The objective is now to produce, within the framework of sustainable agriculture, high quality coffee with high yields to guarantee farm profitability, adapted to local climates and respectful of the environment. To preserve biodiversity and limit the effects of climate change, coffee production systems must provide positive externalities to the environment. The changes in production practices needed to achieve these goals often require replanting coffee farms with adapted and efficient varieties.
Although it is crucial to ensuring the sustainability of their activity, the plantation renovation process can be a huge financial burden for farmers. The investment required to replant one hectare of coffee is in the order of 3,500 to 7,000 USD/ha, depending on the type of planting material (BREEDCAFS survey, Matrice project, personal communications with stakeholders in Nicaragua). Moreover, bank rates available to smallholders through local credit schemes are generally high – between 15 and 25%. Lacking access to the required capital for investment, many producers and especially smallholders tend to postpone this operation. For most smallholders, renovating plantations with the highest quality planting material remains inaccessible.
When developing agroforestry systems, both the issues of plantation renovation and appropriate choice of coffee variety are often overlooked by the research and development community. We argue that these are essential components for improving productivity, quality and sustainability of coffee production systems.
To address this issue, we propose an innovative mode of organization that involves close collaboration between multiple stakeholders, including a strong commitment from the roaster. Indeed, to secure a supply of quality coffee, it is in the roasters' interest to support producers in renovating their plantations with high quality coffee varieties and to therefore remunerate them fairly for implementing agronomic practices that are compatible with the values that they wish to communicate to their customers.
The CaFC (coffee agroforestry business-driven clusters) concept was developed to meet this objective (Bertrand et al., 2019), initially within the framework of a project in 2017 (MATRICE project led by CIRAD), then within the framework of the EU/BREEDCAFS H2020 project initiated in 2019. The aim is to establish agroforestry clusters according to specifications jointly defined by all partners and local actors.
In this article, we first describe the general concept of the CaFC model, its vision and objectives. Based on the pilot project in Nicaragua, initiated in 2016, we illustrate how the CaFC model can be implemented in real conditions and show evidence of its potential. Using data shared by key stakeholders of the Nicaragua project – ECOM (coffee-buyer), the Moringa partnerships fund, NicaFrance (foundation), CIRAD (research institution) and Nespresso (roaster) – as well as data from a similar project in Peru, we assess the profitability of the CaFC model by comparing realistic scenarios and applying sensitivity analysis. We then discuss the model’s reproducibility in other socio-economic contexts, building on lessons learned from the pilot project in Nicaragua and ongoing applications of the model in Vietnam and Cameroon.
The concept of coffee agroforestry Business driven Clusters (CaFC)
History and main components of a CaFC. Coffee agroforestry Business driven Clusters (CaFC) are defined as local micro value-chains dedicated to sustainable production under agroforestry systems of high-quality Arabica coffee with locally adapted and improved coffee planting material. The principles of these clusters are based on three pillars:
1) The creation of a specific micro-value chain, involving a limited set of actors, makes it possible to maximize gross margin per ha for the benefit of all stakeholders, including farmers. This short and simplified value chain also offers better coffee traceability, an important selling point for the “specialty coffee” market.
2) The use of high-performance coffee varieties that guarantee high yields under agroforestry production systems, resistance to local diseases and high organoleptic quality.
3) Agroforestry management that stabilizes production (over a longer period than full sun plantations), improves and homogenizes coffee quality and provides valuable ecosystem services – through limited use of inputs, increased soil protection, and buffering effects on climate change. It also allows producers to diversify their income by combining the cultivation of coffee with fruit trees or timber trees, depending on local demand and markets.
Innovation platform and creation of a micro value-chain. The CaFC model is based on an original organization orchestrated by a network of six types of stakeholders forming an Innovation and Dialogue platform: producers, roasters, brokers, investors, government organisations and research-development actors. Through this Innovation and Dialogue platform, specifications are agreed upon between stakeholders regarding the varieties of coffee planted, agricultural management, coffee processing as well as purchase prices throughout the chain. Research and development organizations act as third parties in the coordination of the innovation platform, where the objective is to develop an equitable distribution of added value throughout the value chain.
