It’s no secret that there are a number of challenges confronting smallholder coffee growers around the world.

Firstly, climate change is reducing the amount of land suitable for growing arabica coffee. Some researchers have suggested that as a result, optimum growing altitudes in Nicaragua, for example, will increase from 1,000 m.a.s.l. to 1,200 m.a.s.l. by 2050. Meanwhile, low coffee prices continue to affect the economic viability of coffee farming in many countries. 

If these trends continue, coffee drinkers will have access to a much less diverse range of flavours in their cup, and smallholder farmers will have fewer ways to provide for their families. A number of these problems could be addressed by planting high-yield, disease-resistant coffee varieties that offer greater resilience to climate change. 

But supposedly simple solutions such as these are not always easy. Firstly, smallholder producers are often unable to access affordable credit to pay for these new varieties. And even if they do, they often face the possibility of selling their crop at prices that do not cover their costs. 

However, a new model being trialled in Nicaragua offers smallholder farmers the chance to build an economically sustainable livelihood, while also building resilience to climate change and strengthening local ecosystems. To find out just how this is possible, I spoke to stakeholders involved with this trial.

Lee este artículo en español Creando un Modelo Sostenible Para la Replantación de Café

Why Coffee Producers Struggle To Replant Their Coffee Fields

Around 70% of the world’s millions of coffee farming families are smallholders. However, on smaller plots of land, the decision to replant aging coffee trees (or even plant them in the first place) is not straightforward. 

Around Rancho Grande, Matagalpa, in northern Nicaragua, while it is possible to grow coffee on these small plots of land, many smallholders instead practice something called “slash and burn”.

Edgardo Alpizar is Head of Agronomy in Nicaragua for ECOM Trading. He explains the technique. “What [producers] usually do is cut it during the dry season, then they burn it and they plant their foods, maize or beans.” 

By growing coffee, smallholder farmers reduce the land they have available for staple food crops. This means that to sustainably grow only coffee, farmers need sufficient income from other activities to buy the food they would have otherwise grown. 

In some countries, such as Nicaragua, smallholders may also work on larger neighbouring coffee farms to support themselves. Teresa Ruiz is Director of Expansion for Fundacion NicaFrance, an NGO that improves the living conditions of rural Nicaraguan communities. She tells me that “the minimum wage from manual farm labour on coffee farms is not sufficient to cover basic needs”.

And even if a smallholder wants to replant coffee, their first challenge is finding credit to cover the cost, which can range from US $3,500 to US $6,000 per hectare. Edgardo says that for “the big banks, it’s too expensive to provide access for those kinds of [smallholder] farmers”. 

Furthermore, smallholders sometimes do not have title to their land. This makes it more challenging for credit institutions to offer cheaper loans, when they would normally use a smallholder’s land as collateral. 

However, in Nicaragua, it is different, as Edgardo explains. “[Banks] create these small finance companies in the small towns, but they usually charge 25 to 30% interest annually. So, basically, there is no profit, because [they end up taking] the profit of the sale of your crop.”

Another challenge is that smallholder farmers are often unable to sell their coffees at financially sustainable prices. Smallholders rarely have access to specialty coffee markets, and certification schemes (which usually offer better prices) are not always available.

“A coffee producer is usually discouraged from [replanting] because of low international coffee prices and the barriers to producing a more valuable coffee crop,” Teresa tells me. 

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A Collaborative Approach To Helping Smallholders Replant Coffee 

CIRAD is a French agricultural research centre. They are testing a prototype replanting model in Nicaragua. This trial offers a new way for farmers to plant coffee in a financially and environmentally sustainable manner. 

Benoit Bertrand is Research Director at CIRAD and one of the promoters of the concept. He says: “In the context of the falling real prices of coffee, forest loss, land degradation, and various competing certification systems for social and environmental problems, this trial offers a new way for farmers to plant coffee.”

At its core, the “coffee agroforestry business-driven clusters” (CaFC) model is straightforward.  It is a new organisational model that fosters social and environmental innovation through farm renovation.

Firstly, outside investors loan smallholder farmers the money they need to replant coffee trees on their fields.

These loans are repaid with the smallholders’ first three full harvests. However, in the meantime, smallholder farmers are paid a modest, yet dependable, maintenance salary. This incentivises careful cultivation to produce coffees with desirable cup profiles. 

Behind this arrangement, the model also needs a commitment from designated roasters to buy these coffees every year at above-market prices. In exchange, they receive quality coffee, and are able to use their socially and environmentally sustainable sourcing practices as part of their marketing. 

Furthermore, the model also brings in agronomy experts who guide the farmers to use agroforestry techniques. This empowers them to boost their income, minimise the adverse effects of climate change on their harvests, and support the local ecosystem. 

Dr Jean-Yves Duriaux Chavarría is the Project Coordinator for Our Coffee at Cornell University. “It’s a great deal,” he tells me. “The farmers end up being way better off than your average coffee farmer.”

