112. For-Profit Solutions for Producers

 The Women In Coffee Project extended their webinar series on "Wealth for Women in Coffee" with this week's panel discussion on "For-Profit Solutions" for improving producer prosperity.

The panelists were Phyllis Johnson, founder of BD Imports, Jeanine Niyonzima-Aroian, founder of JNP Coffee and me, Ruth Ann Church, founder of Artisan Coffee Imports. The moderator, Amaris Gutierrez-Ray, is the founder of Women in Coffee Project and the lead roaster and coffee buyer at Joe Coffee in New York City.

Each of the three panelists addressed at least one specific pro-women activity that their for-profit company continues as part of the mission. 

1. Ruth Ann shared described how Artisan was started in 2009 buys and markets the women's coffee, which encourages the cooperatives to support the women and helps them have more visibility. For example, Artisan has the president of the women's group sign the contract, which many of them have never done. Having a woman in the meetings where contracts are signed between the cooperative and a buyer has important symbolism. Often, women would not be seen in such meetings. 

Ruth Ann also shared about the $.136/lb premium that Artisan pays. This is called an unconditional cash transfer (UCT) in development circles. UTCs have been proven to be effective tools for development, especially when given to women, compared to other forms of development aid such as building a school or a health clinic. The reason is that with cash, a woman has the freedom to apply the money where it's most needed. If the family most needs to buy food, she uses the money that way. If she decides it will go to school fees or a new cement floor for the home, that is also possible.

2. Jeanine shared exciting on-the-ground achievements of JNP Coffee in Burundi, (also founded in 2009) such as increasing the quality over the years to gain higher prices to such an extent that the men in the communities are asking how they can join the IWCA Burundi chapter! Many of them now participate enthusiastically and they receive the premiums and good prices from JNP also.

Jeanine also shared the impressive story of how impactful micro-savings and micro-credit programs have been. JNP helped the women start a micro-savings program when they came to her asking for financial help to build their own washing station. Four years later, they have saved the money they need themselves, and they are now the pround owners of a washing station!

3. Phyllis summarized her experiences and truly inspired everyone on the call with her comments. Phyllis started BD Imports in 1999 with importing coffee from Kenya. Since then she has imported from Burundi, Rwanda, Tanzania, Guatemala, Costa Rica, Nicaragua and now she is focused on Brazilian imports and sourcing from racial minority producers there.

Her watch-word to the group was to "keep a big tent with you." In other words, understand that it is a village of people who help us along the way in the coffee industry. No one is a singular hero or heroine. 

Phyllis wants to change the negative connotation and definition of the word "middleman" in coffee. She emphasizes to roasters that if it wasn't for the "women in the middle" there wouldn't be coffee! You just don't hear about them very often. "The work that's happening in the middle is wholesome work. It's the work we need to be doing, so women are doing it."

To bring it to a close, Amaris, the moderator, reflected what everyone was thinking after Phyllis' stirring talk: "I think I've been to coffee church!"

Hopefully, the panel gave those who listened on Oct. 2 and those who can catch the YouTube Recording, inspiration to continue pursuing for-profit solutions in coffee to benefit producers.

111. The Missing Piece in Cost of Production

 Sep. 2023 - Learning about the DIASCA Project

Rwandan coffee harvest - at what cost?

As some of the largest coffee companies in the world intensify their interest in ESG (Environment, Sustainability and Governance) goals, multi-stakeholder initiatives (MSIs) like the DIASCA project are stepping up to solve long-term issues. One of the thorniest data issues in sustainability is not just how to gather data to estimate cost of production (CoP) of coffee for a given nation, but how to replicate the same method on an annual, or other regular basis. For us at Artisan Coffee Imports, the issue of consistently repeating CoP estimates is "the missing piece" in almost every attempt to estimate CoP of coffee.

Field research is expensive.

The problem: Updating a COP estimate and replicating the estimation method on an annual, 2 year or even 5 year basis is incredibly important. The day a report comes out with an estimate of CoP, it is already aged, and soon will be so out-of-date it is barely useful. The largest cost component of CoP is labor. Labor rates are notorious for changing year to year. CoP is almost always converted from a local currency basis to USD/lb, so foreign exchange rate fluctutaion as probably the next biggest factor. In some countries, inputs like fertilizer are another large component of CoP, and as readers may know, chemical fertilizer costs have spiked up significantly over the past two years. In countnries like Rwanda where organic matter such as mulch is a major cost to farmers, costs have also risen exponentially. Five years ago a farmer could gather enough mulch in near-by fields. Nowadays, it's common for farmers to rent a truck and driver, travel to another district, pay a different farmer for the mulch and spend one or more days of their own time to make this transaction happen.

