some accounts, initiative set out to develop a model for organizational members contributing to the — Diminishing soil fertility coming to agreement on the objectives sustainable coffee production, focused multi-stakeholder model. Already engaged in the broader sector, (from excessive application of nitrogen- proved relatively straightforward, given their on supporting smallholder farmers to sell non-governmental organizations (NGOs), based ). mutual interest in promoting sustainable their products on global markets. Under On the public side, MARD led overall policy research institutes, and think tanks played farming practices in the coffee sector. the leadership of Minister of Agriculture making for the coffee sector. Agricultural a supporting role, lending their technical Vietnamese farmers are known as Nestlé alone accounts for some 20-30% and Rural Development, Dr. Cao Duc research fell to WASI. IPSARD provided expertise to influence the WG agenda, experienced fertilizer users. However, the of coffee exports from Vietnam, so by all Phat, the Ministry of Agriculture and Rural policy advocacy. Translating policy into through such efforts as certification (4C), WG realized early on that adjustments to accounts the targets seemed reasonable. Development (MARD) officially launched farming practices, the NAEC and its local sustainability practices (IDH, Rainforest their practices offered potential benefits. what is now known as the Partnership for units, the PAEC, played an integral role Alliance), and access to finance (BIDV, Sustainable Agriculture in Vietnam. At the in organizing farming households for WG ACB, Agribank). NGO partners participated same event, Minister Phat also announced trainings and provided an influential and and contributed their technical expertise, five WGs (known as task forces in Vietnam), authoritative voice within rural communities. particularly with sustainability practices that including the Coffee WG. In the Vietnam setting, the GOV plays an could benefit the sector as a whole. active role in monitoring rural activities.

Stakeholders Defining WG Objectives

Government Private Sector Civil Society 1 2 3 4 5 6 Enhance quality, Focus on the Demonstrate Enhance farmer Ensure farmers Promote best Institute of Policy and Strategy for Agribank 4C productivity, coffee value chain effective incomes and have access to practice model for Agriculture and Rural Development Asia Commercial Bank (ACB) EDE Consulting environmental and in designated collaboration sustainable best practice in tree rejuvenation (IPSARD) BaConCo Fertilizer IDH farmer economic provinces between partners to livelihoods through plant nutrition and Ministry of Agriculture and Rural Bank for Investment and Development IFC sustainability within fulfill aims of PSAV improved farming profitable output Development – Crop Production Department of Vietnam (BIDV) Rainforest Alliance (RA) the coffee sector and business markets (MARD) Bayer SNV practices National Agriculture Extension Centre Bhin Dien Fertilizer (NAEC) Louis Dreyfus 7 8 9 10 11 12 Provincial Agriculture Extension Centre Fertilizer Provide for improved Develop farmer Support Establish linkages Improve farmer Align geographic (PAEC) and Chemicals Corporation (PVFCCO) crop nutrition to aggregation and environmentally with relevant knowledge and clustering Western Highlands Agriculture and Nestlé increase yield and cooperation sustainable crop financing institutions choice regarding opportunities Science Institute Syngenta Vietnam Co. Ltd. quality practices as relevant management to support farmer new technologies with the scope (WASI) Yara to harnessing practices (such as development for improved market efficiencies water management) efficiencies and address key VC constraints Grow Asia Case Study PSAV Coffee Working Group Journey 6 Grow Asia Case Study PSAV Coffee Working Group Journey 7

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3 4 Structure Plan Determine organizational structure (including Co-design projects, including target setting leads for working groups), how information and responsibilities will be shared, and other details

