Farmer has clearly improved family's livelihood after year one
Meet Mrs Naggayi Florence, mother of 6 children, taking care of all expenses by herself. She gets her income mainly from her one acre coffee garden. Before Ibero Uganda offered her the high quality fertilizer advance scheme, she used to struggle and earn less than UGX 100,000 (USD 27) in a season. This would not sustain her from one season to the next, she would use all the money on family day-to-day expenditures. The greatest challenge was how to pay school fees for her children since paying school fees and coffee harvest do not coincide. The village traders used to give her loans at a low fixed price per kilogram of coffee throughout the season.
After less than a year of joining NKG BLOOM, she has not only been able to get a fair price for her coffee but also to pay for the school fees from the NKG BLOOM Mobile Money credit line. This credit line is available any time she needs it, through sending a simple USSD-code from her personal phone: “It has never disappointed me”, she says. She is already expecting to at least double her harvest for the next harvest and hence her income increasing substantially as well. And this is just the beginning after less than a year applying fertilizer and practicing good agricultural practices.
Neumann Kaffee Gruppe (NKG) takes its business in producing countries to the next level with the creation of NKG BLOOM, a globally unique impact
banking–backed initiative which will reach 300,000 coffee families by 2030.
NKG BLOOM - Coffee sourcing with a purpose.
Hamburg, Germany: Neumann Kaffee Gruppe (NKG), the world's leading green coffee service and trading group, has for decades pioneered real sustainability in the coffee world with a clear vision for the necessity of an economically viable business for all involved in the green coffee supply chain. NKG runs a diverse variety of sustainability projects, in all sizes and scopes, in nearly all coffee-producing countries. These include activities such as those of International Coffee Partners, as well as managing its own larger scale farms as vital parts of coffee communities in Brazil, Mexico and Uganda. Now, NKG is furthering these efforts and introducing a new dimension to its business — and an important step towards responsible business conduct.
In response to the long-term impact that price-volatility, climate change, adverse weather conditions and politics are having on coffee farmers’ ability to generate a reasonable return from their work, NKG is introducing NKG BLOOM: 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 is not a quick fix or customer drivers’ scheme but a long-term investment in and commitment to the weakest of those involved in the green coffee chain in full knowledge of their critical importance to the business of NKG and our industry overall. NKG BLOOM is a unique combination of field-based educational efforts, real-time mobile technology and the industry’s first impact banking–backed initiative for coffee production.
“NKG 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 a lot of 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.”
To form the core of NKG BLOOM, NKG led the creation of a Coffee Smallholder Livelihoods Facility — an innovative $25 million revolving facility involving leading European banks ABN AMRO, Rabobank and BNP Paribas that was signed into existence in August of this year.
Also, and for the first time, the partner banks will share the direct risks on farmer defaults. The facility is further backed by two complementary default guarantees by the U.S. Agency for International Development (USAID) and IDH the Sustainable Trade Initiative.
NKG has set itself the ambitious goal of reaching at least 300,000 coffee families through NKG BLOOM, in 10 major coffee producing countries by 2030. In doing so, it will offer urgently needed resources, such as finance, farm-input and know-how. In 2017, a pilot project was launched as NKG BLOOM Uganda.
NKG is working with NewForesight, an independent strategic consultancy
specializing in sustainability challenges, as external long-term partner and validator of NKG BLOOM, to ensure it indeed delivers provable, structural changes. In 2019, NKG BLOOM will be
introduced in Colombia, Honduras, Kenya and Mexico, and furthered in Uganda, with the establishment and staffing of permanent Farmer Services Units (FSUs) based at the respective local NKG
company. The FSUs will be charged with realizing NKG Bloom's three key tenets:
• Enabling farmers to realize their full potential
• Supporting inclusive sustainability
• Striving for transparency and traceability
“Ultimately, the Smallholder Livelihoods Facility enables us to bring the power of the global financial markets — long the missing piece — to smallholder coffee farmers,” says Catalina Eikenberg, who heads NKG Sustainable Business Unit in Hamburg. “We’ve set ourselves an ambitious goal and we’re excited to make it happen.”
NKG BLOOM - Coffee sourcing with a purpose.
