Nespresso East African Coffee Project

completed

The project consists of a US$3 million loan to Nespresso (guaranteed by Nestlé S.A.) and US$3 million grant from the World Bank’s BioCarbon Fund (to be disbursed through the Nespresso Sustainability Innovation Fund) to support smallholder coffee farmers and producer wet mill businesses in Ethiopia and Kenya involved in Nespresso’s AAA Sustainable Quality Program (AAA Program). The project will be implemented on the ground by TechnoServe, and will entail agronomy and sustainability training to farmers and wet mill businesses and planting of shade trees. The scope of this project targets farmers and wet mill businesses in the regions of Sidamo B (in Southern Nations, Nationalities, and Peoples'' Region, SNNPR) and Sidama A (in Oromia Region) in Ethiopia, as well as in central and western Kenya. The agronomy and sustainability training will target 33,000 AAA farmers and 125 wet mill businesses in Ethiopia, and 10,000 AAA farmers and 60 wet mill businesses in Kenya. In addition, shade tree planting activities will also target farmers and wet mills in the same AAA areas who previously participated in TechnoServe’s training (as part of Gates or Nestlé-funded programs, totaling around 25,000 farmers and 20 wet mills). In Ethiopia, seedlings will be grown in government-owned nurseries, from where they will be transported to farmers and wet mill businesses for planting. In Kenya, seedlings will be grown in cooperative-owned nurseries. Founded in 1986 and a wholly-owned subsidiary of Nestlé, a Swiss multinational food company, Nespresso is headquartered in Lausanne, Switzerland and markets at-home espresso and coffee machines and capsules, as well as single-origin and specialty coffees from coffee producers around the world. Nespresso’s AAA Sustainable Quality Program, launched in 2003, is the company’s long-term commitment to working with farmers and coffee growing communities to promote a sustainable future. Currently, Nespresso sources 84% of its coffee from the AAA Program worldwide, and seeks to source 100% by 2020. As part of its sustainability goals, Nespresso has already planted over 600,000 trees and aims to plant several million trees in AAA coffee regions by 2020, which helps strengthen coffee farms’ resilience to climate change and ensures sustainable coffee production for the future.TechnoServe was established in 1968 as a nonprofit organization with the aim of working in the developing world to build competitive farms, businesses and industries through the linking of people to information, capital and markets. To date, TechnoServe has worked in more than 40 countries across Africa, Latin America and Asia with coffee as one of its major sectors and has reached more than 250,000 coffee farmers around the world. TechnoServe has been present in Ethiopia since 2007 and provided training programs to approximately 50,000 smallholder coffee farmers centered around approximately 100 wet mills. In Kenya, TechnoServe has provided training to 17,000 smallholder coffee farmers and 72 wet mills. Initially funded by The Bill & Melinda Gates Foundation and now Nestlé Nespresso, TechnoServe provides a farmer-training program (Coffee Farm College) to educate smallholder coffee farmers in sustainable agronomic practices to increase yields and business support to farmer cooperatives to establish or upgrade wet mills to improve coffee quality through the East Africa Coffee Initiative. Nespresso and TechnoServe have been working together in Ethiopia since 2013 and in Kenya since 2014 to implement and scale up the Nespresso AAA Sustainable Quality Program. This involves TechnoServe delivering the Coffee Farm College training to smallholder coffee farmers and sustainability and quality training to coffee wet mill businesses (cooperatives and, in Ethiopia, private businesses as well) to improve the quality and sustainability of their coffee, which also includes a module around coffee shade tree planting. The goal is to reach by 2020 an estimated 300 wet mills (purchasing from approximately 250,000 smallholder farmers), and provide agronomy training to 50,000 farmers. Achieving AAA supplier status will enable wet mill businesses to access a new market of Nespresso AAA sales and it is expected that smallholder coffee farmers will have increased coffee incomes as a result of improved yields, quality and market access to Nespresso’s AAA supply-chain.Ethiopia, the single largest African coffee producer and the world’s fifth largest, is commonly considered as the birthplace of coffee. Around 95% of Ethiopia’s coffee is produced by an estimated 4 million smallholder farmers on plots with an average size of 0.5 hectare (the average farm size is less than 2 hectare), the majority of which live in the southwestern and southeastern parts of the country (regions of Jimma, Lekempti, Sidamo and Yirgacheffe). Smallholder farmers are typically grouped into producer cooperatives, which provide services to members including coffee processing (wet mill, sun drying area, and storage shed), credit and human and financial resources. Sidamo (named after the Sidama Zone in Southern Ethiopia) is one of Ethiopia’s most distinctive coffee origins and accounts for more than two-thirds of Ethiopia’s washed coffee output. Kenya is the second largest producer of washed Arabica coffee in Africa. About 55-60% of Kenyan coffee production comes from an estimated 570,000 smallholder farmers, while the remainder comes from large estates. Most coffee is grown in central and western Kenya, accounting for 70% of Kenya’s coffee production. All smallholders process and market their coffee through cooperatives, where they are required by law to be members.The government policy does not allow private companies to operate wet mills to process coffee from smallholder farmers and instead these are operated by cooperatives. Both Ethiopia and Kenya account for a key component of Nespresso’s overall supply from Africa, from where coffee is exported to Nespresso’s facilities in Switzerland for roasting, packaging and distribution through the company’s sales and marketing channels.