The CaFC model is not a one-size-fits-all approach, however. For example, certain varieties of coffee plants work better in some regions compared to others. “Not everybody has the same situation,” Jean-Yves tells me. He explains that a monthly maintenance stipend in exchange for three full harvests might not suit every farmer. 

“There’s other farmers that have a bit more land,” he explains. “So they decide, the moment we start producing, I will [take half of the harvest] for myself, and [use] half to pay the credit.”

The CaFC model brings together agronomy experts, roasters, producers, and NGOs to maximise the long-term profit potential for smallholder farmers. It supports farmers who are replanting by leveraging agronomic best practices, affordable inward investment, and a reliable commitment from roasters. 

The Trial: Replanting In Northern Nicaragua

The trial taking place in Nicaragua is illustrating how the CaFC model benefits smallholder farmers. Many of the smallholders in the region own small parcels of land up near the Bosawas Reserve, in the Jinotega region.

“The small farmers, they own one or two hectares, maybe three hectares maximum,” Edgardo tells me. Incomes in the area are low; a study in a nearby region suggested that “65% of the people were living below the poverty line,” according to Jean-Yves. “This means less than US $1.82 per person per day,” he adds.

Because incomes are so low, coffee isn’t a priority. Instead, the land is used for growing cash crops, such as beans and maize, and replanting is carried out using the “slash and burn” technique.

Unfortunately, this cultivation technique is harming the Bosawas Reserve. Edgardo says: “People are moving into the forest, cutting the trees, and planting their food crops there.”

Farmers also often grow nitrogen-fixing trees called “guabas”, which grow seeds in “bean-like” pods. These seeds are covered with an edible sweet white powder. As well as providing crop diversification, the guabas trees also provide coffee plants with shade, protecting them against harsh direct sunlight.

Edgardo explains, however, that this can often pose more of a difficulty for smallholders. As trees grow, they get older and higher, which makes them more costly to harvest. “You have to prune the branches once or twice a year,” he tells me. “And it is hard to find people that know how to do that because they have to climb the trees.”

Making Coffee Replanting More Sustainable

The CaFC model, funded by the green trader ECOM and Fundacion NicaFrance, is providing a solution. Firstly, as outlined above, these smallholder farmers are offered loans to pay for the cost of coffee planting.

After that, these smallholders are paid a monthly salary to cultivate the coffee and guarantee desired cup qualities for the roaster. They pay back the replanting loan by giving away the proceeds from their first three years of harvests. 

In addition, the CaFC model being pioneered in Nicaragua “comes with training that teaches smallholder farmers how to produce high quality, sustainable coffee,” Jean-Yves explains.

He adds that the arabica trees being used in the Nicaragua CaFC trial are actually grafted onto the roots of robusta plants. This benefits the plant, as robusta roots retain more water and nutrients from the soil, and are more resistant to pests (such as nematodes, a type of parasitic roundworm). 

In this trial, rather than using legume trees, smallholders are instead getting their shade cover from native, precious hardwood trees, which grow slowly.

Once fully-grown (after around 20 years) the timber from a single tree can then be sold for as much as US $500. Edgardo says: “At the end of the coffee cycle, smallholder farmers can get US $25,000, maybe US $30,000 per hectare [from selling these trees].” 

If planted at the same time as the coffee, these hardwood trees will be ready for harvest and sale when the farmers need to replant, helping them cover the replanting costs.

They also provide a robust ecological habitat for wild birds and other animals. “If you go down, you see the coffee trees,” Edgardo says. “However, from the top of the trees, you would think [this land in Nicaragua] is a natural forest.”

“At first there was a lot of fear because the offer was too good to be true and many thought it was a trap,” Teresa tells me. “We started building trust when we followed through on the messages and promises we delivered in our meetings.” 

The Future Benefits Of This Collaborative Replanting Model

The smallholder farmers in the Rancho Grande trial will soon stop offering up their three years of harvests to pay back the replanting costs. After this point, smallholders will own the entirety of their crop. They will be able to sell their coffee wherever they want, to whoever they want. 

But Edgardo says that farmers have asked him if they can continue under the trial model. “You have to say ‘yes, we can continue’ [to the farmer] because he likes the price,” he explains. “The amount we’re paying for this coffee is much more than he usually would get from the middleman or from another cooperative.”

In return for these higher prices, Edgardo asks for higher quality coffee. This incentivises smallholders to continue with their careful cultivation.

Edgardo also mentions that the CaFC model also allows investors to recycle and reinvest their profit. This means the programmes can be expanded again and again to support other smallholder farmers in replanting their ageing coffee trees.

This local micro value-chain model is scalable beyond Rancho Grande. How quickly it will be rolled out more widely remains to be seen. The success is already there – and it’s proving to be beneficial for everyone involved.

This “cluster” model emphasises the importance of co-operation and communication in the coffee industry. Whether it’s used more widely or not, the sector certainly has something to learn from it.

Enjoyed this? Then read Combating Climate Change’s Impact With Hybrid Coffee Varieties

Please note: CIRAD is a sponsor of Perfect Daily Grind.

Photo credits: ECOM Trading, Edgardo Alpizar

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