Gates pours aid into African coffee farms

from The Seattle Times

By Kristi Heim
Seattle Times business reporter

Can Seattle's voracious demand for $3 lattes help send a poor child to school in Rwanda?

Farmers in Rwanda are starting to sell to premium coffee buyers such as Starbucks and Peet's for the first time, thanks to a program to help them boost the quality of beans.

The effort to help African coffee growers is part of a pledge of $900 million from the Bill & Melinda Gates Foundation to help improve agriculture in the poorest countries, largely by tapping into the power of the marketplace.

It's also an example of the kind of "creative capitalism" that Microsoft Chairman Bill Gates hailed Thursday at the annual powwow of big ideas known as the World Economic Forum in Davos, Switzerland.

The world needs new solutions to solve the twin scourges of entrenched poverty and inequality, Gates said, and the business community should be at the forefront.

Partnerships among businesses, governments and nonprofits can "stretch the reach of market forces" to connect producers in developing countries to new customers, helping more of the world's poor earn a living and even increase profits.

Gates has used his platform at Davos to try to shape economic thinking before. Now that he is stepping down from his role at Microsoft in June to become a full-time philanthropist, there's even more interest in where he intends to focus his time and money.

A big thrust of his foundation's work this year is expanding help for farmers in Africa and parts of Asia.

"If we are serious about ending extreme hunger and poverty around the world, we must be serious about transforming agriculture for small farmers — most of whom are women," he said in a statement. The Bill & Melinda Gates Foundation on Friday unveiled a package of new grants worth more than $300 million, nearly doubling its spending on agriculture. It plans to commit an additional $300 million by the end of the year.

Joining the World Bank, African governments, the U.N. and other donors, the Gates Foundation hopes to create "a broad-based movement to lift hundreds of millions of people out of poverty," said Rajiv Shah, head of the foundation's agricultural-development program.

Increasing incomes of the poor has another benefit to the world's economy in opening up a vast untapped market, said Paul Polak, author of the book "Out of Poverty."

"Those markets are just as big as the market created when personal computers were introduced," he said.

Much of the Gates Foundation money will go toward helping small-scale farmers gain access to markets.

As one example, the U.S. nonprofit TechnoServe is working in parts of Africa, such as Rwanda, Tanzania and Kenya, that have the right climate and geography for growing premium coffee, the kind of beans sought by Starbucks, Peet's Coffee & Tea and Nestlé Nespresso.

Premium coffee makes up 5 percent of the world market, but it's the fastest-growing and most lucrative.

But most small-scale farmers lack training and tools to maintain quality control during processing, especially "wet milling," which needs to be done within six hours of picking to remove the bean's fruity outer layer, said David Browning, TechnoServe vice president for business development.

With a $47 million Gates grant, TechnoServe is installing new wet mills and training farmers how to produce high-quality beans for the premium market, which commands a 30 percent higher price. It expects to help 182,000 farmers in East Africa double their incomes in four years.

Already the program, which started in 2004, is seeing dramatic results, including an increase in secondary-school enrollment from 20 percent to 75 percent in parts of southern Tanzania, Browning said.

"What might not sound to western ears like a lot of money can have a profound effect on someone's life," he said.

More than 1 billion people still live on less than $1 a day, most of them in rural areas dependent on farming. But the world largely has ignored agriculture, at least in sub-Saharan Africa, where farm productivity has declined and more people are starving.

Over the past 20 years, the amount of development aid going toward agriculture has dropped from 16 percent to less than 4 percent, according to the World Bank.

Yet almost no country has managed a rapid rise from poverty without increasing agricultural productivity, the World Bank concluded in its most recent development report.

The largest of Gates' grants, $164.5 million, goes to the Alliance for a Green Revolution in Africa (AGRA) to improve soil health.

AGRA seeks to build on the original Green Revolution, which doubled food production in Latin America and Asia and saved hundreds of millions of people from starvation in the mid-1900s. But the Green Revolution methods have been criticized for damaging the environment and favoring wealthier farmers.

Shah said the new approach for Africa is different. While the original Green Revolution concentrated on breakthrough seeds for a few major crops, AGRA is investing in more than a dozen local crops, each targeted to the food preferences of those communities, he said. Small-scale farmers are involved in the process from the beginning. New crops are tested in farmers' fields and modified at local research stations based on the farmers' feedback.

AGRA's plan to improve Africa's severely depleted soils includes fertilizers, but it combines that with intercropping to boost nitrogen and conservation tillage to retain water and nutrients, he said.