Establishing a pre-competitive structure Leadership role of the private sector Determine project management Defining project parameters Core activities of WG members — Streamlining farmer training activities across companies and their value chain The Coffee WG was structured as a The Coffee WG currently looks to Nestlé With the focus placed squarely on With the goal and objectives determined The Coffee WG emphasized collaboration networks. pre-competitive model in which the WG as the lead private sector advocate to set supporting farmers, activities involved by consensus, stakeholders mapped across multiple companies and offered a package of services and market the agenda, convene regular meetings, demonstration plots and a package of their current activities in Vietnam, in order organizations, even among private sector — Expanding certification programs for benefits to coffee farmers along a value monitor project activities, and report on agricultural services, inputs, and trainings. to suggest potential pilot areas for WG players with competing business interests. sustainable coffee production (by chain ecosystem. After objections from performance. As WG co-lead, Nestlé Chosen for their close interaction and projects. Led by the private sector co- To achieve its goals, the Coffee WG carries engaging NGOs). NGO partners, Coffee WG members came played a pivotal role in moving the relationship with farmers, PAEC acted as lead, the WG carried out site surveys out a series of project activities with key to consensus that they would not brand or partnership agenda forward. Early on, project manager and reported to the WG (size, elevation, and location of farms; partners, such as: — Sharing best practices across all promote any one company or organization coffee stakeholders interacted frequently, co-leads. WG members would provide their accessibility to transport; and other stakeholders and constituents. in project activities. Logos and overt through regular meetings and periodic project funds, which would then be technical criteria) to determine the most — Engaging research institutes to marketing were not permitted in project study tours to select farming areas. The WG managed by the NAEC and distributed appropriate demonstration plots for initial identify seed varieties adapted to local As a true partnership, not everyone takes activities. Product agnostic, the value lead maintained the group contact list and to the PAEC for its activities. PAEC staff activities. Eventually, the group focused on conditions, with trees producing high part in all aspects of project activities. chain project offered purchase choice to informed members when events would take would organize quarterly farmer training, coffee value chains in two initial regions of yield and farming practices having Members contributed when and where farmers, subject to certain conditions that place. Members wishing to participate in with technical inputs from WG members; Vietnam (Dak Lak and Lam Dong). minimal environmental impacts. they could. A division of labor evolved, the WG refined over time. Orchestrating WG events would simply coordinate their coordinated with farmers and private depending on organizational strengths this process required strong leadership, participation, depending on availability and companies on the demo plots; and The WG also worked to determine how — Partnering with the National Agriculture and value-added. GOV agencies provided constant coordination, time commitment, organizational interest. These gatherings managed project funds. To release funds, to engage farmers; criteria for farmer Extension Centre to organize trainings inputs on policy (MARD, IPSARD), research negotiation skills, and patience. served not only to assess traditional farming both WG co-leads needed to sign off on selection; and obligations for inclusion across all demo plots. (WASI), and extension services (NAEC) to practices and collect baseline metrics, but disbursements, which covered management in project activities. For example, farmer mobilize farmers (PAEC). Private sector also to build trust and a working relationship fees for