Is R&R Right For My Supply Chain?

There are so many considerations when developing a program. How do I know if renovation or rehabilitation is right for my supply chain?

What is the Right Approach?

R&R program analysis does not start with determining the R&R need – rather it first starts with a broader analysis of the viability of coffee and the farmers’ willingness to invest, then an analysis of the farmer segments of the relevant context.

1. Coffee Viability

Is coffee - now or in the future - economically viable for farmers? What needs to be in place for farmers to be willing to invest in R&R?

2. Farmer Segmentation

Which type of value chain do farmers belong to? How ‘serviceable’ are they by value chain/sector actors?

3. R&R Need

What is the condition of trees and are farmers already making use of GAP?

R&R Decision Tree

To analyze the best program approach, we have determined eight questions that are used to determine coffee viability, farmer segmentation, and detailed R&R need.

By answering the following set of questions, we’re able to determine:

  • Whether renovation, rehabilitation, or a “do nothing” scenario is needed
  • Whether financing should be done mostly though loans or grants
  • Whether there are other, more important, priorities than R&R

Is coffee, now or in the future, economically viable?

When to Conduct Renovation vs Rehabilitation

Rehabilitation and especially renovation require upfront investments. Determining the best technique to apply comes down to the conditions of the farm and interests of the farm owner. Considerations should include the reason for the declining yield, local availability of inputs, access to technical support, current market price and farmer finances, among other circumstances. Ultimately, it is important that R&R decisions are taken by farmers themselves, with support from other stakeholders as needed.

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Renovation

is required in some situations:

  • Trees may be irreversibly affected by diseases
  • Superior yields and income associated with new varieties may warrant the renovation investment and associated implementation risk
  • Climate models suggest that there will be significant change to suitability for existing varieties, even when good agricultural practices are applied
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Rehabilitation

may be the first choice in many contexts given:

  • The smaller and shorter financing need and associated investment horizon
  • The smaller risk of implementation failure
  • The benefits of old trees - bigger and stronger roots that are more drought resistant than young trees

Financing Investments

The mix of grants and loans depends on the ‘bankability’ of the R&R investment, and whether mitigation measures can decrease risks sufficiently. To determine whether loans or grants should be the prominent financing instruments, potential investors should analyze projected cash flows, and understand risks and their ability to mitigate them.

  1. Large & medium farmers
  2. Commercial farmers in tight value chains
  3. Commercial farmers in loose value chains
  4. Disconnected farmers

Click on the piramyd

Purely Loan-Based Financing

Programs in this range of the continuum primarily cover costs through loans with embedded subsiders/grants to cover hight operating expenses.

Spectrum of R&R Financing

Programs in this range of the continuum primarily rely on grants, and may have some elements of the programs financed by a concessional loan.

Purely Grant-Based Financing

Country Needs & Priorities

To better understand how countries’ needs and priorities for R&R differ we have developed data sheets on the top producing countries. These sheets can help you identify what type of actions are needed where.

The profiles highlight six topics relevant for R&R:

  • Quick facts: basic information about coffee production in the country
  • Farmer segmentation: indication of where farmers are located within the ‘farmer pyramid’
  • R&R programs: examples of past or ongoing programs in the country
  • Viability: potential climate change impacts and other factors relevant to the long-term viability of the industry in the country
  • Enabling environment: high-level information on the political environment for R&R and the availability of inputs, finance, and technical assistance
  • R&R need & potential: overview of key drivers, R&R need and uplift potential if R&R is conducted.

We distinguish between four drivers of R&R need, and highlight them with colors on profiles according to their relevance:

Age of trees
Exposure to diseases and pests
Climate change
Sub-optimal agricultural practices

We highlight these icons on each country profile to indicate their significance in each country:

Very significant driver of R&R need
Significant driver of R&R need
Not a significant driver of R&R need

All estimates and conclusions are high-level only and should, whenever possible, be triangulated with more detailed country level analysis.

Learn more and get involved

There is a lot of work to be done to ensure the long-term supply of coffee from countries where the crop has long shaped the social and economic fabric. Learning to extend the life of their trees and improve yields helps farmers stabilize annual production and in turn, income, while the rest of the world benefits from a steady supply of quality coffee. Continue on to learn more about the immediate attention and action that is required to make this a reality.