2018: Mexico

The Learning Journeys are a crucial part of Sustainable Food Lab’s annual Leadership Summit. The 2018 summit focused on coffee in Chiapas, Mexico and on water use in Bajio, Mexico.

Learning Journey 1: Chiapas, Mexico

Southern Mexico, and the states of Oaxaca and Chiapas, are known for their biodiversity and their diverse systems of coffee production.   This learning journey went to the highlands of Chiapas to explore how farmers, cooperatives, NGOs and buying companies are working to build resilience among small-scale farmers and rural families who depend largely on agriculture for their livelihoods.   We visited farming families who have been hit hard by the coffee leaf rust disease and who are farming on small land sizes and with few other agricultural markets to support diversification.   We learned about strategies such as a partnership between a major coffee exporter and farmers to renovate and rehabilitate their coffee for higher productivity, a small business supporting farmer to develop micro-lot high quality coffees for the growing national market, and a development organization working with farmers to diversify into additional crops for food security and income.

Increasing Incomes Through High Quality Artisan Coffee, Cafeólogo

Cafeólogo is a Chiapas based firm that works with 35 small scale coffee farmers (less than 4 hectares each) with the goal to develop high quality, specialty coffees as the route to farm profitability. Cafeólogo’s team works with farmers to understand and assess quality in order to diagnose their specific needs to increase the quality of their coffee and maximize the potential of their farms.

Owner Jesús Salazar shared their transparent quality-based pricing model that is designed to incentivize and support their suppliers to invest in the practices that will produce the quality coffee they are looking for.  The potential for impact for his coffee suppliers was clear, but the group struggled to see how this high touch model could scale.

Heifer International

Pathways to resilience for rural communities include profitable and sustainable farming, but also must include efforts to strengthen social capital, food security and new income generating activities. Heifer, as a NGO focused on viable farming systems in poor communities worldwide, shared two visits to two different projects in Chiapas to help families who typically depend on coffee for income to diversify their farming operations and thus their income sources.

The project ‘Building Our Future’ focuses on improving food security through increased productivity of honey, livestock and coffee with farmers in two indigenous groups, the Tzeltal in the Tenejapa and the Tzotzil in the Chamula area.

Their poultry work has involved training of 72 families on care and handling of poultry for both egg and meat production. The sheep are a Chiapas breed raised for wool, which is then used for tailoring clothes used by the family. There was a significant problem in the region of malnutrition of sheep and the families in the program have learned grass and feed propagation, and general care and handling of the sheep for better health and wool quality.   Our group had the opportunity to don beekeeping suits and visit the 140 bee hives maintained by the village, and learn about their challenges in adopting this new activity and the help the additional income brings when coffee production suffers.

Café California, UCIPA and Por Más Café

The Neumann Kaffee Gruppe(NKG) is the world’s leading green coffee company, with 49 companies in 27 countries. Café California is NKG’s Mexican business and is responsible for exporting approximately 15% of Mexico’s coffee as well as being a lead supplier to the local industry, which consumes approximately 40% of Mexico’s coffee production.  2.5 million people make their living from coffee and it remains a key source of livelihoods and exchange in Mexico’s agricultural economy.

Café California shared their work to raise productivity and sustainability of their suppliers in Chiapas.  We visited one of their supplier cooperatives, UCIPA, and learned about the Por Más Café program, which is dedicated to technical assistance and financing for increased productivity and farm rehabilitation due to the damage from coffee leaf rust and low yields.

UCIPA (Unión de Comunidades Indígenas de Santa Catarina Pantelhó) is a cooperative founded by 24 smallholder coffee farmers in 2000 and they now have 870 members, whose principal activity is cultivation of coffee and maize.  The group is now certified with both 4C and UTZ.   UCIPA members are in the process of renovating their farms from the impacts of the coffee leaf rust outbreak in the 2012/13 harvest. The Por Mas Café program provides UCIPA members with pre-financing and technical assistance in order to increase their yields, with subsidized help from the Mexican government.

Learning Journey 2: Bajio, Mexico

The Bajio learning journey toured Jalisco and Guanajuato states with visits to dairy, maize and barley producers. The key objective for the visits was to understand the long-term resilience and productivity effects on these different farming systems in the face of climate shocks such as drought and reduced availability of water.

The Danone Margarita Project

The learning journey group first visited the Danone Margarita project. This project explicitly aimed to improve dairy farmer livelihoods by increasing milk production and quality through technical assistance, financing support and stable prices. The primary goal of the project is to triple farmers’ net income within 5 years. Danone is working toward this goal by providing farmers with a stable, long-term price based on cost of production plus a margin, offering technical assistance at a ratio of 1 support person per 30 farmers, and providing access to credit to support investments to improve milk quality and herd health.

To improve productivity and quality, the Margarita project supported farmers to make the following practice changes:

  • improved reproduction through breeding programs,
  • improved animal health,
  • improved animal health from improved alimentation by switching from corn stalks to silage,
  • improved hygiene at milking, and
  • milk storage through the acquisition of on-farm cooling tanks.

In additional to free technical assistance, the project helped farmers finance upgrades to achieve the project goals. The farmer financing model included bank and government partnerships, with an investment ratio of:

  • 10% – producer
  • 50% – SAGARPA (federal government)
  • 40% – FIRA (public investment fund initiated by a major bank)

Danone guarantees the credit through contracts. Cost plus establishes a price floor based on costs of production, determined by Danone every 6 months based on farmers’ enterprise budgets. Danone establishes the price floor at 25% above the costs of production, and the price can fluctuate up and down above that price point.