One key point of the CaFC model is that a purchasing price, significantly above that of world market price, is initially accepted by the roaster, guaranteeing all actors downstream to share a significant quality price premium – including participating producers. This reduces risks and allows for the various investments required to develop a system that produces a consistent supply of high-quality coffee. Such a system includes i) renovating plantations with high-quality and high performing locally adapted Arabica plant material, ii) developing agroforestry systems, iii) providing extension services through various means, such as private service providers or digital agriculture information services, to ensure that farmers have the capacity to implement quality-enhancing and agroforestry management practices and adapted processing equipment and services. Eventually for roasters, this commitment enables them to secure a stable supply of quality coffee that is highly differentiated with a high added value potential.
Plantation renovation at the heart of the concept. In order to avoid a drastic decline in productivity, a coffee plantation must be replanted after 15 to 30 years of production – depending on the variety. While this renovation process is crucial to ensuring the sustainability of coffee production, it can be a huge financial burden for farmers.
The cost of replanting itself lies in the order of 3500 to 7000 USD/ha for the first two years according to a 2020 survey implemented by CIRAD in Nicaragua. The majority of coffee is currently produced by smallholders managing less than five ha of coffee (Jha et al., 2011). For these smallholders, generating the capital required to invest in plantation renovation can prove difficult, and local credit mechanisms typically available are not adapted due to excessive interest rates.
Decisions taken during plantation renovation will impact socio-economic and environmental outcomes for years to come. For producers, this process is not only paramount in ensuring the long-term profitability of their farms, it also represents a tremendous opportunity to redefine their production practices, adopt new technologies, and switch to higher quality coffee varieties. Recognizing plantation renovation as a steppingstone in the implementation of sustainable practices, the CaFC model stands out by integrating this process within a tailored and locally adapted sustainable production system, a starting point for which is agroforestry.
Adopting high quality varieties adapted to agroforestry systems. Buyers and roasters are well aware that the choice of variety has a great importance on the sensory profile of the coffee and, ultimately, on its value and marketability. However, with very few exceptions, stakeholders upstream have limited control over the varieties they buy. Moreover, producers often have access to a limited diversity of coffee varieties. The CaFC concept offers a solution to this dilemma: roasters and farmers are given the opportunity to jointly choose a variety and a process tailored to the local production context and with specific characteristics. The decision taken on such an important economic and strategic factor in coffee production, and recognition of common interests between stakeholders is what defines the CaFC model as 'business driven'.
In Arabica, the types of varieties are pure line, clonally propagated F1 hybrid cultivars and F1 hybrid cultivars reproduced by seed (using male gene sterility).
The choice of genetic material is based on three considerations: i) the different agronomic performances between line and hybrid varieties, ii) the possibility of controlling large-scale production of hybrid clones, and iii) the availability of large amounts of seeds.
The pure lines varieties are in theory formed by a single homozygous genotype which, through self-fertilisation, gives descendants that are all homozygous and identical to each other and to those of the previous generation.
This type of variety has two advantages:
a) homogeneity with a maximum performance in a given environment.
b) they are theoretically reproducible in seed form by the user.
The major risk in using line varieties is that of uniformity. Today, 90% of the world's Arabica plantations (more than seven million hectares) are planted with line varieties derived from a narrow genetic basis. Despite an effort of gene introgression, Setotaw et al. (2010) showed that the genetic bases of 121 cultivars released in Brazil between 1939 and 2009 were defined by only 13 ancestors.