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First success of Village Coffee Organizations (VCOs) for
non-organized farmer groups
From October 2018, Ibero Uganda decided to offer its services to farmers not organized in farmers’ groups. We developed what we call the ‘Village Coffee Organizations’ (VCOs). We go to districts where coffee farmers never received good agricultural trainings nor finance, and we train them. We organize Farmers Field Schools (FFS) and we build capacities with lead farmers that are chosen among their pairs. We explain the benefits of selling their coffee already processed. We encourage them to add value to their production, so not only the farmers produce more, but they also get a better price for it. Here are 2 success stories among the VCO farmers:
In October 2018, 58-year old Luyinda Edward, joined the NKG BLOOM programme under the new and innovative business model of the Village Coffee Organisation (VCO). Edward lives in Ndagwe Sub-county in Lwengo district and has 18 acres of coffee trees. When Edward joined the programme, he started attending Farmer Field School (FFS) sessions that were organized as part of the activities under the programme for retooling farmers with agronomic skills required to improve the health of their coffee trees. For example, through these sessions, Edward admits that his coffee picking behavior has improved significantly and so is the quality of coffee from his farm. He has also learnt to implement important agronomic practices such as desuckering which, prior the FFS, were not prioritised. The FFS sessions have also promoted a harmonious working relationship within the community in his village. Before joining NKG BLOOM, Edward was clearing a loan from another source and could not afford buying fertilisers. He therefore enrolled on the program and was advanced 575 kgs of fertiliser (NPK) in March 2019 season. He has been applying fertilisers once a year but now thanks to NKG BLOOM programme, Edward is able to access and apply fertilizer to his coffee trees twice a year. Edward admits noticing a price difference through selling coffee to Ibero (Uganda) Limited than he would get when he sold the coffee at the hulling station.
Sseruyange Joseph decided to start selling his coffee to Ibero (Uganda) Ltd in November 2018 through Ndagwe-VCO. He owns 5 acres of coffee trees and was advanced 200 kgs of fertiliser (NPK) in the March 2019 season. During the same period, Joseph was also advanced a tarpaulin which ensured that he stopped drying his coffee on bare ground. He was also advanced a mobile money pre-payment for his coffee of UGX 500,000, which he used to top-up on his savings and used it to acquire a piece of land that he plans to use to expand his coffee farm. With fertiliser from NKG BLOOM, Joseph admits that the health of coffee trees has shown great improvement. For example, blossoming flowers have been intense that before and the coffee trees are ever green despite the dry season.
First NKG BLOOM DAY during 6th cycle of fertilizer disbursement
On the occasion of Mr. David Neumann’s (NKG’s Group CEO) visit to Uganda, which has coincided with the sixth cycle of fertiliser disbursement, Ibero organized a “NKG BLOOM DAY". This event took place on 19th of August 2019, in the Nabumbugu farmers’ cooperative, where Ibero had launched the NKG BLOOM operation in March 2017. In doing so, Ibero brought together all partners with a keen interest in promoting value chain development in Uganda to witness the implementation of NKG BLOOM Uganda operations as well as give them an opportunity to interact with coffee farmers that have benefitted from the services of the Ibero Farmer Service Unit. Working together with the right partners made financing coffee smallholders possible (follow the link to see > our partners).
Not even 3 years after the beginning of the NKG BLOOM Uganda, the services offered to smallholders evolved. We don’t only distribute high-quality fertilizer on advance, we are developing a whole environment to support coffee farmers and their farmer groups: from mobile money advances for farmers to further invest in their farms or to pay for school fees to incentivizing farmers’ groups to bulk more and better quality green coffee. We are even about to pilot long-term finance to allow farmers to invest in their coffee garden in a sustainable manner. From a Farmer Financing Unit, we are evolving into a Farmer Service Unit. We are not a project. We are here for over 20 years, and we will keep growing, and blooming together with the farmers.
But it’s not just that: against all odds, we have over 99% repayment! To us, this is the best evidence that what we do makes sense to the farmer: the farmers we work with are entrepreneurs: they understand the advantages and benefits of what we offer, and because of it, they want to continue, and every season, we have more farmers applying to the scheme. And every season, we receive more coffee.
Within this 6th distribution of fertilizer, we distributed over 600 tons of fertilizer to almost 5000 farmers in 70 different farmers groups located in 10 districts.
Fertilizer distributed to more than 2.500 farmers in 2018
During the latest disbursement day, we doubled the number of farmers that have being distributed fertilizer between March and August 2018.
