Successes in Addressing Climate Change and Rising Production Costs to Support Smallholder Farmers

We have released our Annual Report for 2023. It illustrates the critical challenges faced by the global coffee sector and our successes in supporting smallholder farming communities. In a year marked by climate change-induced disruptions, volatile markets, and soaring production costs, we worked closely with our implementing partner, Hanns R. Neumann Stiftung (HRNS), to promote sustainable farming practices, income diversification, and resilience-building initiatives across our focus countries.

In 2023, we reached 36,306 households in coffee farming communities through our projects, with an 80% adoption rate for Good Agricultural Practices, compared to 71% in 2022, and a 92% adoption rate for climate-smart agricultural practices, a notable increase from 88% in 2022. Women’s participation in project activities also grew, reaching 42% compared to 35% the previous year, further embedding inclusivity and gender equality across our focus regions. Through initiatives promoting income diversification and sustainable agricultural practices, we helped smallholder farming families stabilize their livelihoods despite challenging conditions.

These include the severe impact of extreme weather events on coffee production in key regions such as Brazil, Central America, Ethiopia, and Tanzania. In Ethiopia, unusual rainfall patterns and even snowfall in some areas were reported, while Tanzania was heavily impacted by El Niño, leading to infestation of pests and diseases, flooding, and soil erosion. On the other hand, there were droughts, which triggered a reduction in yields and compromised coffee quality.

These adversities disproportionately affected smallholder farming families, whose livelihoods depend on coffee cultivation. With decreased incomes from reduced harvests and volatile market prices, many smallholders faced heightened financial insecurity, hindering their ability to invest in their farms, access resources, and support their families. Such circumstances underscored the urgent need for sustainable practices, resilience-building initiatives, and equitable market mechanisms to safeguard the welfare of coffee-dependent communities worldwide as they are being promoted and fostered in our projects.

At the same time, a significant overarching trend observed was the dramatic increase in coffee production costs across all our project countries, outpacing the growth of household incomes. This cost escalation was primarily attributed to rising input costs, notably chemical fertilizers and labor. Despite improvements in coffee prices, particularly in Brazil, Indonesia, and Tanzania, they were insufficient to offset the surge in production costs, resulting in diminished profitability for coffee farmers.

In response to these pressing challenges, we prioritized promoting agroecological practices and encouraging crop and income diversification to strengthen the resilience of coffee farming households. Together with our implementing partner HRNS, we supported farmers in adopting sustainable practices and diversifying their sources of income, which not only mitigates financial risks but also enhances food security and economic empowerment. The organization also emphasized the importance of gender equality and youth involvement in all farming families to promote equitable and inclusive development.

Looking ahead to 2024, we remain focused on expanding our efforts to promote climate-smart practices, income generation, and food security, especially among vulnerable groups such as female-headed households.