In the majority of Arabica producing countries, there are no controlled or certified seed production bodies, putting farmers at risk that the seeds for new trees are not of consistent quality, genetic purity and variety standards. Moreover, there is no strict autogamy with Arabica and a certain rate of cross-fertilisation leads to a 'degenerative effect' of the variety after a few generations. With an allogamy rate of 4% to 10%, the percentage of off-types is estimated to be between 12 and 20% after three generations.
The lack of certified seed and seedling producing schemes results sometimes in poor-quality plants or seeds and fraudulent seed sales, which lowers productivity at the farm level. It is therefore necessary to guarantee the quality of planting material with reliable traceability and introduce quality control.
F1 hybrid cultivars
F1 hybrid varieties result from the controlled crossing of two distinct homozygous parents.
The F1 hybrid generation obtained between two different gene pools – e.g. American cultivated varieties and Ethiopian wild accessions – yield 30 to 40% more than the best parent (Bertrand et al., 2019).
In Arabica, only the best individual of the best F1 hybrid progenies is selected and cloned by vegetative propagation so as to keep its agronomic performance (Etienne et al., 2018).
The main disadvantage of the vegetative propagation is its elevated price. A cloned hybrid plant, produced in nursery and ready to be field-planted, costs about three times the price of a plant produced by the producer with pure line seeds. Seed production in Arabica F1 hybrids is still a major deterrent; however, the situation becomes less constraining if the hybrid is also produced as seed.
The technique for F1 hybrid seed production based on seed garden using sterile male individuals was applied on a large scale to produce the first commercial seeds of the F1 hybrid Starmaya (Georget et al., 2019). A Starmaya plant coming out of the nursery and ready to be planted costs about 1.2 times the cost of a plant produced by the producer with pure line seeds. Starmaya F1 hybrids were shown to have better agronomic characteristics in terms of vigor, bean size, and yield than the Marsellesa® cultivar or the Caturra red as control (Georget et al., 2019; Marie et al., 2020). The Starmaya F1 hybrids also had a higher cup quality than the traditional cultivars, such as Marsellesa® and Caturra red.
Through the CaFC model, high performing and locally adapted F1 hybrids such as Starmaya are developed based on specifications agreed upon between stakeholders of the Innovation platform. Moreover, the quality of the planting material provided through the CaFC cluster is guaranteed through a certification system developed by World Coffee Research – a partner organization in the initiative.
Offering a fair price. Voluntary sustainability standards (VSS) such as Fair Trade, which are becoming a sine qua non for access to specialty coffee markets, face increasing criticism from academics and stakeholders of the coffee sector. VSS have been the subject of many studies in the past decades, especially in coffee value chains, and contradicting results have been reported regarding their impacts on various elements of sustainable livelihoods. Whereas some studies show positive effects for at least some environmental, social or economic sustainability indicators, many find no or even negative impacts (Akoyi & Maertens, 2017; Baake et al., 2018; Fort & Ruben, 2017; Minten et al., 2018; Mithöfer et al., 2017; Oya et al., 2017; Vanderhaegen et al., 2018). Specialty coffees are usually certified by one or several of these VSS as a communication tool to consumers regarding their sustainability. While they often result in higher prices at the farm gate, questions remain about the extent to which the benefits of higher retail prices translate into higher revenues for farmers and rural communities (Rueda & Lambin, 2013). As a novel organizational model, CaFC strives to overcome these short-comings. Through transparent collaboration between producers, roasters and other stakeholders, the CaFC model is designed to guarantee shared added value of high quality coffee and fair prices to producers regardless of the size of their farm and volume of coffee delivered.
Promoting agroforestry systems for increased environmental sustainability. The CaFC model addresses one of the most significant threats to coffee production: the shift from diversified shade coffee to simplified shade or unshaded coffee (Goodall et al. 2015; Jha et al. 2014).
