Building stable, peaceful communities is essential if we are to meet the sustainable development goals. Restoring agricultural industry and rebuilding rural economies will be key to this. In my speech today at the edie.net Sustainability Leaders Forum, I explained how Nespresso’s efforts to revive coffee farming in fragile regions is helping to building peace, prosperity and economic development. Our vision is that all businesses can use their value chains to create shared value that drives sustainable development.
A new way of drinking coffee
The Nespresso system revolutionized the way we drink coffee at home. The combination of the pressure in the machine interacting with the air-tight aluminium capsule meant that, for the first time, people could make a cup of coffee at home that would rival what any barista could offer in a coffee bar.
To get the best out, you have to put the best in. From day one, we sourced only the finest quality beans to make our coffees. This gave us an opportunity to ‘premium-ize’ what is essentially a commodity. Very quickly, we had a rapidly growing demand for very high-quality coffee. We had to make sure that the supply of high-quality coffee would be able to keep up with our demand.
Coffee grows at high altitudes all around the equatorial belt. And in many of the countries and regions where it grows, the agricultural industry is threatened by instability and conflict. War, persecution, poverty, political or economic factors – there are many reasons why people leave these regions which of course puts the production of coffee at threat. In some cases it means that it stops altogether. For Nespresso, this was the opportunity: could we help to revive premium coffee production in these places where it has been lost or forgotten because of instability, and in doing so, help people build stable, sustainable communities?
Breaking the cycle of decline
An unprecedented 68 million people around the world have been forced from their homes because of conflict or persecution. Poverty also drives people from the countryside to cities - 75% of the world’s poor live in rural areas. The impact of these combined factors is a strong trend of migration: the proportion of people living in urban areas has more than doubled in the past 50 years, and this trend is more pronounced in less-developed countries.
This is leading to the loss of agricultural industries and forcing the decline of rural economies. In particular, rural youth then have fewer opportunities: they don’t see a future in farming and migrate to urban areas, where they face very different challenges. This means that the rural economy now lacks a strong, dynamic workforce to rebuild it and very quickly, rural economies can spin into a downward spiral of decline.
How to break this cycle? How can we reinvigorate rural economies and build stability in regions where is has been disrupted?
People in these fragile communities need to thrive, not just survive – and to do this they need economic independence. To promote development, we must restore strong rural industries like farming. We must help communities where there has been conflict to cement the peace and build stability. We must attract the next generation to farming by ensuring that agriculture can provide them with a long-term, sustainable livelihood.
I believe that business has a key role to play in driving economic development and building peaceful communities, and as a coffee business, we have a unique opportunity. As one of the world’s most traded commodities, coffee plays a crucial role in the livelihoods of approximately 25 million people. Each year, nearly eight million tons of coffee is consumed globally - equivalent to roughly 1.5 billion cups per day, and consumption of premium coffee is growing. But most coffee is grown by smallholder farmers who unfortunately are often unable to take advantage of this opportunity due to lack of ‘know how’ and ability to navigate the unpredictable and volatile market. It is also not easy to grow, it takes time and some skill. Because of these factors, in some regions coffee production has been all but lost.
Reviving lost coffees
We first saw the potential of reviving a lost coffee production in South Sudan. Coffee is indigenous to this part of the world, it still grows wild in some places. South Sudan is made up of 60 ethnic groups, fighting between the north and the south over oil-reserves – around 80% of Sudan’s oil came from the south. Decades of civil war have led to 1.5 million lives lost and the displacement of 4 million people.
South Sudan represents the single largest state building challenge of our generation. Around 80% of South Sudanese people live in rural areas. To kick-start economic development there needs to be a grass-roots wealth creation focused on rural areas. Sadly, years of conflict meant that the coffee industry in South Sudan was all but lost.
