Brazil can ensure a sustainable supply of raw materials for years to come, company says
03/25/2024
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Andrea Illy — Foto: Gabriel Reis/Valor
Brazil will be able to guarantee illycaffè’s supply of coffee from regenerative practices in the next decade, said Andrea Illy, CEO of the Italian multinational. For him, sustainable cultivation is the key to increasing productivity, even in the face of climatic adversity. For this reason, the businessman is studying the creation of a fund of $1 billion a year “for coffee resilience.”
Illy wants to make it possible to renew coffee plantations in producing countries where farmers are unable to finance the transition to more sustainable production methods. With the “coffee resilience” fund, the company would also have more raw materials available for processing. But the main goal, according to Illy, is to “mitigate” the effects of climate problems.
Regenerative agriculture involves practices that restore soil, reduce carbon emissions, and manage water and biodiversity. With raw materials produced using these methods, illycaffè aims to double its share of markets outside Italy and the United States, which currently represent 0.3% of volume and 0.6% of sales.
Without a structured business model or defined partners for the fundraising phase yet, Mr. Illy is inspired by actions such as those of the Swiss bank Lombard Odier, which has contributed $150 million to transform farms into regenerative systems, and the Bill and Melinda Gates Foundation, which has invested nearly $6 billion over the last 17 years in initiatives to improve agriculture, particularly in Africa. Mr. Illy also mentioned the Mattei Plan, an initiative of the Italian government to support the development of African countries.
Should the fund materialize, its initial resources will be dedicated to renovating coffee plantations globally, facilitating their transition to regenerative practices. The businessman said that coffee plantations in India and Vietnam, aged between 80 and 100 years, are experiencing declining productivity. In contrast, in Brazil, where the average plantation age is 12 years, the situation is different.
Hence, Brazil might not be given precedence in the selection of countries to receive funding from the initiative, although Mr. Illy has not dismissed the possibility entirely. The primary focus would be on supporting micro-producers in vulnerable regions facing challenges in accessing financial resources.
“We’re currently exploring the feasibility of investing in equity, or a combination of equity and loans, to empower micro-producers to enhance and rejuvenate their plantations. The main challenge lies in determining the appropriate business model to elevate the project to the next stage,” said Mr. Illy.
Although talks have already begun to get the idea off the ground, the CEO admitted that it could take a while. Nevertheless, he expressed optimism and projected that the adoption of regenerative methods is expected to grow worldwide.
Today, Brazil is one of the leaders in this practice, which increases the company’s interest in local coffee. Today, Mr. Illy’s main suppliers of Brazilian beans are the Cerrado Mineiro, Matas de Minas, Sul de Minas, and Chapada de Minas regions.
Last year, the company launched the world’s first 100% coffee sourced from regenerative management. All the beans composing the blend come from the Cerrado Mineiro, a region that produces over 6 million bags per harvest.
As part of its commitment to fostering sustainability in the coffee industry, illycaffè is currently conducting tests on several experimental plantations to quantify the reduction in greenhouse gas emissions. The goal is to pinpoint effective practices that can be promoted as regenerative methods in coffee farming. Initial findings are slated for publication next year.
*Por Isadora Camargo — São Paulo
Source: Valor International