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Supply Chain

Cutting Middlemen's Profit One Way To Boost Coffee Farmers' Gains, ICO Head Says

Increasing transparency and adjusting the size of gains for middlemen in coffee trading is one way to increase profits for coffee farmers, a major task for the International Coffee Organisation (ICO), the incoming new head of the group said.

Vanusia Nogueira, who in May will become the first woman – and also the first person from the producers' side – to lead the coffee entity, said the disparity between countries regarding the share of the profit that stays in the hands of farmers is a major obstacle in achieving higher living standards for producers.

Poor Returns For Farmers

Poor returns for farmers in some parts of the world, despite the high profitability of coffee companies, is seen as one factor forcing producers to leave the business and sometimes consider migrating to countries with stronger economies such as the United States.

The ICO created a task force in 2019 to seek measures to reduce that disparity so farmers could make enough to stay in the activity, but not much has changed so far.

"In countries such as Vietnam and Brazil, farmers still keep a good share of the selling price, but in other places that slice falls sharply," Nogueira said on the sidelines of the Specialty Coffee Association's Expo in Boston.

Read More: Uganda Coffee Exports Plunge 20% In February

Electronic Platforms

One tool that could help solve that problem, Nogueira said, is to boost direct sales by producers, sometimes using electronic platforms such as the Almacielo, which has grown in Asia.

Farmers are aware of the potential to increase profit margins by reducing intermediaries and some associations of producers were searching for opportunities during the SCA Expo such as the Uniocafe, from Honduras.

"We can get 30% or 40% more when we manage to sell directly," said farmer Hector Maldonado, who has a client in Taiwan with whom he deals without intermediaries.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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