TRADER PROFILE ■ 43
C&CI
With a soluble coffee market of around
Mr Verma said Olam participates in a number of
Despite the decline in production, coffee
530,000 tonnes or more annually, and val-
certification schemes, including the 4C
still remains the main source of cash March 2010
ued at US$3.65 billion, Olam’s target mar- income for a large number of producers,
ket is the independent segment, which is but high levels of disease and ineffective
largely bulk, non-branded and private label husbandry limit production - current yields
soluble coffee and accounts for around 30 average 58kg of green beans per hectare,
per cent of the total soluble coffee market. just 10 per cent of average yields in Brazil.
This independent bulk segment is estimat-
ed at 160,000 tonnes, and is valued at
Educating farmers
around US$1.38 billion.
Using Farmer Field Schools (FFS) to edu-
Synergies with other
cate producers about the latest methods,
one of the project goals is to at least dou-
business segments
ble production, and thereby income. "As
The overall soluble coffee market has been farmer incomes rise, we hope the trend of
growing at 4 per cent a year over the last declining production can be countered and
five years with strongest growth coming ultimately reversed. Project staff are
from emerging economies in these already reporting increased productivity,
regions. In particular, the freeze-dried mar- with farmers bringing neglected coffee
ket segment has been growing faster at 7 fields back into production," Mr Verma
per cent per year with Central and Eastern explained. To keep track of the project’s
Europe, South America and Southeast Asia performance, a sophisticated monitoring
contributing to the high growth rates. The system has been implemented to allow
new facility in Vietnamese is being imple-
"This move into the soluble mar-
farmers to learn from others in the region,
mented in two phases, with Phase 1 ket in Vietnam is an example of as well as record the magnitude of change
expected to have a production capacity of
that strategy in the coffee busi-
in the coffee area over the next 4-5 years.
3,700 tonnes per annum, and Phase 2
ness," he explained, "and it fol-
As with most companies, some parts of
approximately doubling capacity. Olam’s global business were affected by the
lows a pattern that we have
credit crunch and the worldwide recession
Supporting
established in other parts of the
last year, but demand for most products has
business. We felt that Vietnam recovered since then. However, Mr Verma
the 4C initiative
was the right location, they are a
said the coffee side of the business was not
Olam also has a commitment to sustain-
large producer and it is the right
affected at any stage. "Coffee has been fair-
ability across the range of products it man- ly immune to the downturn," he said. "We
ages, and in coffee has been participating
part of the world, with a growing
never really saw a reduction in demand."
in various certification schemes such as
market for soluble coffee"
While the recession did not have an
UTZ Certified, Rain Forest Alliance, Café impact on the coffee business, the produc-
Practices and 4C. tion problems in Colombia did have an
Olam has been an active supporter of farmers to stick to best practice and get effect on Olam’s growth plans in the coun-
the Common Code for the Coffee maximum value for their goods." try, but as Mr Verma noted, problems in
Community (4C) initiative, the global asso- In Africa, Olam is also working with the Colombia - the world’s third largest produc-
ciation aiming at social, environmental and DE Coffee Foundation in Cameroon. er - have affected the industry as a whole.
economic sustainability in the mainstream Globally, Cameroon is a marginal producer "We were on a high growth trajectory in
coffee sector. of coffee, but its Arabica beans are of the Colombia, but with the steep fall in produc-
"Working with some of our major cus- finest quality. Dwindling technical support tion there we will just have to defer our
tomers, we currently have processing facili- and access to credit, in combination with ambitious growth plans and wait for produc-
ties in Indonesia, Brazil and Vietnam certi- low coffee prices in recent years, resulted tion to pick-up again," Mr Verma told C&CI.
fied under this scheme. As a part of the 4C in a tremendous decline of coffee produc- As highlighted elsewhere in this issue of
programme, we offer farmers pre and post- tion in the country. C&CI, some analysts are predicting a hike
harvest training on best practices, and In 2008, amid fears that Cameroonian for the ‘C’ contract in New York because of
ensure workers in the processing factory coffee would stop being commercially tightness in the physical market and falling
are trained in the latest health and safety attractive, Olam and the DE Foundation (a stock levels, but Mr Verma thinks any price
methods," Mr Verma explained. foundation established by Douwe Egbert, spike in the short term is unlikely to be
"In Indonesia," for instance, "where we part of Sara Lee) initiated a five-year proj- sustained.
are certified under Rainforest Alliance and ect to improve the socio-economic condi- "We are fairly bullish about the forthcom-
Café Practices we have also helped own- tions of small-scale Arabica coffee farmers. ing Brazilian crop," he concluded. "There
ers of smaller farms by changing our sys- Currently the project works with 800 farm- has been talk about it being affected by
tem to accept coffee in volumes less than ers, with the aim to increase the number to some problems, but from what we have
the standard 8-ton truckload, while still 5,000, or about 20 per cent of all Arabica seen we think it will still turn out to be the
paying full market prices. This encourages producers in Cameroon. largest ever crop from Brazil." ■ C&CI
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