Neumann Kaffee Gruppe (NKG), understanding the need for economic viability for all participants in the green coffee supply chain, announced a new, expanded version of NKG BLOOM. While NKG BLOOM initially referred to a smaller, Uganda-focused effort, the name is being applied to a far larger and more advanced initiative furthered by a unique impact banking–backed facility and a goal of reaching 300,000 coffee families by 2030.
Redeveloped as a long-term sustainable-sourcing initiative designed to address poverty in coffee communities, financially empower coffee farmers and ensure a healthy future for coffee, NKG BLOOM will be introduced in at least 10 countries by 2030 and will continue to grow in Uganda.
"NKG BLOOM is not a marketing strategy, it is not a philanthropic endeavor or a feel-good project. It’s about the way we want to do business in the long term. It will cost us money and effort, but it is simply the right thing to do,” says David M. Neumann, Neumann Gruppe’s Group CEO. "Lending to smallholder farmers in some of the poorest places in the world is a risky proposition, but it´s critical to unlocking the potential that these farmers hold for global agriculture and development in their own countries and communities."
Coffee is by far the largest export product of Uganda, accounting for 20% of export revenues. With approx. 1.3 million households, Uganda has the largest number of coffee farming families in the world.
Despite favorable agro-climatic conditions for its production and a constant global increase in demand for the product, those smallholder coffee farmers still operate at a very low productivity. The reasons for this are varied, such as a lack of
reliable access to agronomic skills, inputs, finance and markets. The farmers as well as Ugandan exporter Ibero are falling far short of their possible potential.
Therefore, NKG BLOOM Uganda was initiated by importer Bernhard Rothfos and Ugandan exporter Ibero, both members of Hamburg based Neumann Kaffee Gruppe. They established a network of partner companies in order to create NKG BLOOM Uganda, a sustainable sourcing strategy.
At the heart of NKG BLOOM Uganda is the set up of a fully fledged Farmer Service Unit within the Ibero operation. This unit provides fertilizer and cash advances to farmers, as part of a 2-year crop-nutrition program that should increase farm-level productivity by at least 75% after 2 years. Moreover, Ibero is setting up, through a complex and innovative set of partnerships, an ecosystem of support to farmers that includes agronomy and financial literacy trainings. For Ibero, this is a business opportunity and not just a CSR initiative. The idea is to be able to grow its sourcing capacity and ultimately its business competitiveness hand in hand with the growth of farmers.
Several years before NKG BLOOM Uganda was initiated, the non-profit foundation Hanns R. Neumann Stiftung (HRNS) has started its work in Uganda in order to build farmer groups through the establishment of depot committees - laying the foundation for NKG BLOOM Uganda:
In Uganda, smallholder coffee farmers are mostly unorganized. Yet, HRNS organized farmers from several coffee regions in about 82 Depot Committees (DC's), which are either registered companies or cooperatives with 30 up to 600 farmers. In 2018, in order to offer its services to more farmers from more regions, Ibero Uganda started to organize farmers into groups, the Village Coffee Organizations (VCOs).
Today, Ibero Uganda works with about 100 farmer groups and over 25,000 farmers delivering coffee to them through their farmer group structure. In January 2017, NKG BLOOM Uganda has started and has already disbursed fertilizers to 493 farmers at 7 Depot Committees. This August 2020, we intend to distribute fertilizer on credit to over 6,000 farmers from about 100 farmer groups.
Today, the average Ugandan farmer produces only 550 kg of green coffee per ha, in one main crop and one fly crop, while its counterpart in Vietnam yields on average 2.500 kg per ha. But Demo-plots of HRNS in Uganda prove, that the average yield of the Ugandan farmer could increase up to 1.625 per ha within only two years. What the Ugandan farmer needs is basically fertilizer and cash (besides agronomic training).
A 2 year crop nutrition program cycle is the starting point for Ibero Uganda and all partners to improve the smallholder coffee farmers' livelihoods and to establish the sustainable sourcing strategy in Uganda. Every farmer has to meet specific eligibility criteria and to complete an application process before he is getting two guaranteed fertilizer and cash (mobile money) disbursements. After every two disbursements, the farmer has to fully repay the disbursements by bringing coffee to exporter Ibero Uganda. The farmer cannot reapply for the next two disbursements before the repayment is fully done.
In November 2019, Ibero Uganda set up two new regional coffee buying stations—one in Mityana, approximately 70km west of Kampala, near Lake Wamala; and one in Masaka, just over 100km south of Mityana. The motivation for building the stations was to bring services closer to Ibero’s clients. The benefits, though, both to farmers and to Ibero Uganda, have exceeded those hopes. Having a presence in the field has provided an avenue for more frequent exchanges between Ibero and its customers... read more
On March 18, when the government of Uganda implemented the first national measures to prevent the spread of COVID-19, we at NKG BLOOM were still finishing a major distribution of fertilizer. We
quickly transitioned from the usual, large gatherings to small, local distributions, to ensure that we could maintain safety distances and protect our team and farmers. We were all relieved that
we managed to deliver the requested fertilizer in time for the farmers to apply it with the rains...
This February, Ibero started its couple seminars with the aim to close the gender gap within farming households making them more resilient to shocks, increasing coffee production, and income. More seminars will follow, once COVID-19 permits.If women had the same access to productive resources as men, families could increase their yields by 20-30 percent That’s an impressive productivity gain with the potential to improve farmer livelihoods without adding to costs. So, what can we do to bridge the gap?... read more
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NKG BLOOM Uganda can only be successful with the help of the following partners and suppliers:
"Combining private investments with GIZ experiences in financial product refinement and farmer training, this project is an innovative attempt to bridge existing gaps in the access to financial services for smallholders.”
"NKG BLOOM Uganda is not just another CSR project to include in a company´s annual report. It´s about transforming the heart of the coffee sourcing business in a manner that holds the potential to lift thousands of smallholder farmers out of poverty."
"The most satisfying feeling is to see the look of gratitude in the eyes of a farmer in whose life you have made a positive impact. That is what is happening with NKG BLOOM Uganda. The first batch of farmers have started seeing good results on their gardens and over 92% of them have already paid off all or half of their advances and have come for the second batch."
"NKG BLOOM Uganda is providing smallholder farmers a key service that most financial institutions have to date not been able to offer effectively. Access to financial services is critical for farmers to invest in production and to break out of the vicious cycle of dependency towards middlemen."
Learn more about how our project partners and suppliers support NKG BLOOM Uganda: