How to build a resilient and sustainable coffee value chain in Africa

Coffee is a major export for African countries, bringing in much-needed money from abroad and generating jobs in rural areas. In countries like Burundi (38.2%), Tanzania (23.7%), Uganda (22.1%), or Ethiopia (14.2%), a large portion of the population is dependent on the sector. However, smallholders face persistent economic, social and environmental pressures that undermine the sector's sustainability.

Given these challenges, the global coffee value chain garnered significant attention in 2024. In April, the G7 Climate, Energy, and Environment Ministers’ Meeting recognised coffee as a strategic commodity capable of driving sustainable economic growth and development, which was then also reiterated at the Apulia G7 Leaders’ Summit and the G7 Development Ministers’ Meeting in Pescara.

Consequently, the G7 committed to a new public-private initiative aimed at enhancing the resilience and sustainability of coffee value chains worldwide through sustained investments, research, innovation and partnerships. The proposed initiative aims to establish a ‘Global Coffee Sustainability and Resilience Fund’ to prioritise support for smallholder farmers, women and youth, particularly in Africa and other vulnerable regions, by providing investments for sustainable practices and livelihood improvements.

Building on the outcomes from the FAO event “Enabling investments in the coffee value chain through the Hand-in-Hand Initiative and G7 support”,, I suggest four imperatives for the sustainability of the coffee value chain.

1. Addressing climate and environmental challenges

Climate change poses a severe threat to coffee production, with rising temperatures and erratic rainfall affecting yields and quality. In Africa, coffee production has increased, yet yields have declined significantly, implying more land is being used to achieve comparable outputs. This expansion often comes at the expense of forests, leading to deforestation, biodiversity loss and as a consequence increased carbon emissions. Furthermore, unsustainable farming practices such as poorly managed pesticide use, soil depletion and poor water management exacerbate environmental degradation.

Figure 1: Coffee production, yield, and area harvested  in Africa

To address these challenges, farmers must be equipped with knowledge and resources to adopt climate-resilient agricultural practices. Agroforestry — integrating trees with coffee farming — is a promising approach to enhance productivity while preserving ecosystems.

2. Navigating EU regulations

Complying with new EU rules, such as the European Union’s Deforestation Regulation (EUDR), is challenging for smallholders. The EUDR mandates that imported coffee to the EU be deforestation-free, a requirement that could exclude many smallholders from global markets due to high compliance costs and logistical barriers.

For example, verifying the origin of coffee plots and geolocating them remains a challenging task, especially in remote areas with limited internet access. At the same time, the small-scale nature of producers could undermine the verification process as production lots from diverse sources are mixed by producers or intermediaries in collection or processing sites. These challenges of working with smallholders may incentivise major coffee processing companies to engage with more established farms to reduce risk, leaving smallholders out. 

There is evidence that coffee importers to the EU are already reducing their purchases from African smallholders.

However, the EUDR’s implementation has been delayed by 12 months, offering a critical window to provide smallholders with technical assistance and capacity-building support. The EU’s Team Europe Initiatives – flagship projects that combine resources and expertise from the EU,  its member states and European financial institutions – could help coffee producers meet these requirements and ensure their continued participation in global supply chains.

3. Addressing income inequities

Smallholder farmers receive a disproportionately small share of the proceeds within the coffee value chain, often earning less than 10% of the final retail price despite bearing significant production risks. By contrast, multinational corporations dominate coffee processing (particularly roasting), capturing substantial profits in the value chain. This income asymmetry perpetuates poverty, limits farmers’ investment capacity and exacerbates social inequalities.

Fair pricing models, such as Fair Trade initiatives, could help ensure that farmers receive equitable compensation. However, these initiatives face challenges, including logistical barriers, certification complexities, market price volatility, and some consumers’ unwillingness to pay a premium. However, evidence has shown that Fair Trade prices often exceed the historically volatile market prices of coffee. A study in Costa Rica's coffee sector showed that farm owners took home more money, but the same could not be said for earnings for unskilled workers, the lowest and largest group in the coffee sector. The Beyond Chocolate Partnerships, which works to ensure the sustainability of the cocoa supply chain and decent income for cocoa growers, could provide inspiration for the coffee value chain.

Strengthening farmer cooperatives can also empower smallholders by improving their negotiating power, facilitating market access and reducing information asymmetry. This may also allow farmers to pool their resources and invest in processing facilities to extract more value from the chain. In addition, women, who contribute significantly to labour-intensive stages of coffee production but often lack access to resources and equitable income, require targeted support to enhance their participation and benefits across the value chain.

4. Mobilising investments through partnerships

There is a substantial financing deficit in the coffee sector, which must be addressed to achieve sustainability goals. 

Coffee producers play a vital role in the value chain, yet they cannot bridge this finance gap on their own. They must collaborate with financial institutions, the private sector — including coffee supply chain businesses — governments, and multilateral organisations. Initiatives like FAO’s Hand-in-Hand Initiative and the G7 public-private partnership on coffee are promising examples of multistakeholder collaboration addressing investment gaps and fostering an enabling environment for the sustainability of the coffee value chain.

Blended finance mechanisms, which involve cooperation between public and private actors and the use of public funds to attract private investment, offer a promising avenue to attract investments. Here, public development banks have a pivotal role in developing bankable projects and facilitating public-private partnerships for sustainable coffee value chains. 

Looking forward

Building a resilient and sustainable African coffee sector requires immediate actions and long-term reforms. Aligning incentives across the value chain is key to ensuring smallholder farmers benefit equitably from market opportunities. Regulations like the EUDR need to balance sustainability and economic impact on smallholders.

While the private sector is critical in bringing expertise, technology, and global market access, managing systemic issues, such as price volatility and climate risks, requires sustained collaboration between the private sector and public institutions. Sustained dialogue and cooperation among stakeholders to advance sustainable coffee value chains, including through information sharing and coordination among the different ongoing financing instruments, will be important.

The future of coffee producers can be improved by prioritising support for smallholder farmers and fair compensation, collaboration, and investment in resilience, innovation, and capacity building. This would bring about the necessary sustainable transformation of coffee value chains and ensure long-term viability and economic prosperity for millions dependent on coffee cultivation.

The views are those of the authors and not necessarily those of ECDPM.