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Neumann Kaffee Gruppe furthers sustainability efforts with bank-backed initiative

From the October 2019 issue.

Neumann Kaffee Gruppe (NKG) has announced the launch of the NKG Bloom initiative to further the green coffee trader’s sustainability efforts.

NKG signed the London Declaration in late September, committing to action addressing the economic sustainability of the coffee sector.

The group says NKG Bloom will combine field-based educational efforts, real-time mobile technology, and the industry's first financing facility to reach 300,000 coffee families by 2030 and empower them to meaningfully improve their livelihoods.

"NKG Bloom is not a marketing strategy. It is not a philanthropic endeavour or a feel-good project. It's about the way we want to do business in the long term. It will cost us a lot of money and effort, but it is simply the right thing to do," NKG CEO David M. Neumann says.

"Lending to smallholder farmers in some of the poorest places in the world is a risky proposition, but it ́s critical to unlocking the potential that these farmers hold for global agriculture and development in their own countries and communities."

To form the core of NKG Bloom, NKG led the creation of a Coffee Smallholder Livelihoods Facility — a US$25 million revolving facility involving European banks Abn Amro, Rabobank, and Bnp Paribas – that was signed into existence in August 2019.

For the first time, the partner banks will share the direct risks on farmer defaults. The facility is further backed by two complementary default guarantees by the United States Agency for International Development and IDH the Sustainable Trade Initiative.

NKG is working with NewForesight, an independent strategic consultancy specialising in sustainability challenges, as external long-term partner and validator of NKG Bloom, to ensure it indeed delivers provable, structural changes.

In 2019, NKG Bloom will be introduced in Colombia, Honduras, Kenya, and Mexico, and furthered in Uganda, where a pilot was launched in 2017, with the establishment and staffing of permanent Farmer Services Units (FSUs) based at the respective local NKG company. The FSUs will be charged with realising NKG Bloom's three key tenets:
• Enabling farmers to realise their full potential,
• Supporting inclusive sustainability, and
• Striving for transparency and traceability.

"Ultimately, the Smallholder Livelihoods Facility enables us to bring the power of the global financial markets — long the missing piece — to smallholder coffee farmers," says Catalina Eikenberg, who heads NKG Sustainable Business Unit in Hamburg. "We've set ourselves an ambitious goal and we're excited to make it happen."

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