By DAVID SMITH
Associated Press
Sunday, May 4, 2014
LITTLE ROCK, Ark. (AP) – In January last year, Scott Ford, an owner of
Little Rock based Westrock Coffee Co., and Todd Brogdon, the company’s
chief executive officer, flew to Rwanda to talk with the company’s top
10 coffee growers.
“We asked them what we could do to be a better partner,” Brogdon told
the Arkansas Democrat-Gazette (http://bit.ly/1koZqnS ) at the firm’s
56,000-squarefoot plant off Maumelle Boulevard in North Little Rock.
Westrock Coffee and an affiliate, Rwanda Trading Co., were formed in
2009 with a desire to ease the plight of Rwanda’s coffee farmers. Ford
is the former chief executive officer of Alltel Corp., which was sold
in 2007. Many of the people who work at Westrock are former Alltel
employees.
What those 10 Rwandan farmers were concerned most about was how they
could pay school fees for their children. The fees are due in January,
but the farmers don’t get paid until March when they pick the coffee
cherries, Brogdon said.
Ford and Brogdon said Westrock would start a trial with just the 10 farmers.
“We told them we would make them a loan for school fees in January and
the first cherries they delivered would go against that loan,” Brogdon
said. “Of course, anything delivered above that, we’d pay them for.”
After the first season, the 10 farmers repaid 100 percent of their
interest-free loans. Ultimately Westrock hopes to extend the program
to its 50,000 farmers.
“Our focus is the farmers and how we can help our farmers in East
Africa,” said Elizabeth McLaughlin, chief marketing officer for
Westrock.
Rwanda has approximately 800,000 coffee farmers. For the most part,
they operate small farms, some with as few as two dozen coffee trees.
The East African country is about the size of Maryland. Rwanda has
been relatively peaceful and stable in recent years after suffering a
1994 genocide, when members of the Hutu tribe killed about 1 million
Tutsis and politically moderate Hutus.
With a population of about 12 million, it is the most densely
populated country in Africa. It has a gross domestic product of about
$7.1 billion, about 80 percent of the revenue Alltel generated in a
good year. The per-capita income is $644 a year.
Brogdon, a McCrory native who started and operated a microfinancing
bank in Rwanda from 2006 to 2008 before joining Westrock, declined to
disclose revenue figures for Westrock. Ford said in an interview four
years ago that the initial investment in Westrock was about $5 million
and it lost about $1 million in its first year.
In the five years since it started, Westrock has gone from no exports
to almost 5 million pounds annually of green coffee shipped out of
Rwanda, Brogdon said. It is the third-largest exporter of green coffee
in Rwanda and the largest exporter of higher quality, fully washed
coffee, Brogdon said. The coffee is shipped to businesses in Europe,
Asia and North America, he said.
About 85 percent of the green coffee Westrock exports out of Rwanda is
sold to other coffee companies. Only about 15 percent goes to
Westrock’s plant in Arkansas, Brogdon said.
This year, Westrock will roast about 2 million pounds of coffee, more
than half of which comes from its business in Africa, Brogdon said.
Coffee producing countries – including those in Central America,
Africa and Asia – are primarily impoverished, said Konrad Brits,
managing director and a shareholder in Falcon Coffees in Lewes,
England, south of London.
“Coffee holds this incredible opportunity for poverty alleviation,”
said Brits, whose company does business with Westrock’s Rwanda Trading
Co. “Because coffee is the only commodity – perhaps cocoa as well –
where more than half the world’s coffee is grown by an estimated 30
million small farmers. These are very vulnerable people. So there is
this latent potential.”
A few large multinational companies dominate the coffee supply chain,
Brits said. Because it is the best way to manage their collateral,
these companies seek to buy the coffee as close to the tree as
possible, Brits said. That, however, means the farmers liquidate their
crops at the lowest possible price, he said.
A number of smaller companies, including Falcon Coffees and Westrock,
allow the farmers to participate in the highest value for their crop,
by selling at the point of export, Brits said.
“Rwanda Trading Co. entered with that same objective,” Brits said.
“It’s a (gutsy) thing to do. These guys put their money where their
mouth is, invested in brick and mortar and sought to upset the apple
cart by trying to conduct themselves in a different way.”
Westrock’s subsidiaries – Rwanda Trading Co. and Tembo Coffee Co. in
Tanzania – pay 25 percent to 30 percent above the market rate to their
90 full-time employees, as well as about 200 to 300 people who work
seasonally, Brogdon said. The companies also pay higher prices for the
coffee they buy than their competitors do.
In addition to improving the financial condition of the farmers in
Rwanda and Tanzania, Westrock has provided clean water in the villages
where it works. It has built four water stations to clean the coffee
cherries but also to provide water for everyone in the village.
Before the water stations were built, villagers often would use yellow
dairy cans to collect water, sometimes from a mud hole, said
McLaughlin, Westrock’s marketing chief.
“It is a way we give back to the communities, beyond just the farmers,
but obviously that is our connecting point,” Brogdon said.
Westrock also provides a hot meal each day, private showers and
clothes for its workers, McLaughlin said. The company also teaches its
farmers how to improve the quality of their coffee and improve their
crop yield, McLaughlin said.
“We want to help the poorest of the poor,” McLaughlin said. “We want
to sell coffee for (the high-quality and low quality grower).”
Of course, no one has found the solution to overcoming poverty, Brits said.
“Africa is littered with good intentions by failed aid and donor
money,” Brits said. “I’m a very strong believer in trade and not aid.
And Westrock has recognized the humanitarian need, the latent
potential coffee has and done it as a commercial, for-profit business.
Something can only be sustainable when it can pay for itself.”
It was difficult to talk with Westrock’s 10 top farmers last year, Brogdon said.
“It’s hard to sit across from these guys who live hand-to mouth and
don’t have much money,” Brogdon said. “And here we are in our world.
It’s hard to feel like you’re paying them a fair price for their
coffee. Just on an emotional level – not business – it’s hard to do.
“But it’s the best thing to do. Because obviously we can’t solve the
world’s problems, but we can help them, one at a time. And that’s what
we’re trying to do.”
Source: http://www.arkansasonline.com
