Global food and beverage company Nestlé announced today the launch of a pilot program to provide weather insurance to smallholder farmers in its Nescafé brand’s supply chain. The company said that the new program comes as climate change pressures coffee-growing areas, with smallholder farmers exposed to the risk of irregular weather conditions affecting their crops.
The new program aims to provide farmers with financial protection to cope with unpredictable weather patterns, using satellite-based climate data to determine if coffee output has been impacted by too much, or not enough, rainfall during key crop cycle phases, and issuing payments automatically to affected farmers, according to the severity of the weather.
Launched in collaboration with climate insurance specialist Blue Marble, the program is being piloted with more than 800 smallholder coffee farmers in Indonesia. Based on the results of the program, Nestlé said that it will determine whether to expand the initiatives to other Nescafé sourcing locations.
Jaime de Piniés, CEO of Blue Marble, said:
“Smallholder coffee farmers in Indonesia are vulnerable to climate risks and need access to insurance to protect against extreme weather events. We are proud to partner with Nestlé and its brand Nescafé to develop innovative ways to support the climate adaptation of smallholder coffee farmers and their families.”
According to Nestlé, the new program forms an integral part of its Nescafé Plan 2030. Launched last year, the plan outlines the coffee brand’s strategy to improve the sustainability of coffee farming, and help farmers transition to regenerative agriculture practices. Initiatives under the plan include providing farmers with training, technical assistance and high-yielding coffee plantlets, and working with farmers to test, learn and assess the effectiveness of multiple regenerative agriculture practices. The plan’s initiatives are focused in countries including Brazil, Vietnam, Mexico, Colombia, Côte d’Ivoire, Indonesia and Honduras, which represent 90% of the brand’s coffee sourcing. At launch, Nestlé said that the brand will invest over 1 billion Swiss Francs (USD$1 billion) by 2030 in the Nescafé Plan.
Marcelo Burity, Global Head of Nestlé’s Green Coffee Development, said:
“This weather insurance helps to establish a support mechanism for smallholder coffee farmers in Indonesia. It allows them to access financial resources to re-establish their crops in the event of irregular weather conditions while building resilience in coffee farms.”