Coffee agroforests may vary from a single shade tree species planted within the rows of coffee trees to traditional or rustic systems where coffee is planted under managed forests, where numerous tree species provide an almost complete shade cover through a multi-strata tree canopy (Perfecto et al., 2005). A modern version of the latter system is promoted through the CaFC model, where a variety of shade trees are pro-actively selected to provide a range of services to coffee trees. Such systems have been appraised for their services as refuge for biodiversity, including their role in biological corridors, where the productive system also serves to connect fragmented forested areas. Management of shade tree cover in coffee agroforests is also considered one of the key measures towards climate change adaptation (Vaast et al., 2016; Verburg et al., 2019). Shade trees in coffee agroforestry systems may serve two climate related purposes: i) adaptation, by buffering the expectedly increasing variability in temperature and rainfall and improving resilience to extreme weather events such as windstorms, frost or hail, and ii) mitigation, by capturing and storing carbon in the shade trees, below and above ground (Goodall et al., 2015; Pinoargote et al., 2017; Vaast et al., 2016; Verburg et al., 2019). Coffee agroforestry systems that have limited disturbance to the soil present a more organic matter-rich system than many other agricultural systems and – when coffee does not replace forests – are a step forward in climate change mitigation (Guillemot et al., 2018; Verburg et al., 2019).
Agroforestry systems also provide additional services or benefits to the producers. The shade trees, especially when consisting of flowering trees, may provide a habitat for pollinators and thus provide pollination services, not only to the coffee crop but to other crops in the vicinity (Boreux et al., 2013). The shade environment may also enhance biological control of certain pests and diseases, which otherwise are controlled through commercial or homemade inputs, which come at a cost to farmers. These different services associated with shade trees all contribute to the growth and development of the coffee trees, but the shade trees themselves also directly provide products to the farmers’ households in the form of fuel wood, timber and other materials, as well as food products (Nguyen et al., 2020). Agroforest systems developed through the CaFC model are designed to incorporate native timber trees that increase their resilience to climate change and provide environmental services to neighboring communities. At the end of their life span, these timber trees should represent a significant capital for the producer.
However, the main shortcoming of coffee agroforests remains the associated reduction in coffee yield. Decades of breeding strategies and agricultural extension policies focusing on high yields have resulted in non-shaded coffee monocultures being the dominant production system and has undermined research in varieties adapted to shaded environments and able to perform well under agroforestry systems. This issue is at the core of the CaFC cluster, which renovates farm plantations with new improved Arabica varieties that provide high yield under shaded conditions.
Management of innovative agroforestry systems requires extensive knowledge not always accessible to smallholder farmers. The CaFC model integrates capacity building and training of farmers to overcome these challenges by enabling a central coffee farm to offer technical expertise to smaller farms joining the cluster, as well as an access to innovative processing practices and equipment that can help tackle local sustainability issues.
Integrating and creating synergies with current certifications. CaFC shares similar objectives with other certification systems – e.g. Fairtrade, Rainforest Alliance, UTZ – offering smallholders access to differentiated markets and price premiums, reducing their vulnerability to price volatility, improving their livelihoods and promoting agricultural practices that are respectful of the environment. The organization in agroforestry clusters does not obliterate these certifications. On the contrary, it uses and reinforces them by increasing their reliability through the improved traceability of the CaFC’s micro-value chain.
The pilot project in Nicaragua. The pilot project in Nicaragua is a great opportunity to illustrate how the CaFC model can be implemented in real life. The pilot cluster was formed in 2016 in Nicaragua, where 1,300 ha of coffee trees are currently cultivated under agroforestry management in association with high quality and high value timber trees. Through this pilot project, coffee producers, ECOM (coffee-buyer), the Moringa partnerships fund, CIRAD and Nespresso (roaster), were all brought together within an Innovation and Dialogue platform coordinated by CIRAD.
