Climate change and the “core business model”
The term “business model” is just a fancy way to refer to the way companies make money. In my experience, people usually add the modifier “core” when the company is focused on making money more efficiently and shedding all kinds of expenses that don’t contribute mightily to that goal. So when Ben Corey-Moran of Thanksgiving Coffee told me last week at SCAA the company would be focusing more on its “core business model” moving forward, I was deflated. After all, this is the company that brought you the Pearl Project, The Coffee Cupper’s Manifesto, Mirembe Kawomera, and so much more. Ben went on to explain, however, that the company’s concept of its core business model includes innovative partnerships with NGOs in East Africa to create incentives for effective climate change mitigation and adaptation. Turns out that the concept of the core business model in the coffee industry may be evolving.
For many years, the the specialty coffee industry seems to have embraced the idea that the roaster’s core business model should be driven by product differentiation, especially on the basis of quality. Investment — through Coffee Quality Institute, quality-obsessed roasters, development agencies and other channels — has flowed to origin in massive amounts to upgrade infrastructure and post-harvest processes and raise coffee quality. The approach has been successful as far as it goes — anyone who has been a specialty coffee consumer during that time has tasted the results of that investment in the form of more truly extraordinary coffees in the marketplace, and many farmers have benefited from quality premiums.
But I see the quality-driven business model from the perspective of the coffeelands, where coffee quality isn’t necessarily the most imminent threat to vulnerable smallholder farming families. From here, issues like food security, climate change and access to clean water, to name just a few, all seem like urgent threats to a family’s survival, to say nothing of their ability to produce lots of high quality coffee for the market. To my way of thinking, this makes these issue part of coffee roaster business models.
As it turns out, this is precisely why Ben and Thanksgiving are focusing so much energy on climate change. They see it as a direct threat to the “long-term viability of production” of fantastic coffee — a pretty central part of how Thanksgiving (or any coffee company, for that matter) makes its money.
The company has focused its efforts in this area initially in the context of its partner relationships in Rwanda, where it feels that farmers are more vulnerable to the impacts of climate change than anyplace else in the company’s supply networks. Thanksgiving is partnered with a grassroots NGO there that is conducting climate change mitigation contests, awarding a cow to the farmer in each village who makes the most progress in the mitigation strategies that the communities themselves developed, which include improving shade cover and diversifying coffee fields with nitrogen-fixing legumes that improve soil quality and introduce additional high-protein food into the family diet.
Thanksgiving was involved in some of the pioneering investments in coffee quality at origin — investments that strengthen the coffee chain and improve the profitability and quality of life of everyone involved. It has applied that same standard to climate change and is pushing forth into the considerably more uncertain fields of mitigation and adaptation not as charity, but as a way to protect core business processes and current profit margins. Here’s hoping for more hard-headed business decisions like this one in the industry in the months and years to come.