PAEC and farmers, trainings, and groups needed to include 20-30 members — Setting up farmer and companies (Yara, Syngenta, Nestlé) and Initial phase of partnership among industry players, particularly in co- other technical support for demo plots. with at least 20 Ha of land. To entice farmer groups to reach farmers at scale, other members provided technical inputs branding their activities. farmers to take part in project activities, with: for trainings; in-kind contributions (seeds, In the initial years of its existence, the the WG developed a package of benefits — Financing solutions. fertilizer, irrigation, agro-tools, labor); and WG functioned without structured co- (such as partial subsidies for seeds, inputs, — Direct linkages with input suppliers funds to carry out project activities. leads and relied instead on champions Articulating a value proposition agro-tools, and trainings on sustainable and eventual market buyers. (particularly Nestlé) to propel the multi- practices). In line with the pre-competitive — Dissemination of innovative farming Actual commitments evolved over time and stakeholder agenda. Those initial years Over time, membership in the WG naturally nature of the WG, farmers were free to sell practices. were revised annually. Some organizations, provided an opportunity to build trust coalesced around core members most their coffee beans to any buyer. active early-on, became less so over time, and working relationships across various engaged, and they began tackling problems — Working with provincial and national depending on how WG activities aligned organizations and competing interests. collectively. GOV partners in agriculture In total, the WG outlined a series of governments to: with their organizational needs. Leading Members assigned technical teams to and rural development (MARD, WASI, sophisticated arrangements for the — Reach farmers effectively: inspection WG members (such as Nestlé and Yara) figure out activities relevant for the WG. This IPSARD, and NAEC) remained engaged rights and responsibilities of farmers. At of coffee seeds, labels of origin. developed cost estimates and secured informality gave way to more structured and active members. Private companies the same time, the WG also depended — Create preferential policies: co-financing arrangements from numerous interactions, as WG members agreed that stayed active in the WG expressed on commitments from its members, planting of new trees, infrastructure stakeholders. The overall cost of project on the need for strong management and a vested interest in the partnership, as such as support for hosting meetings; investments, and access to financial activities and logistics for WG meetings coordination to promote and realize a articulated in their broader corporate logistics arrangements to the WG; in-kind services. were split 50/50 between the public and shared agenda, especially considering strategy and sustainability goals for the contribution for project activities; and efforts private sectors. IDH provided significant the different (and sometimes competing) coffee sector. This alignment strengthened to expand their delivery channels to farmers funding to support the project. interests of member organizations. organizational buy-in and staying power within the WG network. for multi-stakeholder engagement. In particular, Nestlé, the private sector co-lead committed personnel (with dedicated staff working 40% on WG activities) and other resources (including financial) to the WG. Snapshot of Training Fertilizer Purchase price Record and Build model and proposed WG 4C and/or WASI Yara (in kind) Off-takers traceability system legal framework support to farmers (including Nestlé) Trung Nguyen MARD Training materials Seed Yara Syngenta (in kind) Market information Subsidy for leader Coordination cost Syngenta and communication of farmer team Nestlé WASI Village collector Trung Nguyen Cash (from WG All WG members IPSARD members through (excluding Yara VICOFA PAEC as project and Syngenta) manager) Grow Asia Case Study PSAV Coffee Working Group Journey 8 Grow Asia Case Study PSAV Coffee Working Group Journey 9

