Nestle to invest $1 billion towards sustainable coffee farming plan

The new plan builds on a previous coffee-sustainability effort that started 12 years ago involving around 100,000 farmers; the goal is to double that in the coming years

The largest coffee corporation in the world, Nestle SA, has committed to investing more than 1 billion Swiss francs ($1 billion) by 2030 to help farmers who supply its Nescafe brand use more sustainable agricultural practises as crops are threatened by climate change and extreme weather.
 

To encourage farmers to take sustainable farming actions, such as growing cover crops to protect the soil, Nestle will provide training to them about the best planting methods as well as financial incentives. Nescafe sources its beans from a vast network of more than 500,000 farmers, and the firm plans to increase the number of suppliers it works with on these issues by at least 200,000.

Climate change poses a threat to the supply of coffee since the commodity is planted close to the equatorial belt, which has historically been more vulnerable to extreme weather events like storms and droughts. According to the Inter-American Development Bank, the area ideal for growing coffee would decrease by as much as 50 per cent by 2050 as a result of rising temperatures, which pose a long-term threat. In Brazil, severe frosts reduced the crop from the previous year and also curbed the potential for 2022.

David Rennie, head of Nestle’s coffee business said, “We will not have viable coffee farms in 20 or 30 years if we don’t take action now. That’s why Nescafe is boosting its efforts to support farmers transitioning to more regenerative practices. Through training, technical help and high-yielding coffee plantlets, Nescafe can help farmers improve soil health, plant fertility and water usage." 

Nescafe aims to source all of its coffee responsibly by 2025, up from 82 per cent in 2021. It also wants half of it to be farmed using regenerative techniques by 2030 and a fifth by 2025.

The programme will, for instance, swap out coffee trees for kinds that are resistant to disease and the effects of climate change, which can help revitalise coffee plots and boost yields for farmers. Nestle provides rewards and prizes for beans that are supplied ethically because not enough farmers are doing it on their own.

Nescafe is a significant coffee buyer, purchasing 8 per cent to 9 per cent of the world's green beans. Estimates show that more than 5,500 cups of Nescafe is being consumed globally every second which is more than 10 billion Swiss francs in sales. Sustainable coffee farming, however, is a challenging issue. Due to market volatility and speculation, it can be risky and expensive for poor farmers to invest in regenerative methods on their own. This is because more than 80 per cent of coffee farming families live at or below the poverty line, according to TechnoServe, a non-profit organization. They are also grappling with surging inflation, crimping their household budgets.

Nescafe plans to start a financial support program in Mexico, Ivory Coast and Indonesia with an aim to encourage farmers to switch to regenerative methods. It will try out measures like conditional cash incentives and weather insurance to make coffee farming more resilient in collaboration with farmers.

“It’s also expertise. How do I get the best out of this crop?” Rennie said. “On-the-ground agronomy support is equally as important as the cash.”  

Unlike Nestle’s premium brand Nespresso, which is already sourcing more than 90 per cent of its coffee sustainably, Nescafe’s products compete more on price, limiting its ability to sharply boost how much it pays farmers for their crop. The new plan is an extension of a previous coffee-sustainability effort that started 12 years ago involving around 100,000 farmers. The aim of revamping the old plan is to double efforts in coming years.