Economics

Dangerous grounds

The world’s youngest country is infamous for conflict and oil. Decades of war in South Sudan has killed tens of thousand undefined

s of people, displaced more than two million, and caused chronic food shortages.

Until recently, it had also virtually wiped out a farming industry for some of the world’s finest coffee.

When Nespresso launched Suluja ti South Sudan last October, it was the four-year-old country’s first ever coffee export, and first significant non-oil export in over a decade.

“What we have found here is just an incredible coffee,” Nespresso Director of Creating Shared Value Daniel Weston tells GCR.

Getting it to market, however, was no easy task.

As part of its AAA Sustainable Quality Program, Nespresso invested nearly US$2.6 million to train more than 500 farmers, replant trees, and set up wet mills in a region of the country believed by some to be the birthplace of coffee.

“Our investment represents a real opportunity in a country where there are few opportunities,” Weston says.

The very limited edition capsules of Robusta coffee are only available in France. The brand doesn’t expect to see a return on the coffee for several years. 

Weston, however, hopes Nespresso’s long-term commitment will not only help revive the war-torn country’s coffee industry, but potentially be an agent for peace.

THE LONG HAUL

Known for its fruity and complex flavours, Africa is home to some of the world’s finest coffee, with beans from some plantations drawing rich premiums.

The continent used to be a leading coffee grower.

Until the late ‘90s, it had eight countries in the world’s top 20 producers, according to the International Coffee Organization. That number has since fallen to four.

Other than Ethiopia and Uganda, coffee production in Africa has slumped.

Hollywood actor and peace activist George Clooney, a brand ambassador for Nespresso, suggested the Swiss-based company help revitalise South Sudan’s coffee-production industry in 2011.

It likely wasn’t a hard sell for Nespresso Chief Executive Officer Jean-Marc Duvoisin.

“We believe that the only way to continue to deliver quality and consistency to customers is to protect the supply of our coffees,” said Duvoisin in a statement on Nespresso’s website. “And our experience has shown us that the best way to do this is to build a more environmentally sustainable and financially equitable outcome for farmers.”

In the last two years, the company has purchased 12 metric tons of export-grade coffee from South Sudan.

Farmers are receiving 40 per cent above local market price for their coffee. 

“Everything begins and ends with top quality coffee,” said Duvoisin at the Global Coffee Forum in Milan last August. “If we add value to the whole value chain, we can build valuable income for a sustainable chain.”

Nespresso’s South Sudan efforts have focused in the Yei region of the country, an area on the border of Congo and Uganda not directly affected by conflict.

To improve yields and coffee quality, the program has provided support for farmer mobilisation, infrastructure development, three wet mills, and two coffee nurseries.

“When TechnoServe started to come here and farmers heard how much they can make from coffee, it has awakened them,” said Cosmas Ada, Chairman of the Inutu Cooperative.

Because of the new wet mills, farmers can now process their beans on site before export, without making the long and dangerous trip to Khartoum.

“That’s like driving from Paris to Beijing,” says Weston, noting the trip could take up to two months for a farmer to travel and sell their coffee. “It’s an enormous distance on really bad quality roads.”

And that’s just a start. Nespresso plans to expand its roster of farmers from 500 to 15,000 over the next decade.

“The farmers we’ve been working with are starting to understand we’re not here today and gone tomorrow,” says Weston.

RISK AND REWARD

Nespresso isn’t the only company seeking coffee in African countries where security is a serious concern.

Starbucks, Keurig, and other major coffee retailers are investing in coffee farms in Ethiopia, Kenya, and Uganda to help secure their supply of premium beans.

Likewise, Clooney isn’t the only Hollywood celebrity making headlines with responsible sourcing initiatives in the continent. Hugh Jackman’s Laughing Man coffee sources coffee from Ethiopia and Ben Affleck’s Eastern Congo Initiative has a partnership in the works with Starbucks.

According to Weston, investing in the war-torn countries such as South Sudan presents a variety of risks.

“The biggest risk is that we won’t get coffee,” he says. “We would have invested upstream and there is no income downstream.”

Another very serious concern involves safety in the midst of ongoing conflict.

“The other part [of the risk] involves the people on the ground and to make sure they are as protected they can be,” he says.

For instance, security concerns led Nespresso’s partner TechnoServe to pull its foreign workers out of the country for a large part of 2014.

Despite this, Weston believes there may be a link between stable agricultural communities growing coffee and peace within a very difficult context.

“If you look at countries with experience with civil war, there seems to be a correlation with coffee-growing areas in the country and pockets of stability in a fragile environment,” he says

Weston speculates this may be due to coffee growing being a crop that requires more time to harvest yields than milk or potatoes, for instance.

“There is very little to be gained from soldiers coming in.”

John Prendergast, Founding Director of the non-profit Enough Project that aims to end genocide and crimes against humanity, believes sustainable agriculture such as coffee farming can be a pillar for peace.

In an article he wrote in the Financial Times, he says much more than a ceasefire is needed “to give peace a chance” in countries such as South Sudan.

“The more that alternative livelihoods and wealth-generating opportunities exist, the more people can sustain themselves without being tied to the corruption-fueled spoils of the state. Specifically, specialised agriculture like coffee can benefit communities directly without the corrupt state intercepting the benefits, thus moving incentives away from the war economy.”

He pointed to Eastern Congo, Rwanda, Ethiopia, Columbia, and Mexico as examples of countries that have shown “in a conflict or post-conflict situation, investing in high-value coffee production can also provide an anchor of stability and economic diversification for the country”.

While Prendergast’s article generated some heat on social media, with critics saying it was an overstatement to say coffee farms would bring peace in South Sudan, he defended himself in a follow-up article.

“Land is one of the most available and abundant resources in South Sudan, and is also at high risk of exploitation, once again at the expense of communities,” he wrote. “Responsible investment and economic diversification therefore would be crucial pillars of reconstruction in South Sudan, and would reinforce local citizens’ demands for a responsible, transparent, and accountable government that is capable of upholding South Sudanese law, protecting rights, and ensuring corporations and investors do so as well.”

For Clooney, at least, Nespresso’s Suluja coffee tastes “just a little bit better knowing that it was from people who have worked so hard for normalcy and peace”, he said in a statement to Bloomberg.

A NEW BEGINNING

Nespresso’s efforts to revive South Sudan’s coffee industry will no doubt be a long-term commitment, and Weston says they are up for the challenge.
“Nespresso’s model is to invest with farmers for the long term,” he says. “We hope that our investment here will lead other investors to come in, rebuilding a vibrant coffee industry which will play a key part in revitalizing South Sudan’s economy.”

While the country is very oil-dependent, Weston says selling agricultural products has a larger supply base and has a bigger impact on gross domestic product. For every dollar going into the country from coffee, it has the potential to create local income from five to 10 dollars, Weston says.

Though difficult to gauge extent, some farmers claim to have already seen a positive impact from Nespresso’s involvement in their community.

“I have seen that there is great change within the community,” said Joseph Malish Thomas, a South Sudanese farmer and leader of the Inutu cooperative. “We want to produce the right quality. People now have hope. We will be able to pay school fees for children and in the end develop the country.”

Down the road, Weston says Nespresso hopes the program will help bring the Soluja coffee to a broader number of consumers and continue to make a significant difference with farmers in the communities they are working with.

“It’s a proof of our fundamental philosophy that we’re able to create shared value,” he said. “In a country like South Sudan, it’s very badly needed.” GCR

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