How the Coffee Industry Is Building a Sustainable Supply Chain in an Unstable Region
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Economics Aug 14, 2018

How the Cof­fee Indus­try Is Build­ing a Sus­tain­able Sup­ply Chain in an Unsta­ble Region

Three experts dis­cuss the chal­lenges and rewards of sourc­ing cof­fee from the Demo­c­ra­t­ic Repub­lic of Congo.

two coffee growers harvest beans

Lisa Röper

Based on insights from

Ameet Morjaria

Sara Mason

Angel Mario Martinez Garcia

Econ­o­mists are look­ing to pri­vate-sec­tor invest­ment in devel­op­ing economies to make up the bulk of glob­al growth in the future. But one lim­it­ing fac­tor to growth is these coun­tries’ propen­si­ty to break into conflict.

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Take the cof­fee indus­try. Cof­fee con­sumers world­wide are increas­ing­ly inter­est­ed in high-qual­i­ty, gourmet, arti­sanal beans. They care where their prod­ucts come from and how they are sourced. Yet across the glob­al cof­fee belt” — Colom­bia, Nicaragua, Viet­nam, South Sudan, and cen­tral Africa — spe­cial­ty cof­fee is inter­twined with a his­to­ry of conflict. 

Few regions com­pare to the east­ern part of the Demo­c­ra­t­ic Repub­lic of Con­go (DR Con­go or DRC). Cof­fee afi­ciona­dos’ desire for new region­al vari­etals, as well as the qual­i­ty of Robus­ta and Ara­bi­ca grown there, are gen­er­at­ing excite­ment from buyers.

And yet, har­vest­ing, wash­ing, and trans­port­ing Con­golese cof­fee beans from the area is fraught with per­il, from the dozens of mili­tia groups oper­at­ing in the east of the coun­try to decades of polit­i­cal instability. 

Ameet Mor­jaria has long been fas­ci­nat­ed by the cof­fee sup­ply chain in East Africa, and in par­tic­u­lar the DR Con­go. Mor­jaria, an assis­tant pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences, grew up in near­by Tan­za­nia. Since 2012, he has advised or led both pol­i­cy and aca­d­e­m­ic projects with cof­fee author­i­ties in Rwan­da, Ugan­da, Ethiopia, and Burundi.

Mor­jaria believes that now is a crit­i­cal time to focus more atten­tion on the Con­golese cof­fee industry.

Devel­op­ment dol­lars have arrived at the shores of the east­ern Con­go, says Mor­jaria. For those top dol­lars to have a last­ing impact is not straight­for­ward: farm­ers are poor, lack sup­port, and strug­gle to get access to finance. Their trees are old, bad­ly main­tained, and low-yield­ing. On top of that, investors wor­ry about the expense and logis­tics of get­ting pro­duce out of the coun­try at vol­ume. And last­ly there are issues of inse­cu­ri­ty and poor governance.” 

How­ev­er, there are path­ways to suc­cess for com­pa­nies will­ing to put in the time and infra­struc­ture. To bet­ter under­stand what is need­ed, Ameet Mor­jaria, an assis­tant pro­fes­sor of man­age­r­i­al eco­nom­ics & deci­sion sci­ences, spoke to two experts on the Con­golese cof­fee indus­try. Sara Mason is founder of SHIFT Social Impact Solu­tions. Angel Mario Mar­tinez Gar­cia has more than 15 years of expe­ri­ence work­ing with small­hold­er cof­fee pro­duc­er orga­ni­za­tions in 22 coun­tries and is head of the DRC Pro­duc­er Group Devel­op­ment Plat­form, a SHIFT project in the region

This inter­view has been edit­ed for length and clarity.

Ameet MOR­JARIA: Why is it impor­tant for com­pa­nies to con­tin­ue to find inroads into the Con­golese cof­fee market? 

Sara MASON: The rea­son it’s essen­tial for com­pa­nies to con­tin­ue work­ing in DRC is because we see there is so much poten­tial. We real­ly hope that in a few years, with pos­i­tive sup­port from the gov­ern­ment, there might be a chance to trans­form the sec­tor into an agri­cul­tur­al growth oppor­tu­ni­ty that will ful­ly real­ize its potential. 

MOR­JARIA: When we talk about the cof­fee busi­ness in the Con­go, what enti­ties exact­ly does that entail? 

MASON: We’re talk­ing first­ly about cof­fee pro­duc­ers who are small-scale or small­hold­er” farm­ers, typ­i­cal­ly with less than one hectare of pro­duc­tion. Some­times for oper­a­tional effi­cien­cy, access to mar­kets, etc., these pro­duc­ers aggre­gate pro­duc­tion to form pro­duc­er orga­ni­za­tions. Some pro­duc­er orga­ni­za­tions export their own cof­fee, but most work with exporters or traders who find mar­kets and sup­port the export of the coffee. 

