Coffee, Commerce, and Communities: Small Scale Agricultural Development in East Africa

On February 5th, 2010 a panel of experts met at the Woodrow Wilson Center to discuss a new development initiative in East Africa to work with small scale farmers in Rwanda and Tanzania. Peet's Coffee and Tea Inc. has partnered with nonprofit TechnoServe's Coffee Initiative to provide training and mentoring to coffee farmers to help them produce high quality coffee and increase their income. The panelists explained the process, goals and challenges of this partnership, while discussing whether it could be used as a model for sustainable, business oriented development to be emulated elsewhere.

In his opening remarks, Kent Hughes, Director of the Program on America and the Global Economy, also emphasized the potential of the small farmer, TechnoServe, and Peet's Coffee partnership to be applied elsewhere in Africa and in other parts of the developing world. He noted the growing interest in regional or corridor development that took advantage of existing infrastructure to help facilitate access to the global market.

David Browning, Senior Vice President for TechnoServe's Coffee Initiative began his remarks by explaining TechnoServe's purpose and the goals of the project. According to Browning, TechnoServe provides business and investment advice to local entrepreneurs to help them create jobs and earn higher incomes. "It starts with a business case," Browning said. "Where is there a place where there is a business opportunity?" In 2008 TechnoServe was presented with a business opportunity when it received a grant from the Bill and Melinda Gates Foundation to create the Coffee Initiative with the goal of helping over 180,000 East African coffee farmers increase their incomes by improving quality and yield.

In this particular region TechnoServe found that the coffee growers in the highlands had an unrealized competitive advantage. Because of the high altitudes, farmers had the potential to produce high quality coffee in the fast growing luxury coffee market. However, lack of knowledge and access to technology in rural areas caused most farmers to process their coffee by hand, resulting in damage to the coffee and value lost. TechnoServe's goal was, as Browning said, to move this advantage "from potentiality to reality" by teaching farmers the skills needed to produce quality coffee and to get that coffee to the market.

Next, Shirin Moayyad, Director of Coffee Purchasing at Peet's Coffee and Tea Inc., explained that Peet's role was mainly to provide a market for the coffee, which she described as the "mercantile dot on the 'I' and cross on the 'T.'" Moayyad said that the opportunity to partner with the Coffee Initiative came at a time when Peet's was looking to invest in more African coffees. She explained that African coffee was highly attractive because of the huge diversity of types and flavors found in the region. For instance, Ethiopia, regarded by many as the original home of coffee, boasts over 1500 varieties of coffee beans.

The business risk was therefore "worth it for Peet's because those coffees don't exist anywhere else in the world," Moayyad said. For Peet's, buying coffee from Africa was a way to tap into their core business while adding value and strengthening their supply chain.

The final speaker was Julie A. Howard, Executive Director of the Partnership to Cut Hunger and Poverty in Africa, an independent coalition that aims to increase U.S. foreign investment in African agriculture. Speaking about Peet's and TechnoServe's efforts, Howard underlined that it was a different level of commitment than normal corporate social responsibility initiatives. "This is not charity, it is a business proposition," she stressed. "The long-term stake of Peet's is a very different relationship than simply putting aside money for charity."

Howard called for an ongoing "candid informed discussion of what works and what doesn't." She asked her fellow panelists about their recommendations for other businesses considering similar investments, and what the best organizational models and techniques were for consulting firms such as TechnoServe. She also suggested that the next step of sustainability was to promote capacity building in Africa through local organizations instead of intermediaries from the United States.

Despite the initial success of the initiative, "it's a little too early to declare victory," Browning cautioned. Even with great preliminary signs, he said the real test will come over the next several years. He highlighted building trust and personal relationships, instilling good management, and the high volatility of the coffee market as major ongoing challenges. "Long after the lights and cameras have stopped rolling the question is whether it's had any impact," Browning said.

By Sarah Hutson
Kent Hughes, Director, Program on America and the Global Economy