It estimated that approximately 60% of the world’s coffee is produced by 12.5 million smallholder farmers in remote tropical regions, many of whom struggle to secure a living.
Increasingly, climate change threatens to reduce the land area suitable for production and increases the spread of pests and disease. Inefficient farming techniques can exacerbate the situation, leading to deforestation, soil erosion and the subsequent sedimentation of waterways. As a result, the size and quality of coffee harvests are becoming much less reliable. At the same time, smallholders are subject to price fluctuations caused by market trends over which they have no control. All these factors combine to make their livelihoods precarious, leading to socio-economic vulnerability and declining food security, with the risk that farmers leave coffee cultivation and seek more profitable occupations in urban areas.
LDC is one of the world’s top five green coffee merchants, with a strong presence in 11 coffee-producing countries that cover 85% of global production. As an industry leader, we are well-placed to support smallholders in addressing the challenges they face through more efficient, sustainable and ultimately profitable, production practices.
By doing so, we help to advance the United Nations’ Sustainable Development Goals (SDGs) on several fronts:
“We believe that sustainable agriculture is closely linked with farmers’ wellbeing. Where possible, we therefore choose to work directly with coffee growers in the field, supporting them through initiatives that aim to increase their productivity and incomes through the adoption of more sustainable farming practices.”
Head of Coffee
As consumer demand for sustainable coffee has increased, especially among millennials in North America and Western Europe, so too has the number of certification and verification schemes.
As consumer demand for sustainable coffee has increased, especially among millennials in North America and Western Europe, so too has the number of certification and verification schemes. As more consumers choose to buy coffee that complies with such schemes, so roasters are setting increasingly ambitious responsible sourcing targets and driving growing demand for sustainably grown and sourced coffee.
While working with certification / verification programs is only one of a number of measures we take to increase our production of sustainable coffee, we recognize that such schemes offer assurances to consumers and help increase transparency in supply chains. They remain one of the most powerful indicators of sustainability within the coffee industry.
The main certification / verification programs we work with are 4C, C.A.F.E Practices, UTZ/Rainforest Alliance, Fairtrade and Organic. In 2020 we supported the production of more than 1.4 million 60kg-bags of certified or verified coffee across our main origins: Brazil, Colombia, Honduras, Indonesia, Mexico and Vietnam.
This brought LDC’s total certified/verified volume produced to 84,738MT1.
We currently manage a diversified portfolio of collaborative sustainability projects in our coffee supply chains across seven different countries: Brazil, Colombia, Ethiopia, Indonesia, Mexico, Uganda and Vietnam.
We run many of our projects in collaboration with value chain participants or third party organizations such as PUR Project, with whom our collaboration focuses on regenerating coffee ecosystems through agroforestry.
Farmers are trained in techniques to regenerate soils and groundwater supply, and encouraged to plant native trees in and around their coffee fields to protect the crops. This helps them improve the quality of their coffee and so generate additional income, while preserving regional ecosystems and increasing their resilience to climate change.
Indonesia, Ethiopia and Uganda are among the world’s main coffee producers, where farmers have been facing increasing challenges in terms of yields, food security and livelihoods. Climate change has had a major impact on crop production due to irregular rainfall, rising temperatures and droughts.
To increase farmers’ resilience to climate change, LDC, the Louis Dreyfus Foundation and PUR Projet joined forces to promote coffee community agroforestry in these countries. Taking a general and systematic approach, we seek to bring about widespread regeneration of coffee ecosystems by restoring forest cover and empowering coffee-growing communities through knowledge transmission and adoption of more sustainable practices.
This work started in Indonesia in 2014, and was later extended to Ethiopia and Uganda. Since then, some 900,000 trees have been planted, and we estimate that these trees will sequester some 145,100 metric tons of carbon dioxide equivalent (tCO2eq) from the atmosphere over their 30-year lifetime, helping to mitigate global warming.
Alongside our extensive collaboration with Pur Projet, we are also working with like-minded partners to investigate how to reduce carbon intensity in coffee production. In 2020, LDC participated in a study funded by Jacobs Douwe Egberts, The Sustainable Trade Initiative (IDH) and Green Invest Asia, on carbon and farm profitability in Vietnam’s Robusta coffee sector.
To make coffee production more sustainable, reducing associated carbon emissions is essential. Without relevant data, however, supply chain actors cannot make informed decisions about production management or communicate progress in reducing emissions.
Vietnam is the world’s largest Robusta coffee producer and the second-largest exporter of all coffee varieties. The study we participated in assessed the carbon footprint of coffee production in the country’s Central Highlands region, the world’s most intensive coffee production area, with a goal to identify business strategies most likely to incentivize farmers to adopt more sustainable agriculture methods, while also reducing carbon emissions.
LDC collected data from thousands of farmers over a period of three years, the results of which show that carbon-neutral coffee production is possible. Optimal use of fertilizers and nutrients, as well as crop diversification, are both key to reducing a farm’s carbon footprint.
The study showed that 32% of highly diversified farms had a negative carbon footprint (with sequestration exceeding emissions), compared to 15% of medium-diversified farms and only 8% of monoculture farms.
Nevertheless, a reduced carbon footprint does not always correlate with higher profits for the farmer. Relationships between carbon intensity and profitability are complex, and more detailed understanding of specific intercropping and production models is needed.
In 2021, LDC will continue to work with partners to collect data for the study, with the aim to contribute to improving the sector’s sustainability – in the region and beyond.
Spreading sustainable practices throughout the coffee value chain, without excluding any farmer or supplier, remains a key aim for LDC. To this end, in 2015 we produced a dedicated Code of Conduct for coffee suppliers, to encourage them to commit to a long-term and continuous improvement process, supported by LDC and its partners.
In 2020, we updated this code to comply with changing industry requirements, with the input of our partners – including independent certification organizations, customers and suppliers.
Our 2020 Code of Conduct was revised by LDC in consultation with Des Enjeux et Des Hommes (Group EcoCert), experts in strategy, change management and corporate social responsibility, to be more comprehensive and based on an ‘assess and address’ approach that focuses on prevention, engagement, improvement and incentives to tackle sustainability issues. It is backed by Ethics Point, our comprehensive and confidential reporting tool, and is available in English, Vietnamese, Bahasa, Spanish, Portuguese and French.
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The roll-out campaign for our new Code of Conduct began in March 2021 and includes training to support suppliers in its implementation.
As targeted in our 2019 Sustainability Report, our updated Code of Conduct is now also accompanied by a method to verify supplier compliance. We will begin to audit suppliers in two countries in 2021, and will begin reporting on this in 2022.
Our 2020 Code of Conduct serves as the basis for our 2025 targets to purchase and trace coffee from suppliers who have agreed to the 2020 version of our Code of Conduct and, building on the revision of our Code of Conduct, LDC is now working to develop its own Responsibly Sourced Verified Program, from which roasters should be able to begin buying volumes in 2022.
Publish updated coffee supplier Code of Conduct
Produce methodology to verify supplier compliance with Code of Conduct
Design training to support supplier compliance with Code of Conduct
Status: Ongoing (training designed, roll out begins 2021)
Develop and launch LDC Responsibly Sourced Verified program
70% of all coffee purchased from Code of Conduct compliant suppliers
Completion: 2025 (reporting begins 2022)
20% of coffee traced to farm through Code of Conduct compliant suppliers