Cost of Sustainable Production for Coffee Farmers Project

Creating an Innovative tools for enhanced farm management and living income monitoring in coffee

This project is co-funded the GIZ, German Agency for International Cooperation (GIZ).

Timeline of grant: 2019 to 2020

Main project objective:

The objective of the project is to develop an appropriate, digital tool that empowers farmers to administer their farms as a small-scale enterprise and optimize profitability, based on records of actual yields, production costs and sales income. This tool should enable farmers to calculate current and potential farm profits under varying scenarios of applied good agricultural practice and product diversification, compare results against productivity benchmarks and make well-informed business decisions.

Enhanced producer capacity to provide accurate data on cost of production and farm income will, in turn, enable income monitoring in order to establish current income baselines and measure progress towards living incomes, strengthen Fairtrade pricing review processes, as well as producers bargaining position towards industry partners.

Target group:

Producer Networks CLAC and NAPP, farmers in Colombia, Uganda/Ethiopia, Indonesia

Project description

The Living Income & Coffee workplan for 2019-2020 includes the establishment of baselines of current coffee household incomes and productivity, based on farm records kept by Fairtrade coffee producers in 7 countries across 3 continents. Income and productivity gaps will be determined, comparing actuals against living income benchmarks and target yields, in order to identify effective strategies to bridge the gap and achieve living incomes for Fairtrade coffee farmers. Based on data analysis, the minimum conditions for making a living income from farm revenues will be determined and Living Income Reference Prices for coffee can be calculated.

Basic farm record keeping tools have been developed for this purpose, but in order to keep up with the era of digitalization, innovative tools are required to facilitate agile data management going forward to enable on one hand continuous monitoring and evaluation of real farmer incomes, accurate calculation and analysis of cost of production, while empowering farmers to optimize their farm profitability.

This project complements the already planned activities in coffee, coordinated with and implemented by the respective producer networks. Complementary activities include:

  • Design & testing of a user-friendly digital farm management application for recording data on farm productivity, cost of production and farm income as a basis for building entrepreneurial skills of producers, providing insights into changes in profitability when certain farm decisions (such as implementing gap, product diversification), leading to informed decision making for optimizing profitability;
  • Technical support to small producer organisations and their members on farmer record keeping, followed by establishing a baseline of current yields, cost of production and actual household incomes;
  • Establish productivity & Living Income (proxy) benchmarks for gap analysis in comparison to actual yields and income and calculate a Living Income Reference Prices based on previous inputs. Multi-stakeholder Technical Advisory Committees (TACs) will be set up in each country for this purpose, in order to discuss and foster alignment on critical benchmark parameters;
  • Optional: Integrate tool into an online data sharing platform, serving both producer organizations as well as Fairtrade’s Monitoring & Evaluation work. Farm records linked to Internal Control Systems/IMS at organizational level enable technical and commercial departments to trace their plans and develop productivity enhancement programmes based on real data. Farm records feeding into MEL systems will facilitate measuring cost of production and tracking impact on productivity and farmers’ incomes.
  • Project results and good practices will be shared at relevant industry events, bringing together key stakeholders in the coffee sector, including members of ICO, GCP, SCA, ISEAL, producers, traders, roasters and academics, to raise awareness around living income and price gaps and explore common strategies to bridge these.