Potential Solution: The Committee on Sustainability Assessment (COSA) is the

DIASCA is a multi-stakeholder
initiative funded by GIZ.

technical workstream (TWS) leader for a new effort to develop a rapid CoP estimating method that can be adapted easily to almost all coffee-producing countries. Their efforts are one part of the larger project of the International Coffee Organization (ICO) to address living income. The larger project's acronym of DIASCA stands for Digital Integration of Agricultural Supply Chains Alliance. The purpose of DIASCA is to make digital traceability more efficient by helping all actors in the supply chain "speak the same language." To do this, COSA is proceeding with the careful and difficult work of facilitating parties in different countries and many different organizations to agree on the most important variables to measure, AND they are simultaneously testing new methods for obtaing metrics of those variables that will greatly reduce the cost of field research. 

Lars Kahnert, GIZ

Artisan Coffee Imports is proud to be participating in the roundtable discussions to develop the economic model and supporting metrics to produce a reliable and repeatable CoP estimate that will then be a key component of the DIASCA project's larger Living Income estimates. 

Indicator lists and flow-chart models are still in process! We can't share them with you today, but soon there will be early results to share. (Watch this space.) It is challenging and rewarding with colleagues from esteemed organiztions across the globe, COSA being one of them, as we work towards this important industry goal.

Daniel Mbithi, Kenya Coffee Exchange, 
gives insight on Kenya's project.

110. Dukundekawa Musasa Achieves ISO 9001 certification

Dukundekawa Musasa Achieves ISO 9001 certification

Ruth talks with Ernest

In June 2022, Ruth was visiting the cooperative Dukundekawa Musasa in the Northern Province of Rwanda. Ernest Nshimiyimana, the Managing Director, mentioned that he planned to have the cooperative’s operations certified to the ISO 9001 standard by the end of 2023. In April 2023, they accomplished this goal! They have become one of only two coffee cooperatives in Rwanda to achieve this internationally recognized quality standard. 

Nshimiyimana commented on the new achievement, "Every single day, we’re learning, creating and refining. This is one more objective proof to our staff, partners, clients and the outside world that customer satisfaction is at the core of our business. We are farmers. Buy from a farmer and enjoy the perfections."

Organizations use the ISO 9001:2015 standard to demonstrate the ability to consistently provide products and services that meet customer and regulatory requirements. It is the most popular standard in the ISO 9000 series and the only standard in the series to which organizations can certify.

Artisan is impressed by this accomplishment in the area of quality and organizational management. Up until this time, we have only heard of one other coffee producing group, Daterra Estate in Brazil, that has understood the value of quality systems and international standards well enough to pursue this challenging standard. They achieved ISO 14001, which is the international standard that provides a framework for an effective environmental management system (EMS). It provides a processes an organization can follow, rather than establishing environmental performance requirements. 

Achieving a certification, any certification, is the first and hardest step, but continuing to maintain a certification is the next difficult phase.

Dukundekawa's ISO 9001:2015 certificate - issued 13 Apr 2023

What is ISO?

ISO is the International Organization for Standardization. It is a worldwide federation of national standards bodies (ISO member bodies) based in Geneva Switzerland. It aims at developing common international standards in many areas. Its purpose is to facilitate International trade by providing a single set of standards that people would recognize and respect. It specifies the requirements for a Quality Management System (QMS) where an organization needs to demonstrate its ability to consistency and aims to enhance customer satisfaction through effective application of Quality systems.

109. How does Artisan price their coffee? Is it related to the C market (ICE)?

Dec. 9, 2022

Artisan's founder, Ruth Ann Church, had the honor to join a panel yesterday, Dec.

Sustainable Sourcing Webinar, Dec. 8

8, organized by Bellwether, the innovative manufacturing company of roasting machines that any cafe owner can use. Owners of Bellwether roasters may opt-in to green coffee supplies from Bellwether also, and that's where Artisan and another importer, BeLift, come in. Both Artisan and BeLiftGreenBeans were guests on the webinar titled, "The Relationships and Realities Behind Sustainable Sourcing." 