In DRC, most of the actu­al grow­ers, the nor­mal peo­ple who are grow­ing cof­fee, they’re liv­ing in extreme pover­ty. Their lev­el of edu­ca­tion is extreme­ly low. They may not even speak French [the region’s main lan­guage is Swahili]. So, their abil­i­ty to com­mu­ni­cate with the out­side world is extreme­ly min­i­mal. This can leave the every­day grow­er vul­ner­a­ble to the con­trol of pro­duc­er orga­ni­za­tion lead­ers who have the best access to and abil­i­ty to com­mu­ni­cate with the out­side world. Some­times the prices paid for cof­fee are not mak­ing it to the actu­al farmer who grew the cof­fee. Help­ing to sup­port strong, trans­par­ent pro­duc­er orga­ni­za­tions was one of the dri­vers for cre­at­ing the SHIFT DRC Pro­duc­er Group Devel­op­ment Platform. 

MOR­JARIA: Are there ways to lev­el the play­ing field between those every­day grow­ers and the few grow­ers who might have that abil­i­ty to con­nect with the out­side world because they may speak French or be well con­nect­ed in the Congo? 

Angel Mario MAR­TINEZ GAR­CIA: Tech­nol­o­gy can help. More and more, there are peo­ple that have access to some basic tech­nol­o­gy. Cell phones are still quite lim­it­ed, but there’s a sense that it’s grow­ing expo­nen­tial­ly. That could be a way in which peo­ple can com­mu­ni­cate in Swahili. So there can be cer­tain ways in which peo­ple can actu­al­ly get their mes­sage out, using technology. 

MOR­JARIA: In 2016, the DRC export­ed 4.5 bil­lion dol­lars worth of goods, of which 85 per­cent was com­posed of min­er­als and petro­le­um prod­ucts. Agri­cul­tur­al com­modi­ties like cocoa and cof­fee hard­ly made it to the ledger. This is in stark con­trast to the days gone by. In the 1980’s cof­fee was the country’s sec­ond-most valu­able com­mod­i­ty. It was not sur­pris­ing to see DRC export­ing around 88,000 tons of beans in a year. In 2016, it export­ed just 8,000 tons. 

So the growth we see in the DRC now is most­ly from exports of min­er­als, which are con­trolled by very few peo­ple. But then you have some­thing like agri­cul­ture, which, to some extent, can be more inclu­sive. And yet cof­fee still isn’t con­sid­ered a high-val­ued export, in part because farm­ers have very lit­tle sup­port or train­ing, mean­ing that their yields are low. Bulk or com­mer­cial cof­fee would have a much larg­er impact on the lives of the poor.

MASON: The agri­cul­ture indus­try faces a lot of chal­lenges before it will be able to real­ize its poten­tial to be a more inclu­sive indus­try. Some­thing crit­i­cal that is miss­ing is leg­is­la­tion to ensure sup­port for farm­ers and effec­tive col­lab­o­ra­tion with the pri­vate sec­tor. For instance, today it’s real­ly dif­fi­cult for a cof­fee buy­er to get a visa to enter the Con­go. That’s not good for busi­ness or trans­paren­cy with the out­side world. 

MAR­TINEZ GAR­CIA: And then there is the secu­ri­ty issue, of course. There are not many cof­fee buy­ers who will ven­ture into the Con­go. It’s risky.

A quick fix is nev­er going to work in the Con­go. And some­times it’s a chal­lenge to find some­one who’s able to pro­vide resources and time and ener­gy for peo­ple to work there in the long run.” —Angel Mario Mar­tinez Garcia

MOR­JARIA: The threats are real: death threats, kid­nap­ping, and extor­tion. Since May 2017, 535 for­eign­ers and Con­gloese were abduct­ed and held for ransom. 

How are buy­ers respond­ing to these challenges?

MASON: They try to be sup­port­ive, and there are real­ly two kinds of cof­fee buy­ers: spe­cial­ty buy­ers who will buy a small­er quan­ti­ty because they are inter­est­ed in hav­ing cof­fee from DRC, and larg­er buy­ers who are real­ly the ones that you need to be on board to achieve any kind of scale for the cof­fee indus­try. It might be pos­si­ble for some­one who’s buy­ing 10, 20, 30 bags to be flex­i­ble when there are chal­lenges that effect cof­fee qual­i­ty or deliv­ery times. But, if you have a very large-scale buy­er who needs 20 con­tain­ers of cof­fee, and you’re four months late deliv­er­ing because you just can’t get the cof­fee out of the coun­try because of delays in cus­toms or bor­der issues, then that’s real­ly hard for buy­ers because this will neg­a­tive­ly impact their business.

MOR­JARIA: I hear there’s a lot of tax­a­tion — both for­mal and infor­mal. Bureau­cra­cy along the sup­ply chain real­ly kills the farmer’s incen­tives. Offi­cial­ly, the tax rate is less than 0.5 per­cent, but in prac­tice it is more like 15 per­cent. This is remark­ably high com­pared to neigh­bor­ing coun­tries like Ugan­da and Rwanda. 

