ECOM on making profit with purpose


ECOM Group, one of the world’s largest family-owned coffee merchants, talks about its commitment to innovative solutions and making a profitable supply chain. 

When it comes to sustainability solutions, Teddy Esteve, Managing Director at ECOM Agroindustrial Corporation Limited and CEO of Coffee, says the company pioneered innovations in the services offered to farmers in the days when traders were only supposed to trade. 

“At ECOM, sustainability is something we live and breathe every day. We integrated sustainability into our company strategy before the word was fashionable,” Esteve says. “The reason we started back in the 90s was because our close relationships with farmers allowed us to see how difficult it was for a producer to make money in the post-ICO [International Coffee Organization] quota-free market. We had suppliers who weren’t making money when prices were sky high at US$3.00 per pound. We wanted the farmers to be successful.” 

Teddy Esteve, Managing Director at ECOM Agroindustrial Corporation Limited and CEO of Coffee.

To reach the level of productivity that allows farmers to be profitable and sustainable, ECOM created its Sustainable Management Services (SMS) division. By implementing tailored programs and providing tools and solutions to producers, SMS can support smallholder farmers in sustainable practices while being productive. It also provides clients with increased traceability in their supply chain. SMS’s first goal was to certify farms. Back then, Esteve says certifications such as Rainforest Alliance had no market. It was a leap of faith he is happy to have taken. 

“The farmers realised that if we helped them certify their coffee, they could make $10 more per bag. So they did. Then we said, ‘how about we improve your quality. That will help you make another $10 per bag.’ Quality is important but the big multiplier is productivity. When we said, ‘let’s work on your productivity. It will allow you to triple your output so that 200 bags become 600 bags,’ then the farmers were enthusiastic about the potential,” Esteve says. “These are the three first steps towards sustainability – I tried it myself on my farms and I can tell you it’s easier said than done.”

The fourth step to ECOM’s sustainability strategy is financing. Once a farmer is eligible for ECOM’s micro credits, they can invest in their farms and have access to an expert sales team and technical assistance. These pillars fit in ECOM’s statement of purpose: “creating connected rural prosperity”. It aims to enhance farmer livelihoods and connect them to the best markets for their products.

Even then, Esteve says some farmers still have a tough time running a profitable operation. How then do the less fortunate farmers do it? “It’s when you confront this situation that you realise why we definitely need to be focusing on making sure our suppliers are more productive or diversified,” he says.

ECOM has a large portfolio of projects covering more than 600,000 farmers, including more 300 sustainability projects, with a network of 1500 field agronomists and staff. But more technical assistance is still required to help farmers reach the levels of productivity needed to remain profitable. 

Some origins need more support than others, while others, such as Brazil and Vietnam, influence sustainability standards and lead coffee pricing. Esteve says producers in Asia, East Africa and Latin America still need support to compete at the same price level. 

“For many people, coffee is not their main job. Some have inherited a plantation with no interest in running it, and others do not believe their land is valuable yet but might be in 10 years’ time. So, they still need someone to manage the farm,” Esteve says. 

“To date, we have many farms in East Africa and Latin America under farm management where SMS has participated directly in the rehabilitation and renovation [of these farms and plants].” 

Farm management is one means by which ECOM is helping promote farmer resilience. The other, is investment in the development of new hybrid varietals. For the past 17 years, ECOM has shared a strong partnership with the French Agricultural Research Centre for International Development (CIRAD) to develop and breed new hybrids. 

Thanks to the work of CIRAD Research Director Benoit Bertrand and the early backing of Promecafé, samples are taken from the leaves of “favourite” varietals and multiplied to create “the perfect tree”. Its most famous creation is that of rust-resistant varietal Marsellesa, which Esteve describes as the “Volvo” of the hybrid world. The “Ferrari” is the H1. This varietal has very good productivity – two times higher than Caturra or Catuai, but like the luxury sports car, demands special maintenance. And then there is a “special” undisclosed “Tesla” varietal that produces hybrid seeds – the famous Starmaya.

To date, five plant varieties developed at the research laboratories have been registered in World Coffee Research’s plant catalogue. More than 20 million plants were distributed to 11 countries in 2019. 

“We needed to start planting these coffee varieties to have a chance of competing with countries like Brazil and Vietnam,” Esteve says. 

Jose Esteve Thomas founded ECOM in 1849 as a cotton trading operator, with coffee added to the business in 1959. Today, the business has a reputation as a global leader and trader in coffee, cocoa, and cotton across 40 origin countries. 

What is unique about ECOM, Esteve says, is that many members of the management team are coffee farmers themselves. Esteve is one such producer. 

“COVID-19 has provoked some changes of mind. I have the gut feeling that demand for organic coffee will grow. We believe in organic and regenerative agriculture to reduce the use of fertilisers. As such, we have started a carbon department to help our customers understand the path to reducing carbon emissions, and reach carbon neutrality,” he says.

Another project ECOM is implementing within its supply chains is the Social Progress Index (SPI). Producers within SMS’s network will take part in the study and be monitored through the SPI lens in core areas of household wellbeing such as access to water and sanitation, education, and other basic needs. ECOM’s aim is to leverage the SPI methodology to identify key areas for improvement within local communities and create a collaborative environment with local stakeholders. The SPI methodology will also be used to monitor progress and impact.

“Like all efforts and investments in sustainability, from social practices to economic and environmental programs, progress must be tracked. Otherwise, like we say in Spanish, ‘a task given without follow through is like having homework without a teacher to correct it’,” Esteve says.

There is still work to be done, but the positive impact of ECOM’s investments is clear. 

“We’ve been collaborating with a family of farmers in Mexico and when he started with ECOM, he had just 20 hectares of land. The family now owns close to 400 hectares,” Esteve says. “Another source of satisfaction is to see farmers achieving productivity of 50 bags per hectare on average a year, up at least 100 per cent in the last three years, and of incredible quality.”

Esteve says this success is thanks to ECOM’s devotion to innovation, building relationships, and its ability to identify farmer needs before they hit news headlines. 

“Collaborating with farmers in implementing solutions for a more prosperous livelihood is what gives our business a human face and what makes going to the office every day (even if it’s a home office) more inspiring,” Esteve says.

“Innovation is ingrained in our DNA, but if we want flawless supply chains, we need to look after our farmers so that when our customers buy coffee from ECOM, they can be confident that it’s very well looked after from all angles.”

For more information, visit www.ecomsms.com

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