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5 6 Implement Advance Determine how implementation should occur Celebrate success and progress, moving project agenda forward, share information across Country Partnership, assess progress and adapt

At this stage, key partners carried out Select farmer champions Farmer aggregation and cooperatives Factors determining project success — Support from NGOs, (e.g. Rainforest Plans for WG outreach and communication their action plans for the Coffee WG. In Alliance and IDH) in the form of in 2016 include: leaflet materials for an iterative process, project activities Integral to project activities was the careful Cooperatives formed a key pillar of the Project success derives in part from (i) how monitoring and alignment with farmers, an agriculture newsletter, and progressed from initial pilot activities (two selection of farmer leaders, who provided WG’s approach – what the WG termed the best practices filtered down to influence international standards. documentary film on the project activities. demo plots) to more structured (and scaled) their time, reputation, and farmland to “flower model”. Each province would have a farming behavior and (ii) performance As project activities continue to expand, interventions, as the WG gained confidence support demo plots. The WG private lead central , which would then work results trickled across the Coffee WG, within — Strategic and careful selection of farmer communication efforts also expect to scale in their working relationship with each other. played a strong role in identifying these with smaller farmer groups who effectively the coffee industry, and upwards to PSAV to leaders and geographic location of demo commensurately, perhaps with mass media farmers, who ideally needed to exhibit functioned as satellite groups. The central advance agricultural objectives in Vietnam. plots that aligned with existing delivery and awareness campaigns. (i) strong commitment to the project; (ii) cooperative would then coordinate Indeed, achieving collaboration with varied channels of private companies Pilot activities with competitors in a pre- general understanding of technical farming functions such as input distribution, private sector players is uncommon. Some (if possible). competitive space practices; and (iii) openness to adapting collection, sales and payment on behalf of key factors that contributed to the success new technologies. The selection of demo the satellite groups. Cooperatives would of this multi-stakeholder model include: — Focus on farmers, providing meaningful Companies such as Yara and Syngenta sites depended on technical requirements also be reviewed by WG members every extension services to them and provided in-kind inputs of fertilizers and as determined by the WG (e.g. road access, three years in order to ensure that standards — Strong commitment from GOV (starting coordinating technical teams in the field. chemicals. WG members would determine slope, quality of existing coffee fields). To are met. If a particular cooperative failed to at the central level and filtering to the their own demo plots, in consultation and show progress over time, demo plots for meet the requirements, the WG would then provincial and local levels). negotiation with other stakeholders. Private coffee fields were generally of average decide to terminate the relationship. Communication and reporting companies determined the business case quality at the onset. — Mix of input and output companies for for their involvement in specific activities risk-sharing on a pre-competitive basis. With clear roles and responsibilities and looked after their own interests. For Expanding scope of WG activities determined for project implementation, example, each demo plot required inputs Technical expertise and industry — Strong relationship with farmers on the the Coffee WG continued to monitor and of fertilizer, crop protection, seeds, and knowledge from WG members Over time, the project activities became ground, including frequent site visits and track progress against applicable baseline eventual off-takers, among other farming even more sophisticated, with an expanded interactions to reinforce sustainable best metrics. The WG leads communicated requirements. At the beginning, with only With deep industry knowledge, various package of services to farmers, such as practices. (via telephone, emails, meeting) often and two demo plots, this arrangement appeared organizations provided technical inputs to advanced technical trainings and financial frequently (sometimes weekly) with project straightforward. However, as the scale a package of training materials, including repayment options. At the same time, — Constant communication and managers and WG staff in the field with of demo plots expanded, companies participating in technical tours and demo the WG began to experiment with ways coordination among WG members. farmers. As project manager, the PAEC negotiated their own arrangements. No plots, organizing training-of-trainer to expand the scale of its reach, through compiled data metrics (e.g., average companies working in the same industry activities, and supporting farmers with cooperative arrangements for farmers and — Strong commitment from private sector yield, water consumption, fertilizer usage, (such as fertilizer) would share a given value chain resources. NGO partners also inclusion in broader industry initiatives companies already extensively active on coffee bean size, profit) from farmers in demo plot. Such a comingling of inputs shared best practices in sustainable coffee to support the coffee industry. The WG the ground (e.g., Nestle, Yara), with their demo plots and controlled areas. Through would fail to serve their business interests farming and certification (4C and Rainforest recognizes that in the Vietnam context, the technical teams spending a large portion their demo plots, farmer leaders shared in distinguishing their products from Alliance). Farmer leaders then played a value proposition of cooperatives is yet to of their time on WG activities (in some best practices (via trainings) with other competitors. key role in transferring knowledge to other be determined, given the country’s failed cases upwards of 40% for staff of the farmers. On a monthly basis, PAEC sent farmers in their networks. history of collectivization. But they continue private sector co-leads). performance results to the Coffee WG to experiment and explore options to reach leads, who compiled the information into farmers on a wholesale basis that builds the key performance indicators for quarterly business case for project activities, such reporting to the entire WG. as with larger farms and communities to achieve greater scale.

