The 15th edition of our monthly SDG Meetup with SDG House explored global supply chains, a topic that cuts across multiple Sustainable Development Goals (SDGs), including SDG 8: Decent Work & Economic Growth, SDG 10: Reduced Inequality, and SDG 12: Responsible Consumption & Production.
With COVID-19 disrupting international production and trade, enterprises with international supply chains are facing major challenges. These challenges are amplified when sustainable and responsible business practices are top priorities in the affected organizations.
In this online event, we invited Helena Posthumus (KIT Royal Tropical Institute), Jan-Marcel Schubert (Original Beans), and Guido Staveren van Dijk (Moyee Coffee) to analyze and share their experiences with current and expected supply chain developments and mitigation strategies. What challenges are these organizations facing and how can they overcome such obstacles?
COVID-19’s impact on food systems in Low- and Middle-Income Countries (LMICs)
To set the scene, Helena Posthumus, Senior Advisor at KIT’s Sustainable Economic Development & Gender unit, focused on how the COVID-19 crisis is impacting food systems in LMICs. Such countries are essential farming hubs for the cocoa and coffee beans sourced by Original Beans and Moyee, respectively. In spite of hotspots in countries like Brazil, Peru, Nigeria, and South Africa, to name a few, LMICs are largely at the beginning of the curve. Yet COVID-19 measures are already starting to have adverse effects.
Short-term effects on national and global food systems chains include food security impacts, such as fewer meals for children due to school closures, loss of income for the poorest workers in informal economies, and less nutritious diversity in diets. The negative effects on food supply chains range from a sudden drop in demand for fresh, high-quality commodities in the hospitality sector to price volatility of raw materials for food processing and devaluation of local currencies.
Among the most affected food supply chains are those of perishable products that need a cold chain currently affected by transport and logistics disruptions, and labor-intensive harvesting and processing of veg and meat, which faces a shortage of (seasonal) workers. High-value niche markets (think herbs or flowers) or those driven by just-in-time logistics, such as online supermarkets, are also highly vulnerable to COVID-19 measures. On the flipside, processed foods or products with a long shelf-life, multinational food companies, and staple foods produced in bulk in specific regions, like wheat or rice, are the least vulnerable.
When examining the long-term effects of COVID-19 on food systems, it becomes clear that transformation is inevitable. And the different possible outcomes will have both winners and losers. According to Helena, the choices of consumers, governments, and businesses will define the type of system change. From a survival-of-the-fittest food system, dominated by multinationals and intensive agriculture, to a system driven by cooperation and built on fairer, shorter, and sustainable food chains – the change spectrum is broad and the result depends on our collective (in)action.
Moyee Coffee: the world’s first Fair Chain coffee brand
Guido Staveren van Dijk, the founder of Moyee Coffee, was in Colombia at the start of the global COVID-19 crisis. By the time he had returned to the Netherlands at the beginning of March, the situation had become dire. Moyee employees in Ethiopia, for example, had to leave the country due to incidents of abusive behavior towards foreigners in relation to the coronavirus. In spite of setbacks, a container of roasted beans from Ethiopia has made its way to the Rotterdam harbor.
In terms of the global coffee supply chain, Guido foresees a dip in June. ‘The new harvest is going to be dramatic’, he explains, referring to a likely drop in price due to decreased demand from international buyers. To help avoid an economic meltdown in coffee-producing communities, Moyee wants to take the excess harvest and make it the brand’s problem rather than that of the farmers they work with. ‘We are not going to renegotiate with farmers. We will take a financial hit, but our shareholders are prepared for it”, Guido adds. In addition to supporting farmers, Moyee hired freelancers.
By June, Moyee will have had sufficient practice in dealing with excess stock. “We are a consumer brand because we’re selling an idea, but 90% of our business is actually B2B. That has dropped to about 5%”, says Guido. To distribute the 8 tonnes of coffee originally destined to offices and horeca – and currently stuck in the Rotterdam harbor – Moyee launched a solidarity campaign. Organizations are encouraged to buy coffee for employees to enjoy at home, but individual consumers can also partake in the discounted packages.
Original Beans: boosting conservation in biodiversity hotspots
Jan-Marcel Schubert, Conservation Cacao Leader for Latin America at Original Beans, shared how COVID-19 affected the company, which purchases high-quality cocoa to make single-origin chocolates and achieve its mission of strengthening biodiversity. Original Beans generates 60% of its revenue from the hospitality industry, particularly hotel (chains) and restaurants, and 40% from retail, with Germany, the UK, and the Netherlands as its main markets. The brand found itself in the same situation as Moyee, as its B2B revenue dropped from 60% to about 5% – a few fancy restaurants that were still buying chocolate for their Easter menus.
But things are brighter than they seem. As Original Beans only purchases cocoa from smallholder farmers, which are usually families working together, COVID-19 physical distancing measures were less impactful. And although special permits are to take cacao to fermenteries, for example, the supply chain is still moving – only at a much slower pace. In other good news, ‘we are selling even more chocolate than ever before in organic retailers’, said Jan, ‘Six years ago they told us Original Beans would only sell in specialty shops’. But in times of crisis, his team has seen a 10% to 20% increase in the revenue of organic chain products.
With increased retail sales, a stable cacao supply chain, and unaffected tree planting and nursery activities, which are essential to the company’s biodiversity goals, Original Beans seems well equipped to successfully navigate the COVID-19 pandemic. Jan is also optimistic about other fellow small sustainable companies: “From innovative campaigns to crowdfunding, they’re used to hustling”.