Nestlé, the world’s largest food and beverage company has announced that it is piloting a weather insurance program for over 800 smallholder coffee farmers in Indonesia who supply coffee to its Nescafé brand, to help them cope with the impacts of climate change. The insurance scheme will provide financial protection for coffee producers in the country to cope with the adverse effects of unpredictable weather patterns of rainfall and severe drought.
According to Nestlé, coffee-growing regions are facing immense pressure due to the impact of climate change, and smallholder farmers, who rely on coffee crops as their primary source of livelihood, are at risk of losing significant income due to the adverse effects of climate change on their crops. This corroborates with the 2023 coffee barometer report which has deemed ‘sustainable coffee’ as an illusion due to the current impact of climate change, creating a threat to future coffee production to meet future demand and consumption.
To address this challenge, Nestlé is partnering with Blue Marble, a climate adaptation and insurance specialist to develop innovative ways to support the climate adaptation of smallholder coffee farmers and their families.
According to the Chief Executive Officer of Blue Marble, Jaime de Piniés “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.”
The insurance program will use satellite-based climate data to determine the impact of rainfall on coffee output during key phases of the crop cycle and payments will be automatically issued to registered coffee farmers who have been affected by the weather, based on the severity of the impact. Nestlé will then evaluate the results of the program to decide whether to extend the initiative to other Nescafé sourcing locations worldwide.
“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” the Global Head of Nestlé’s Green Coffee Development, Marcelo Burity, said.
Additionally, this initiative is an essential component of Nestlé’s Nescafé Plan 2030, which outlines the coffee brand’s approach to enhancing regenerative agriculture practices, reduce greenhouse gas emissions and improve farmers’ livelihoods.
Nestlé Nescafé Plan 2030 will also provide farmers with technical assistance and training on good agricultural practices, climate adaptation and mitigation measures (including high-yielding coffee plantlets) and financial literacy. The aim is to help farmers especially in the seven key origins where the brand sources 90% of its coffee—Indonesia, Vietnam, Colombia, Mexico, Brazil, Côte d’Ivoire, and Honduras—improve their productivity, quality and resilience, while reducing their environmental footprint. To this end, the brand is investing over one billion Swiss francs by 2030 in the Nescafé Plan 2030.