Farmers in the program have been able to increase milk production from an average of 13 liters of milk per day per cow to 21 liters of milk per day per cow. It used to be that farmers would have to sell off part of their herd when costs of production were too high. Now, with the Danone program, they are able to maintain and increase herd size. Danone has successfully doubled the income of 300 farmers with a goal to reach 3000.

As farmers improve incomes, the sustainability of their farmers also improves. As Danone moves into Phase III of the program they will begin to focus on climate resilience. Dairies are particularly vulnerable to increasing temperatures because heat stress will reduce productivity, strain animal health and affect the supply and cost of feed inputs and water.

Challenges:

  • Long-term sustainability of program when Danone pulls out and transfers costs of maintaining technical assistance to the farmers (although Danone intends to continue cost-plus contracts, which would include TA in costs of production)
  • Costs of importing the majority of feed onto the farm and implications of rising costs of feed resulting from increased frequency of drought and water availability
  • Long term availability of water for animals and crops
  • Incorporating conservation practices like cover crops into cropping systems when they are seen to compete for water availability, herbicide programs prevent intercropping, and costs of planting are expensive for amount of production

Maize and Barley in the Fertile Valley de Santiago

The Learning Journey completed the tour of the region in the fertile Valle de Santiago with visits to a maize farmer growing maize for PepsiCo and two barley farmers.

The PepsiCo maize farmer has been practicing rotational no-till farming for 15 years. As a result of his no-till and rotation practices he has been able to increase soil organic matter (SOM) by 1% and now has a SOM above 3% improving moisture retention with better overall soil structure. As a result of this improvement and the installation of drip irrigation through a partnership with PepsiCo and FIRA, this farmer has increased yields from 9 tons/ha corn to 18 tons/ha corn. The farmer finances 10-15% of the loan guaranteed by his contract with Pepsi, with FIRA financing the remaining 85% of the loan.

This visit sparked lively conversation about irrigation efficiency stimulating increased production, the role of contracts in providing stability and accessing credit, and the role of check-lists that require farmers to meet certain guidelines. In this farmer’s case, his sustainability journey began with a contract with Green Giant that required him to properly store chemicals and clean out chemicals from equipment. The stable contract incentivized him to make the investment in changes needed. The group also discussed how to bonus more than quality in contracts. Is there a soil health metric incentive that is possible in contracting agreements?

The barley visits took place in partnership with FIRA research and technical assistance teams. The first farmer we visited switched to no-till in her barley-corn rotations with the help of FIRA. As a result, she has experienced lower machine costs, less water evaporation, and better water holding capacity between irrigations. She is still using flood irrigation, but has improved the system with pipes that direct the water more accurately. This farmer described how farmers are influenced towards behavior change through:

  • credible technical advice
  • being able to visit farms and see for themselves
  • being convinced by the numbers – farmers in the region are not used to looking at the numbers and there is a big gap in enterprise budgets for practices such as no-till
  • starting slow and build knowledge – it takes awhile to figure it out and it is different in each field on the farm

This farmer was also clear that there is frequently too much information and it can be difficult to cut through the noise.

The final farmer visit was to a 3.8 ha farm plot in a wheat-barley-corn no-till and integrated pest management (IPM) system. This farmer showed us how he has reduced his costs by half as a result of reducing pesticides and fertilizer use, and the number of times he needs to irrigate. As a result of less irrigation and pesticide application he also has lower labor inputs than his neighbors. He said that his yields are not significantly higher, but they are more predictable. He underscored the need for more enterprise budgets and better prices and contracts to support farmers making practice changes. We also heard how hard it is to change farmer behavior. Despite this farmer’s success, his neighbors have not changed their approach.

FIRA and ConAgua in the Bajio Region

FIRA is a both a research and technical assistance provider and a government backed community bank focused primarily on providing farmers with access to credit. FIRA has research stations across Mexico, the largest one in located in Guanajuato. There are 4 million farmers in Mexico and 2 million of those are located in the Bajio region (FIRA works with 66,000 of those).

The learning journey concluded at FIRA’s research station with a compelling presentation from ConAgua (the government water authority) on the urgent need to address future water availability in the region. ConAgua estimates that there is about 12 years of water left in the region’s aquifers based on current recharge rates. They have a three-point strategy for addressing water balance where 85% of water use is from agriculture.

  • 31% savings will come from enforcement of water allocation
    • currently farmers don’t pay to use the water
    • usage is not enforced
    • regulation is on a per use time, not a per volume allocation
  • 23% will come from adoption of drip irrigation on 150,000 ha of the 1 million ha of ag land in Guanajuato
  • 10% savings will result from conversion of alfalfa acres to vegetable production

ConAgua urgently requested that companies use their influence for stronger regulation and enforcement of water use at the federal level and work together to finance drip irrigation and technical assistance to increase adoption.

FIRA is focused on ensuring the viability of farming into the future. Thirty five percent of farmers in the region have access to technical assistance, much of it comes from ag retailors. Forty percent of the land is rented and the average age of farmers in 60 years. There’s a big challenge to make farming profitable enough for the next generation to come back to the farm. “Most farmers farm for production at any cost and fail to see that their margin is small, they are spending almost as much as they are making, and their labor costs are higher.” FIRA argued that the best way to increase the use of conservation agriculture techniques is to start with the farmers who are interested and line up the TA and financing to make it as easy as possible for them, then organize other farmers so they see how it can work on their farms, and simultaneously scale the financing and TA.

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