Commodities trader Olam launches sustainable coffee programme

FILE PHOTO: Venezuelan coffee beans are seen in a roaster in Caracas February 26, 2015.. REUTERS/Jorge Silva

LONDON (Reuters) - Global commodities trader Olam pledged to improve conditions for the farmers it buys coffee from and ensure its direct supply chain is not responsible for deforestation as it announced its first public sustainability targets in coffee on Thursday.

Commodity traders have for years used coffee certified by third parties to meet consumer demand for ethical and sustainable sourcing, but the system has to date had limited success.

As a result, western governments are now poised to legislate against the import of commodities linked to climate change and human rights abuses, putting companies under increased pressure to find solutions.

“Many of the complex challenges in coffee remain and are now compounded by COVID-19,” Vivek Verma, managing director and CEO of Olam Coffee said in a statement marking the launch of the company’s sustainable sourcing strategy ‘Coffee Lens’.

Olam OLAM.SI said the programme will aim to ensure that by 2025, half the farmers it buys coffee from directly -- about 200,000 households -- will see improved productivity and incomes.

It will also aim for all children of farmers in its entire direct-sourced coffee supply chain to have access to education by 2025, and for the chain to be free from deforestation, with greenhouse gas emissions reduced by 15%.

Over the past three years, global coffee prices KCc2 have traded about 30% lower than the average of the prior ten years, throwing millions of farmers into poverty and making them less able to withstand the new challenges posed by the COVID-19 pandemic.

To date, Olam and its partners have committed some $25 million to coffee sustainability projects, but the company said it will need to increase its investment significantly to deliver on its new strategy.

Reporting by Maytaal Angel; Editing by Kirsten Donovan