Bellwether's chief coffee officer, Arno Holschuh, is also a celebrity in specialty coffee today. He was at Blue Bottle for five years and has leveraged his experience well into his current role of leading a cutting-edge coffee equipment/sourcing start-up. Holschuh moderated the panel starting with questions about the C Market. Here at Artisan, we found this question intriguing and wanted to share a bit more about how Artisan priced coffee in 2022, which was a watershed year in many ways for coffee.

What most people point to, and Holschuh was considering when he asked the question, is the high volatility of the C Market in 2021 - 2022. Coffee prices for internationally traded coffee went much higher than usual, and kept going up for many months, until recently, in October/November, prices went steeply down again.

In 2022, our prices were influenced by key factors like the NAEB farmgate price, and competition for cherry, but the core of our method rests on understanding cost of production. At Artisan, we have access to some of the best historical research on cost of production in Rwanda. For some time, the evidence from this research suggested farmers must receive at least 300 Rwf/kg cherry in order to make coffee farming worth their while. Some might say, 300 Rwanda franc (Rwf)/kg cherry was a "living income" farmgate price back in 2015 - 2016.

Fast forward six years and the 300 benchmark is no longer relevant. It needs to be updated for current real dollar value (i.e. currency exchange has changed), for general inflation and real cost increases, for example fertilizer and labor. Only considering the foreign exchange rate and inflation, the 300 in 2016 woud be estimated to be more like 400 Rwf/kg cherry. But there was an additional factor in 2022, that is increased competition for cherry. A low-production year in 2021 had created the first time in decades that big commercial buyers of coffee were paying double the NAEB farmgate price of 270 per kg cherry. 

In 2022, despite NAEB taking its cue and setting the farmgate price even higher at 420, the competition to buy cherry was fierce again and farmers won again. Cherry prices were easily at 700 Rwf/kg in Rusizi and 600 Rwf/kg in Gakenke. This is all good for farmers, of course, but it meant Artisan's pricing models, which focused on the 300 Rwanda franc benchmark were now outdated.

Without any solid research to reference for cost of production in this context, Artisan decided to take regional cherry prices as a proxy for farm costs and add cooperative costs to that number. To gauge the farm costs, Artisan required each of the five coops in our sourcing group to send copies of 10 farmer "fiche", the delivery document where every delivery of cherry is recorded. This document gives accurate evidence of the prices one farmer actually received. By averaging prices received by 10 farmers, one creates an "average price paid" for coffee cherry at each cooperative. We use this average cherry price as our baseline of cost of production for the farmer. 

Before 2021, we would never take the cherry price as representing farm costs. We still don't believe the cherry price is equal to cost of production, but we're pretty sure the cherry prices paid in 2021 and 2022 were above the farmer's cost of production, whereas prior to 2021 we had evidence and research that that was not the case.

Cooperative costs included salaries, fuel, security, maintenance. Adding these costs to the cost of cherry allowed us to estimate cost of production at the cooperative level. Once we had this data for one cooperative, it was easier to create the next four. This system of using 10 farmer cherry delivery documents to form the basis to understand total costs at the cooperative level became our new go-to model for price discovery in 2022.

Artisan captures data on COP cooperative level

We like this method of building to a coffee price by starting on the farm. While still involving lots of estimates, it is based on realities of farmers and considers the variation of the micro-markets within Rwanda. A one-size-fits-all price is going to harm some and undeservedly benefit others. Our "based on the fiche" price is more tightly tied to realities on the ground. While not based on the C directly, influence from the C is part of NAEB's farmgate price, and NAEB's farmgate price heavily influences the price that farmers actually receive. This means the C is indirectly affecting Artisan's price, also.

CLICK HERE to view the video of the entire webinar! We highly recommend it for the great comments from other panelists: Ivan Hartanto of BeLift Green Beans, Grayson Caldwell, Bellwether's head of sustainability and impact, and Gabriel Boscana, head of green coffee sourcing at Bellwether. 

IISD on the SCC webinar, Dec. 6

Coincidentally, two days before this Bellwether webinar Sustainable Coffee Challenge (SCC) produced a public meeting with a presentation from International Institute of Sustainable Development (IISD) on the coffee sector. Click here for the YouTube video. 