Pham Viet Dai Tran Quoc Phong Nguyen Khac Hiep

A farmer leader for the Coffee WG. Grows Robusta coffee for a living in the The chairman of a cooperative supported From his demo plot, he transfers best Chu Se district of Gia Lai Province. Working by the Coffee WG. The farming group practices 4x/year to 102 farmers in his with Yara and the Coffee TF, he developed comprises some 186 members, with community. Farmers learn stronger financial higher quality trees (stronger, with more 200 Ha of fields producing over 600 MT management skills by maintaining a farmer branches and leaves, and less cherry drop). of coffee/year. Coop members benefit field book, which helps them track and “I increased my yield from 0.39 to 5.63 from better networks across the VC and monitor not only their coffee fields but also tons/hectare, compared to our traditional improved pricing on inputs/ outputs. household expenses. practices. Profits have increased 15,892,000 VND/hectare (more than 700 USD/hectare).” Grow Asia Case Study PSAV Coffee Working Group Journey 10 Grow Asia Case Study PSAV Coffee Working Group Journey 11

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7 8 Scale Review Decide when and how project scaling Review strategy and identify new opportunities should occur

Systematic improvements and Influencing policy and improving Expanding scope Improved farmer engagement outcomes achieved enabling environment During project implementation, the WG WG members have found scaling the Within five years, this multi-stakeholder The Coffee WG has achieved great success continuously explored ways to expand project to be a challenge and identified WG has resulted in notable achievements in terms of institutionalizing its work at services to farmers, while bringing more improved engagement with farmer toward the goals of PSAV and the regional the policy level. For example, the Vietnam stakeholders into this coffee industry cooperatives to be critical in order to build Grow Asia goal of reaching 10 million Coffee Coordination Board (VCCB) is an partnership on a pre-competitive basis. In on the project’s initial success. The WG is smallholders to improve farm productivity, industry-wide initiative that grew from particular, farmers expressed a need for exploring bringing in new partners to train profitability, and environmental sustainability the Coffee WG’s activities, after the WG more flexible financing options, especially and build capacities of cooperatives. Local by 20% by 2020. The training package sought to increase engagement with local with deferred payments for inputs. In government can potentially play a key role developed by WG members on sustainable companies. The PSAV Coffee WG now response, the WG linked up with Agribank in communicating the value proposition of coffee farming eventually evolved into a plays an integral role in the VCCB as the to consider microfinancing options for cooperatives to farmers as well. draft National Sustainability Curriculum. The Production Sub-Committee of the Board. farmers. More broadly, the GOV launched curriculum was made available throughout the Coffee Development Fund in 2015 the country’s agricultural extension service, to support efforts to sustain and scale contributing towards systemic change in promising approaches in the sector, the Vietnamese coffee industry. including incentives to replant old coffee areas. Other intangible results were also noteworthy, especially in strengthening farmer skillsets (management, bookkeeping, and financial accounting) that moved agricultural practice away from the indiscriminate use of water and fertilizers. With growing confidence and established working relationships among members, the Coffee WG looks to maximize its development outcomes, expanding both the scope and breadth of its activities. Starting from a retail approach (with Vietnam Coffee Coordination Board demo plots), project activities have begun (VCCB) to incorporate more systematic efforts (through cooperatives) to reach farmers. Established in 2013, the VCCB comprises members from across the coffee industry. Meeting every six months, the entity carries out four broad functions:

1 Coordinating coffee production processing, and trade programs.

2 Studying and recommending policies and strategies for the sector.

3 Supporting the organizational restructure process for coffee stakeholders.

4 Representing the GOV in various international, industry events.

The board looks to expand its membership base and increase the voice of different stakeholders in policy formulation and implementation. Grow Asia Case Study PSAV Coffee Working Group Journey 12

Conclusion

Leveraging interdependent relationships and cross-disciplinary strengths of members, the multi-stakeholder approach strengthened public-private cooperation for the Coffee WG. Strong commitments and engaged members guided this diffused, yet cross-functional team of coffee champions. The comprehensive yet decentralized approach achieved significant results, reaching over 8,300 farmers. In the 2014/15 growing season, farmer yields increased by 21%, net profit grew by 14%, and carbon emissions decreased by 63%. A platform to promote shared value, this public-private alliance focused on developing synergies, increased efficiencies, risk-sharing, and co-financing to create stronger outcomes in the coffee sector than would have otherwise occurred in isolation.