Nestle, the world's biggest food packaging company, announced on Tuesday that it is testing a plan to provide monetary incentives to coffee farmers employing sustainable farming methods. This initiative forms part of Nestle's strategy to reduce its coffee segment's greenhouse gas emissions by 50% by 2030.
In the wake of escalating scrutiny and legal consequences for global supply chain management, consumer goods giants like Nestle are taking action. Nestle has committed to invest $1 billion by 2030 towards its sustainable coffee sourcing plan, now incorporating methods to elevate farmers' earnings.
As part of this scheme, Nestle has offered conditional monetary incentives to around 3,000 coffee farmers in developing nations, including Ivory Coast, Indonesia, and Mexico. The aim is to encourage these farmers to adopt regenerative farming practices such as utilizing organic fertilizers to enrich soil fertility, establishing shade trees to shield coffee beans, and implementing intercropping to preserve biodiversity. The latter two strategies also provide farmers with additional income sources.
Rainforest Alliance, an environmental organization aiding Nestle in impact assessments, reported positive trends, including enhanced incomes in some countries and a growing adoption of vital regenerative practices.
However, a 2021 coffee report found that global coffee companies' efforts to safeguard human rights and the environment were lacking in tangible impact, with most farmers unable to finance sustainable coffee farming.
The European Union has recently enacted a landmark law targeting companies that import commodities and associated products linked to deforestation worldwide, a measure taken partly due to companies' unsuccessful voluntary commitments to source sustainably.
With an estimated annual retail value of $200-250 billion, the coffee sector allocates less than 10% of that value to producing countries when exporting beans, with even a smaller share reaching the farmers.
Approximately 125 million people worldwide rely on coffee for their livelihoods, yet it is estimated that 80% of coffee farming families live at or beneath the poverty line, according to non-profit organizations Fairtrade and Technoserve.