• Start at minute 21:00 for the well articulated analysis of the importance of higher prices for coffee farmers and the goal of sustainability.
• At min 31:06 the speakers pose a very interesting question, "why have we normalized high prices for sustainable products, and low prices for products with more negative impacts?"
• At min 32:32 the speakers give a set of recommendations for all parties in the value chain to improve sustainability of the coffee sector.

Artisan supports the recommendations of the IISD and SCC speakers, while recognizing there is always more we can do. We are grateful to partners like Bellwether who are prepared to join us on the journey!

108. Case Study Highlights Method for Importing Women-Grown Coffee Sustainably

 A Sustainable Business-to-Business Approach to Importing Green Coffee from Women, Smallholder Producers in Rwanda

Ejo Heza women with premium check

CLICK HERE to download the full case study.

Emphasizing a business-to-business approach to addressing issues of gender equality and sustainability, authors Roberta Lauretti-Barnhard and Ruth Ann Church have published a case study. The case study focuses on the coffee value chain and offers a window into the world of how businesses, like Artisan Coffee Imports and Food Enterprise Solutions (FES), are working in origin countries to have a positive impact. 

The study tells how Artisan rationalizes and operationalizes its values of offering great taste and consistency to its roaster customers, but also uplifts producer organizations with programs like paying women's premiums and quality control internships. Throughout the piece, the focus is on the Ejo Heza women's group of Kopakama cooperative in Rwanda. Since 2016, Artisan has been developing a relationship with this group of women.

One section focuses on improving women's skills in business management and financial literacy. In this section, the history of the microcredit program of the Ejo Heza women's group is described and the work of FES in microcredit in Latin America is highlighted. 

Next, leadership opportunities for women are highlighted. In this section, readers

Marthe UWIHEREWENEMANA

get a glimpse of the careers of three women: Marthe UWIHEReWENIMANA, Theresa UWIMANA and Betty UWIMANA. Marthe was president of the cooperative during a tumultous episode where her good leadership made a huge difference, and Theresa and Betty are models of coffee farmers who have benefited from leadership roles offered to them through the Ejo Heza women's group. 

The case study also tells the story of how an internship developed to help more women access roles besides farming in the coffee value chain. Grace IZERWE was the first "quality control intern" supported by Artisan and she is now Chief Production Officer, a permanent position at Kopakama Cooperative.

The challenge of measuring impact is squarely addressed. We share the names of somem of the indexes which have been created to help companies measure their progress on gender equity, but these do not offer collaboration in the specific areas where Artisan works. Enveritas is held up as one organization willing to collaborate with Artisan and seeing the value of combining insights from two major datasets at two different points of time but drawn from the same farmers in the one region. 

Despite this one success, the challenge of measuring impact has not yet been overcome. Currently, Artisan suffices with a few (10 - 15) annual farmer interviews. The annual survey uses questions drawn from the Poverty Probability Index to gauge economic status, and other questions designed by Artisan to understand prices and productivity.

Productivity of the land and trees is an important area to understand. Artisan's business model relies on the motivational force that good prices will unleash among farmers to better pursue best practices. 

Ethiopian coffee

Almost the last section addresses the United Nations Sustainable Development Goals and outlines how work such as that of Artisan is probably address five of the SDGs:

#1 No Poverty.

#2 Zero Hunger.

#3 Good Health and Well-Being.

#5 Gender Equity.

#8 Decent work and economic growth.

Finally, the authors share their conclusions, which have a lot of emphasis on the need for new research.

Delivering coffee cherry in Rwanda

107. Variation in coffee cherry prices paid in Rwanda

Artisan tracks cherry prices in Rwanda carefully and has implemented a number of innovative contracting and pricing practices. Recently, we have been excited by new developments that seem to be a mix of market forces and new government pricing philosophy. Together they are playing a positive role to improve incentives for  farmers to invest in coffee.