MAR­TINEZ GAR­CIA: In Goma [the cap­i­tal city of the North Kivu province], you’re direct­ly next to the bor­der into Rwan­da. Goma is maybe 20 kilo­me­ters away from a grow­ing pro­duc­tion area, but it takes sev­er­al hours to reach the cof­fee because of the sev­er­al con­trol points along the way. And at every con­trol point, there might be infor­mal tax­a­tion or some oth­er type of nego­ti­a­tion. So, basi­cal­ly, because of these costs, the price of the cof­fee dou­bles by the time it arrives in Goma. Those are costs that pri­vate sec­tor com­pa­nies must absorb; oth­er­wise the cof­fee will nev­er make it into land har­bors, and it will nev­er be exported. 

MOR­JARIA: That sup­ports a recent study that iden­ti­fied 798 road­blocks in the provinces of North and South Kivu, oper­at­ed most­ly by the Con­golese army, the FARDC. The road­blocks were sep­a­rat­ed by an aver­age dis­tance of just 11 miles. The report found that six truck­ing com­pa­nies in North Kivu were pay­ing a com­bined total of more than $1.5 mil­lion in fines each year. Are there steps that your orga­ni­za­tions, or oth­er orga­ni­za­tions like yours, can take to deal with the finan­cial stress­es and to dis­cour­age cor­rup­tion along the sup­ply chain? 

MAR­TINEZ GAR­CIA: Def­i­nite­ly. With the Pro­duc­er Group Plat­form we are work­ing with pro­duc­er orga­ni­za­tions, giv­ing them the tools and skills and knowl­edge of what’s going on in the world of cof­fee so they can also start increas­ing their aware­ness. And from the oth­er side, we need to have more inter­ven­tion from inter­na­tion­al buy­ers and orga­ni­za­tions that can dis­cuss with local and region­al gov­ern­men­tal insti­tu­tions regard­ing the dif­fi­cul­ties they face in get­ting more cof­fee out of the Con­go, with­out it cre­at­ing a con­flict. And then we need to to find a busi­ness mod­el that every­body can ben­e­fit from. The more cof­fee they can export, the high­er the amount of mon­ey that is going to come in from tax­es — which could help elim­i­nate the infor­mal tax­es. Then it’s just pro­mot­ing exports that bring tax­es into the Con­go in an offi­cial way.

MASON: One of the chal­lenges is that much progress has been made on paper, but the Con­go, it is a huge coun­try, and so you might have reforms being made in the cap­i­tal, Kin­shasa, but most of the cof­fee is pro­duced in the east­ern side of the coun­try. So, regard­less of what kind of reforms are passed in the cap­i­tal, it’s crit­i­cal these reforms trans­late into addi­tion­al sup­port for the cof­fee sec­tor in the east­ern part of the country.

MOR­JARIA: All this rebuild­ing and restora­tion of the cof­fee sec­tor is hap­pen­ing while in the back­ground the polit­i­cal and human­i­tar­i­an sit­u­a­tion remains frag­ile. There was a recent out­break of Ebo­la, for exam­ple. The polit­i­cal sit­u­a­tion is such that the UN in fact has repeat­ed­ly said the DRC has reached a break­ing point,”with elec­tions twice delayed since 2016 when Kabila’s term came to an end. There is a huge pow­er strug­gle going on in the coun­try. Are there steps that you’re tak­ing to sus­tain and sta­bi­lize the work that you’re doing and guard against this insta­bil­i­ty? Or is that some­thing that’s just so strong and all you can do is react?

MASON: The best thing we have found is to have strong rela­tion­ships with the peo­ple we work with in-coun­try. Right now, I can’t go to the places I need to go. But I have very strong rela­tion­ships with the local staff that I work with. And so, even when it’s too dan­ger­ous to go to some areas of the east­ern Con­go, if you have the peo­ple whom you real­ly have faith in, that’s going to get your busi­ness through those times. 

MAR­TINEZ GAR­CIA: A quick fix is nev­er going to work in the Con­go. And some­times it’s a chal­lenge to find some­one who’s able to pro­vide resources and time and ener­gy for peo­ple to work there in the long run. It is real­ly impor­tant to con­tin­ue sup­port­ing pro­duc­ers, to con­tin­ue increas­ing skills and knowl­edge. Because they are the ones, even after we end any activ­i­ty or any project we have there — in a year or 10 years or 20 years — who will still be there work­ing and liv­ing and dis­cussing any future of the cof­fee sec­tor in the Congo.

Featured Faculty

Ameet Morjaria

Assistant Professor of Managerial Economics & Decision Sciences

About the Writer

Glenn Jeffers is a writer based in Los Angeles.

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