How Kenneth Lander and THRIVE Farmers Are Revolutionizing the Coffee Supply Chain

From foodtank.com by Janina Grabs
How Kenneth Lander and THRIVE Farmers Are Revolutionizing the Coffee Supply Chain

THRIVE Farmers International has an ambitious goal: to fundamentally revolutionize the mainstream coffee supply chain, which has many middlemen and a strong reliance on volatile commodity markets. THRIVE supports farmers in maintaining interest in their harvest through the crop’s final purchase. By staying involved until the end of the chain where their coffee has the highest value, farmers can retain profit margins up to 10 times higher than those in conventional markets. We sat down with THRIVE co-founder Kenneth Lander at his coffee farm in Monteverde, Costa Rica.

Food Tank (FT): How do you explain to consumers what differentiates THRIVE from other sustainable schemes such as Fairtrade or Rainforest Alliance?

Kenneth Lander (KL): We wholeheartedly support Fairtrade, but we are something different. At the end of the day, we are not about trying to create a floor that prevents a farmer from going upside down on things; we want the farmer to make a sustainable living, take the next step, and become an entrepreneur.

We are not trade; we are relationship. We are not a commodities market; we are a farmers market. A consumer only needs to understand that we work like their local farmers market, except that these farmers are an ocean away. We have a gift for connecting the consumer to the farmer through storytelling; that is what we do best.

FT: To an outsider, your business model sounds surprisingly straightforward. Why do you think nobody has traded coffee this way before THRIVE did?

KL: The people who have the ability to change the economies of coffee already have their models—their Titanic is built, and it is really hard to turn a ship of that size around. Our company was designed from the ground up to think about economic sustainability of farmers first. The idea of sharing revenue, and creating a fixed revenue stream for farmers based on the final product—it’s a completely different way of thinking.

Also, technology has changed things. We couldn’t have done THRIVE 10 years ago. Now, a farmer can actually see where his coffee is going and how much a cup of it is selling for. One thing that is core to who we are is that we try to harness any opportunity to create channels of communication, including through Skype calls, videos, and personal visits. This is not about pictures of coffee cherries on trees and a nice picture of a farmer standing next to his plant. We feel that everyone in the value chain should be invested in the relationship, and we try to create these possibilities for farmers to engage as much as possible.  

FT: THRIVE focuses on the high-quality specialty coffee market where consumers readily pay high price premiums for outstanding products; however, only 1015 percent of world coffee production can compete in the specialty market. Do you see potential for scalability beyond the specialty coffee niche?

KL: Sure, it just depends on how you want to scale it. I would argue that on the higher end of commercial coffee the impact of the model could be even higher, because you are creating a full-crop solution. The higher you go up in score, specialty coffee creates its own marketplace and the movement of the commodity market tends to be minimized. The real power of our model relates to the fact that when you start sliding down the range, even high-end commercial or low-end specialty grade coffee prices will follow commodity price movement more closely.  What if you had a way to have a coffee that everybody enjoys and pays a good price for, and put it in a system that links farmer revenues to consumer prices? There is still huge potential there, and there are a lot of farmers, big and small, that fit into this model.

FT: Beyond ensuring economic stability, how do you also incorporate environmental and social aspects?

KL: It is really fun to talk about the environmental piece, and the social piece, but a farmer won’t care about these things until he can feed his family. Period. If we don’t deal with that issue head-on, we’ll never get the traction we need on the other two. We would love to partner up with environmental projects and offer a solid marketing base. But our point of entry will always be from the economic side, and then it gets powerful, because farmers do want to take care of their watershed and ecosystems, they just sometimes don’t have the resources to look into the future because they are under so much short-term economic stress.

FT: Do you observe that your customers are willing to pay for environmental attributes of their coffee, or is quality their main priority?

KL: I think people are willing to pay for it if it also helps them meet an agenda. If you have a multinational company that is looking for a good-quality product that is verifiable, truly impactful on the three aspects of sustainability, and that complies with its stated values, I think they are willing to pay more, because they also have sustainability budgets. In that case, what difference does US$1 more per pound make if the real interest is being a sustainability-minded coffee consumer? We are still small, but the vision and ideas behind the approach are huge.

FT: Where do you see the world of specialty coffee, and THRIVE’s position in it, in 10 years?

KL: In this industry, there is lots of talk about the “thin months,” and a recognition that if we don’t do something to ensure sustainable livelihoods, there won’t be any specialty coffee in the coming years. At some point, the balances will tip and people will have to realize that they have to rethink how they engage with farmers in order to ensure that they actually have a large enough supply base. I think THRIVE will be seen in the future as one of those companies that was the first to act at scale. We hope to continue to be a thought leader in that area. If more people think, “Maybe THRIVE has a point. Maybe we shouldn’t base our business upon the commodity market, and rather base it on what we can sell it for, and make relationships with farmers and ensure that they have a consistent revenue year by year that they can live by, because that will help sustain our supply chain,” that would be a good thing. The idea is certainly not below the radar now

Continue reading at Food Tank