Nespresso had initially expressed its interest in a stable supply of high-quality coffee produced by the pilot project in the Matagalpa region of Nicaragua. A cluster of large to medium producers (50 to 150 ha) – referred to as out-growers – has been developed around a central coffee estate owned by Nicafrance – La Cumplida. Through this central estate, training and assistance are provided by ECOM and Nicafrance to ensure farmers joining the cluster have the ability to adopt required practices and produce the highest quality coffee cherries. La Cumplida also provides other farms with planting material and access to an innovative processing facility. This pilot project relies on a sustainable processing of the coffee cherries through an innovative wet milling station and applying the honey process method. This wet milling station – and others to be built in proximity to small out-growers spread around the cluster – uses far less water and ensures a safe management of wastewater, greatly reducing pressure on water resources and environmental pollution associated with the traditional wet milling process (Dadi et al., 2018). While many farmers have their own wet mills, they do not always have easy access to free water, and many do not adopt best practices regarding waste-water management. Hence, the integration of the wet process through a central (and soon multiple) wet milling station translates into positive environmental impacts while also reducing cost and time for farmers.
Nicafrance and ECOM cover the renovation costs and production costs up to five years after replanting. After five years, large to medium out growers regain full control over their production and reap all the benefits from their new high yielding plantation selling coffee at high prices on a tailored specialty market. They can then pay back the remaining initial costs of renovation (plant material, labour for planting, inputs). Large to medium out-growers are certified UTZ and Rainforest Alliance (these two certification agencies having merged in 2018).
Since 2017, 24 smallholder farmers – referred to as small out-growers – have joined the cluster with on average one hectare of land renovated with new varieties – mainly the Marsellesa variety. This is a small-scale approach that allows the consortium to cover the risk associated with the experimental use of CaFCs.
Unlike large and medium size coffee farmers, who usually have various income sources and the capacity to recover from various coffee crises (diseases, price volatility, effect of the climate etc.), smallholders solely depend on the income generated by their coffee farm for their livelihood, and the various costs of joining the cluster could be a barrier to entry. A fair contract for smallholders has been developed for the pilot project, which is essential for enabling smallholders to join in the initiative. Smallholders enter into an agreement with ECOM and Nicafrance to lend the land they want to renovate at no cost during the first five years through a usufruct contract. Smallholder’s entry into the initiative is facilitated by tailored credit repayment schemes with a delay in payment the first couple of years. Production costs are repaid by 50% of the coffee production during the years three to five at zero-interest for small out-growers. Renovation costs do not have to be repaid by the farmers during the first five years. In addition, ECOM offers small out-growers access to credit with favourable terms of repayment for them to cover these remaining costs.
The pre-existing relationships between CIRAD and some local large-scale producers have facilitated the current collaboration in Nicaragua. ECOM and Nicafrance have a long-standing business relationship. La Cumplida estate provides labor opportunities to local farmers in the area and Fundacion Nicafrance has established a positive link with the inhabitants around La Cumplida through a long-term project supporting education from primary school to university. Moreover, a clear interest by ECOM and Nicafrance in a sustainable supply of high-quality coffee has led them to accept the level of risks that allow the initiative to develop in the first place. Trust, mutual interest and long-term collaboration greatly facilitated the implementation of CaFC concept and the Innovation platform.
Research questions
The impact of joining a CaFC on producers’ net income plays a crucial role in incentivizing farmers and maximizing overall economic, social and environmental benefits. In order to better understand how and to what extent the specificities of the CaFC model can influence the overall income of a hypothetical smallholder, the next section will present a profitability assessment comparing the CaFC model to alternative scenarios.
Another key question relates to the reproducibility of the model in various contexts. Depending on the country, local production practices, challenges faced by coffee farmers and stakeholders, and broader social, economic and political contexts, the CaFC model may need to be adapted. Based on the Nicaragua pilot project, the BREEDCAFS project (https://www.breedcafs.eu/) has implemented two 10–15 ha clusters in Vietnam and Cameroon. Reviewing these two case studies, along with the Nicaragua prototype, will allow for the identification of key challenges and shortcomings in each context before concluding on key factors that need to be taken into account when applying the model in various contexts.