In 2018 overall, we distributed 540 tons of fertilizer to over 2500 coffee smallholders. Compared to the overall fertilizer Ugandan consumption (estimated at around 55,000 tons per year in 2016) NKG BLOOM Uganda is contributing 1% of the Ugandan fertilizer consumption!
It is also estimated that the majority of the fertilizer used in Uganda is going to the big sugar cane and tea plantations. World Bank statistics estimate the average usage of fertilizer in Uganda is 2.1kg per ha (just for comparison, it is 202kg per ha in Germany). This fertilizer enables smallholder to double their coffee income in less than 2 years. And with adding the mobile money component, we enable farmers to get rid of middle men and get a fair price for their coffee.
We keep on working hard to support even more farmers in the upcoming year!
Farmer harvests 6-7 kg cherries per coffee tree instead of 2 kg
In 2014, 39 year-old Mukabera Rose decided to take charge of her life again and left her abusive husband. She started making a living through her 2 acres of planted coffee, pigs and
chickens. In August 2017, she took
USD in mobile money advance, which she used to pay for school fees and buy cow dung to fertilize her orange trees. For the first time in her life she did not have to go to the local coyote to access
cash for this critical need.
Through NKG BLOOM Uganda, she applied chemical fertilizer in March and August 2017 to her coffee trees for the first time in her life and could harvest 6-7 kg cherries per coffee tree instead of 2 kg without applying fertilizer. That's an immense improvement. Keep it up, Mukabera!
Farmer estimates that his production has increased
Genza Simon is 27 years old and supports a family of 7 persons. He owns 500 coffee trees on an area of 1.5 acres and had never used fertilizer before he started participating in NKG BLOOM Uganda
nine months ago.
After his successful application he received a fertilizer advance of 100 g per tree in March and 100 g per tree in August. Now it is main coffee harvest season and he estimates his coffee production per tree has tripled from 2 kg to 6 kg. That is a 200% increase in less than a year - we are impressed!
Meet one of the customers of our Farmer Financing Unit (FFU)
Rajab Kiwanuka has participated in NKG BLOOM Uganda for the last two seasons and has already sold 17.087kgs of kiboko (dried coffee cherries) to the DC. By now, he has borrowed 500kgs of CAN and 500kgs of NPK fertilizer for his farm measuring 10 acres as well as approx. $600 in cash. We are looking forward to see more farms bloom and farmers smile like Rajab!
NKG BLOOM Uganda officially launched in Hamburg
On Thursday, September 14th, all partners of NKG BLOOM Uganda met in the headquarters of Neumann Kaffee Gruppe in Hamburg for the official kick-off of NKG BLOOM Uganda. The event was opened by David M. Neumann (Managing Partner of Neumann Gruppe GmbH) followed by several partners and stake-holders in the presence of the Ambassador of the Republic of Uganda, J.M. Muhindo. Speakers representing their companies or organisations presented their individual shares in NKG BLOOM Uganda, what challenges they faced so far and why they continued to be very enthusiastic about the programs’ success. Catalina Eikenberg, Head of Sustainability at Bernhard Rothfos, confirmed this enthusiasm by bringing the first positive results and lessons learned.
The presentations were followed by a Q&A session and a demonstration cupping, after which all guests had the opportunity to get to know each other over a light dinner and drinks.
Second fertilizer disbursement succeeded
From 15th to 17th August, representatives of Yara and Ibero Uganda has been disbursed the next Yara fertilizers, reaching 493 farmers at seven DC's. Around 200 farmers in a pilot DC also
have access to cash advances which they can request through their mobile phones, using a USSD code and mobile money.
One of our participating farmers
This is Haawa Namusoke. She has 2.5 acres of planted coffee and supports a family of 5. She is the head of household. She took an advance of 300 kg of Yara fertilizer and approximately $100 in cash from us in March.
The first coffee will be
After the first fertilizer application in March, the coffee is growing very well and is ready to harvest soon.
Mobile Money Cash Advance
is ready to use
Together with the Ibero Farmer Financing Unit team the first farmers are testing our mobile money cash advance request by dialing a USSD code.
General Assembly in Nabumbugu
A couple days ago, we held a general assembly in Nabumbugu to introduce our products to the farmers. It is the first DC where we have disbursed fertilizer and cash to so far.