Evidence shows that micro-markets developed in 2021, and cherry price disparities of as much as 180 Rwf (US$ 0.18) existed at any given point in time, (author’s data, see Table 1 below). This finding is based on Artisan’s convenience sample of 14 farmer interviews conducted in four districts post-season 2021. For example, Artisan interviewed four Ejo Heza farmers in the south of Rutsiro district and documented prices of 250–360 Rwf/kg cherry, (a difference of ~ US$ 0.11 per kg cherry), which is surprising considering these farmers belong to the same co-operative. Through interviews with female farmers in other districts of Rwanda, prices were found to average 310 Rwf in one area (Karongi), 340 Rwf in another area (Rusizi), 400 Rwf in central Rutsiro, and peaked at 430 Rwf in Gakenke, (see Table 1). The difference between the highest (430 Rwf) and the lowest (250 Rwf) is 180 Rwf (US$ 0.18).

Table 1: Anecdotal evidence: variability in cherry prices across micro-markets for female farmers, 2021 season, Rwanda

We highlight these intra-country price variations to demonstrate that micro-markets exist in Rwanda and offer anecdotal evidence of markets at work in Rwanda’s coffee sector. A government floor price, such as Rwanda's farmgate price, plays a welcome role in protecting farmers against predatory prices. Price variability above a farmgate or floor price is welcome in that it shows how markets are regulating supply and demand across Rwanda’s micro-markets. Micro-markets are defined by different land ownership patterns and variances in soil fertility, elevation, competition (density of washing stations), etc. The variables impacting price are many, and market-based prices are good at adjusting to fluctuations in these forces in ways that reward producers.

Ideally, NAEB officials will leverage the buoyant price environment and continue to allow variable prices among Rwanda's micro-markets. We hope they can entrench polices and activities which align farmer motivation with national production and global product differentiation goals.

 

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[1] 2021 average RWF USD exchange rate of 1001.

106. Two New Research Papers on Rwanda Coffee Supply Chain

Two new papers from lead author Andrew Gerard address current issues in Rwanda that are representative of the complexities faced in coffee supply chains across the world. Exporter business approaches and government regulations on the local market for cherry are long-standing challenges for coffee buyers to understand. These papers give a helpful, objective review through an academic lens and offer new perspectives on Rwanda's situation specifically.

Gerard brings personal passion and first-hand experience to the research presented. He was a member of the influential Africa Great Lakes Coffee coffee project, 2015 - 2018, which was funded by USAID's Feed the Future campaign.

1. Paper: "Relational contracts and value chain governance: exporter approaches to overcoming transaction costs in Rwanda’s coffee sector" [https://www.emerald.com/insight/2044-0839.htm ] plugs a gap in the literature that has been personally frustrating to us at Artisan in our efforts to understand Rwanda's issues. For the first time that we are aware, Gerard has focused on the exporter landscape of the country, classified them into three groups and described their differences: foreign-owned private exporters, Rwandan-owned private exporters and Rwandan cooperatively-owned exporters. The findings include insights that multi-national exporters did not find competition to be a major problem, instead, and in contrast to Rwandan exporters, high cherry prices were most frequently mentioned as their biggest concern. Relative to other respondents, foreign exporters claimed that Rwanda's zoning policy negatively impacted business. "Most said that there is high competition and side-selling, implying that they believe zoning has been unsuccessful."

2. Paper: "Do government zoning policies improve buyer-farmer relationships? Evidence from Rwanda’s coffee sector"

[https://www.sciencedirect.com/science/article/abs/pii/S0306919221001883]

Highlights:

Rwanda’s government implemented a zoning policy in its coffee industry.

•Mixed methods are used to analyze how zoning affected buyer-farmer relationships.

•Buyers were more likely to give farmers bonuses where zoning was well-implemented.

•We do not find evidence that zoning increased coffee farmer investment.

•Buyers believed that zoning improved their relationships with farmers.

• For CWSs that did not credit zoning or requests from government for their decisions to provide second payments, the primary reason for providing them was wanting to motivate farmers to invest in their coffee. Additional farmer investment would allow for greater productivity and more coffee for CWSs, which is helpful because they cannot purchase coffee from outside of their zones. Other reasons for providing second payments included profit sharing being an obligation of cooperatives and provision of second payments being expected in their region.

Both papers are originally part of Gerard's Ph.D. dissertation for the department of Community Sustainability at Michigan State University.

[We apologize, we are unable to make the full-text of these papers available on our website/blog. If you have an account with Elsevier or Emerald Insight, you will be able to find these papers. If you do not have an account, you will have to pay for access. Use the links below.]