Building partnerships for climate resilient coffee farming

At the end of September, SNV’s Café-REDD+ project held its closing event after six years of dedicated efforts to address the conversion of forest to agriculture in the iconic forested landscape of Lang Biang in Lam Dong province, Vietnam. A week later, we launched our partnership with Phuc Sinh Corporation, a Vietnamese coffee trader, processor and exporter, to help scale the adoption of climate-smart farming practices by farmers in their supply chain and to unlock investment from a development bank in their growth. These projects, with SNV’s approach to developing inclusive markets and value-chains at their core, demonstrate different and evolving ways to work with the private sector in achieving climate smart and sustainable economic development for rural communities. 

The Coffee Agroforestry and Forest Enhancement for REDD+ (Café-REDD+) project opened against a backdrop of some of the lowest coffee prices in living memory. This had plunged the poorest farmers further into poverty, but it also galvanised support for the project’s approaches which were centred on making the livelihoods of local communities more resilient to economic shocks through diversification and improved production and productivity. Now, as the project ends, coffee prices are four times higher than in 2019 and near their all-time highest. This price shock is the reverberation through the global market of failed harvests in Brazil due to climate-related extreme events. While the windfall might be a welcome and overdue slice of luck for Vietnamese farmers, it is a stark reminder of the vulnerability of agriculture and the food system to climate change. With Vietnam’s primary coffee producing region, the Central Highlands, known to be highly vulnerable to climate change, it is an important moment to review how farmers and communities there are being supported to increase their resilience. 

The adaptations in farming practices required by farmers are relatively well known. SNV literally wrote the book on sustainable and climate smart coffee production in Vietnam – first developing the National Sustainable Curriculum for Robusta and then supporting a group of experts to develop the curriculum for Arabica through the Café-REDD+ project. Activities such as establishing proper shade and ground cover create a more resilient farm-level microclimate which helps coffee crops deal with more variable rainfall and increased heat stress. More efficient use of water reduces water shortages and ensures the resource is available for all farmers across a landscape. Diversification – growing different types of crops or having different sources of income on a farm - reduces the sensitivity of farming households to both climatic and economic shocks. Regenerative farming practices can ensure the long-term productivity of the land and reduce the human health costs associated with ever-increasing use of chemical inputs require once soil health has deteriorated. 

Despite this knowledge, however, adoption of a suitably resilient package of measures remains slow. This is a particular issue for poorer and more remote farmers, who are less professionalised, and have less capacity to learn and invest time and money in changing their farm practices. One of the barriers to resolving this has been that the market system does not reward or recognise such efforts – water is underpriced, coffee companies don’t trade in or benefit from the produce of diversification, and the price a farmer receives for their beans is relatively insensitive to whether it was grown under shade or above ground cover. This is why SNV’s approach aims not just to empower local farmers, but to tackle the market ecosystem in these local communities and create the right economic environment and infrastructure so that transformation can occur across the landscape. To do this at scale we are increasingly working with the private sector in different ways – no longer just as partners and even beneficiaries in our projects – but as investors and funders of the transformation needed in the coffee landscape. 

In Dak Lak province the TCHIBO-funded Climate Resilient Coffee Farming Project is working with 8,000 smallholder-farmers to promote sustainable production practices and improve their livelihoods. The project is specifically targeting farmers who have not yet been certified – a process which evidences a farmer’s ability to meet a package of sustainability criteria – and therefore have not yet been able to adopt the types of measures required for more climate-resilient practices. SNV delivers the project in partnership with the Dak Lak provincial Department of Agriculture and Rural Development (DARD) and provides capacity-building, training, and coaching to poorer and more marginalised smallholder farmers, including from ethnic minorities. Innovatively, the project is entirely funded by TCHIBO, a German coffee roaster, who are making this investment as part of deep ethical commitment to people, the planet, and tomorrow. This type of partnership with corporations is one that SNV has also pioneered with companies in Indonesia. 

With Phuc Sinh we are supporting them to promote the Rainforest Alliance-standard farming among more smallholder farmers, ensuring compliance with the European Union Deforestation Regulation (EUDR), and scaling their inclusive business model. While Phuc Sinh was the pioneer for Rainforest Alliance standard coffee in Vietnam, their expansion comes with risks as they scale and invest in their suppliers in new provinces. These activities, funded by the Dutch Fund for Climate and Development (DFCD) with contributions from the company, have been designed to de-risk and enhance the impact of the company’s business model, and make it investment-ready for a potential debt investment by FMO, the Netherlands Entrepreneurial Development Bank. Such a partnership is an example of blended finance – using grant funds to catalyse a larger commercial, yet impactful, investment. This approach is also being taken by SNV, under the DFCD, to support a coffee company in Cambodia – Kofi - to achieve similar goals, which has included support to transfer technology and expertise across the border from Vietnam to Cambodia. 

Looking ahead, SNV in Vietnam is exploring how carbon markets can be leveraged to generate revenue and investment in further scaling the adoption of these climate resilient farm practices. Actions such as the introduction of shade trees or intercrops results in greater carbon sequestration by the farm ecosystem. This creates an opportunity to build partnerships between companies across the world seeking to buy or fund the generation of robust and reliable carbon credits and smallholder farmers who may lack the knowledge or financial capital to adopt such practices without support. By working in a value-chain and market-based model, there is a chance to both overcome some typical barriers of aggregation and scale associated with building such a partnership cost-effectively and creating the market ecosystem required to keep these trees, and their carbon, in the ground permanently. Ultimately this channels new financial resources to support farmers, and the business ecosystem around them, to adopt more climate resilient practices.