iDE Global

Fueling the coffee craze

Value chains in Latin America

After oil, coffee is the world’s most important commodity. Grown in places like the hills of Honduras, coffee changes hands and forms several times, from a raw bean to a roasted, processed powder which—once hot water is passed through it—is sipped from a tiny cup by a businesswoman in Rome. Coffee has changed the world, and continues to be an important part of everyday life for people in every country.

Honduras is the leading producer and exporter of coffee in Central America. Doña Julia Rivera is a coffee farmer in Marcala—a region of Honduras known for its high-quality, organic, and sustainably produced coffee beans. Working with iDE, Doña Julia has been able to expand her farm business with the help of drip irrigation and farmer training. Her farm is now an example in her community.

iDE PC Value Chain Extended Caption

The value chain begins with coffee farmers, and the price they receive for their crop establishes the base value for the product. A modest increase of one penny per pound of coffee for the farmer can multiply up the value chain (through roasters, distributors, retailers, and others) into an additional dollar for the consumer. How can we increase the income for farmers without pricing their product out of the market? The answer can be found in the example of coffee production in Honduras.

Traditionally, Honduran coffee was grown in the shady understory of forests, but starting in the 1970s, hybrid plants were developed which could be grown in full sun on monoculture plantations, requiring the use of herbicides and nitrogen-intensive fertilizers. To switch back to growing pure varieties through organic methods is not cost-effective for the large corporate farms that have adopted this method.

Small-scale farmers, however, are well-situated to take advantage of this return to past production techniques. They never adopted the herbicide/fertilizer methods, as they simply couldn’t afford the costs of these chemicals. But to increase their crop production using traditional, organic methods, small-scale farmers do need investment in irrigation technologies, reforestation to promote shade, and increases in soil nutrition through biological alternatives.

iDE is connecting the dots between these small farmers and the rapidly expanding market of speciality coffee buyers, providing farmers with a diversified clientele and more options in the market. This new value chain pays the farmer a premium for their organic coffee. With the additional income, farmers are not only able to repay the loans for needed farm improvements, they can more comfortably survive the “thin months when they aren’t receiving income for their coffee harvest.

Identifying this more lucrative business strategy for farmers of small plots has a lot of secondary benefits as well. Through outreach activities associated with delivering farm improvements, farmers are learning to diversify and grow vegetable crops for personal consumption and to sell at the market. In addition to providing new cash crops, vegetables increase household nutrition and food security, especially in those thin months

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