The coffee sector is one of the largest agricultural supply chains in the world, integrating over 100 million people across 80 countries. With the market expected to grow annually by 4.47% over the next two years, it’s clear that coffee supply will need to increase to meet demand.

However, with low and even insufficient incomes for farmers, barriers to accessing finance, and looming environmental challenges, the coffee supply chain is extremely vulnerable to disruption.

As the effects of climate change become more acute, farmers are being forced to move up to higher altitudes to grow coffee. Beyond reducing coffee yield, this is also reducing the variety of coffee types that farmers can grow, leading to the extinction of some coffee species.

In addition, smallholder farmers and rural dwellers who farm coffee are significantly underpaid, with many coffee farmers in producer countries operating at a financial loss. Without sufficient incentives for farmers to produce coffee – namely a fair income that appreciates their value in the supply chain – production issues will continue to persist.

Ultimately, for the coffee sector to tackle the supply chain crisis and meet rising global demand, it’s imperative that organisations start to adopt regenerative practices, which focuses on improving soil health and biodiversity. Doing so can help coffee growers improve the sustainability of their operations while also producing higher-quality coffee and enhancing biodiversity and ecosystem health.

In a recent podcast with the Innovation Forum, Ben Aschenaki, Delivery Unit Lead and Rebuild Facility Lead at Regeneration, a partnership between Palladium and Systemiq, discusses the role of wild forest coffee, regenerative agroforestry approaches, and landscape-based governance models in fostering supply chain resilience.

“When working with smallholders, it is important to design a structure with strong incentives, for both forest protection and agroforestry practices,” Aschenaki explains.

In the podcast, he demonstrates how Regeneration, which builds sustainable value chains for tropical commodities, has built inclusive and regenerative coffee value chains at scale. Regeneration does this through boosting productivity, lowering vulnerability to climate change, restoring degraded land, and safeguarding farmer livelihoods. Additionally, they ensure that farmers are paid fair price for their labour, provide the technical and financial support needed to adopt regenerative practices, and increase market access.

“For large coffee companies, it is not a choice that they engage in agroforestry production and forest protection and incentivising communities and supporting PFM and landscape-based approaches – it is a necessity,” says Aschenaki. “They will need to do this to ensure that their supply is guaranteed.”

Regeneration is a partnership between Palladium and Systemiq. Regeneration works with corporate buyers, investors, donors, and market-access players to build value chains for regenerative tropical commodities which protect standing forest and promote forest growth.

Listen to the podcast, and contact sabina.gordon@thepalladiumgroup.com for more information.