Nespresso saw an opportunity to revive the industry by implementing the Nespresso AAA Sustainable Quality Program™ in South Sudan. The program helps farmers to grow premium-quality coffee in a sustainable way, for which they earn a premium, and connects them to the international market. The profits from coffee are roughly double what a farmer can make growing maize.
Coffee has advantages over oil: it diversifies the economic base and brings stability to communities. It cannot be looted, it has a longer cash cycle, and is a lawful activity. When coffee farmers make more money the whole community benefits. The rural economy is reinvigorated. Coffee enables grass-roots wealth creation.
For two years, we were able to sell coffee from South Sudan. Nespresso’s coffee became the country’s second-biggest export after oil. Our customers loved opportunity to try one of the world’s rarest coffees, knowing that their purchase was directly impacting the lives of thousands of people. We saw very clearly then, that such a special coffee represents a powerful market force: it can create value for farmers, for consumers, and of course for our business.
Our achievements in South Sudan inspired us to look at other places where reviving coffee could be used in ‘state building’ and of course, our thoughts went quickly to Colombia, where a peace agreement was finally reached in 2016.
The conflict in Colombia had lasted for 50 years. Two generations who have known nothing but war. It left some 220,000 people dead, 25,000 disappeared, and more than 7 million people displaced. Colombia has the highest number of Internally Displaced Persons in the world - more than South Sudan, more than Syria, more than Iraq. Caquetá was at the heart of the conflict, and this made it impossible for farmers in the region to make a good living from coffee: it was not connected to the market and the instability meant that farmers could not invest time or resources in their coffee crop.
We took the same approach as we took in South Sudan: an opportunity to connect these farmers to the international market, to introduce the world to the coffee of Caquetá for the first time, and empower the communities in this region to earn their own stable, sustainable income.
Our aims were to provide opportunities for a more secure future for those already farming, and offer those who have been displaced a reason to return to the region and make coffee their main source of income. Importantly, we hope our approach would offer an opportunity for young people to return to Caquetá and make their living from coffee farming.
Nespresso’s first coffee from Caquetá was a celebration of the Colombian people’s aspiration for peace, and it sold out worldwide within weeks. Our experience has allowed us to further develop the concept of reviving coffee production to promote development and peaceful communities.
We next introduced our AAA program to Zimbabwe. Decades of instability and economic shocks plunged the rural economy into decline. Zimbabwe used to be one of Africa’s big coffee producing countries, but production fell from 15,000 tons twenty years ago to fewer than 500 tons in 2016.
We began working with small-holder farmers two years ago to improve the quality of their coffee and their yields. We are teaching them to farm in a climate-smart way that will help them to build their resilience to climate change as they increase their incomes.
Last year Nespresso bought more than 95% of the quality coffee grown by Zimbabwe’s small-holder farmers. For the first time, they see that coffee can provide them with a strong income. It is early days but we are confident that this can stimulate Zimbabwe’s rural economies, that this will directly lift thousands of people out of poverty and allow investment in other agriculture.
A cupful of hope for the future
At Nespresso, we see a real opportunity to make an impact by reviving coffee production in places where it has declined or even been lost. Building sustainable, profitable, coffee production, will help to rebuild rural economies and bring peace and stability to fragile economies.
Our consumers get to enjoy new, exciting and rare quality coffees, so this is good for us as a business. And it is because we are a business, not an NGO, that our approach can be successful: because it creates shared value. Value for the farming communities, of course, but they also create value our consumers and for us as a business. This is what makes it sustainable, because this is not aid: this is finding a business solution that can create new value and bring peace and stability to regions where it is now crucial to build it.
What can other businesses learn from this?
We are not all trading in an agricultural product, and we don’t all have the opportunity to create value to this extent in regions that are desperate for economic development. However I believe that all business have an opportunity, and an obligation, to look at our value chains for opportunities to create shared value and have a positive impact on the world. The business community as a whole must drive investment in sustainable development in a way that is also good for business. Because this is the truly sustainable approach.