Protecting Vulnerable Value Chains in the Face of Covid-19

In the period from 2020 to 2022, the Rebuild Facility aims to ensure that 100,000 hectares of land are managed sustainably.

The Rebuild Facility is a returnable grant facility that supports environmentally sustainable cocoa and coffee producers. It aims to protect vulnerable value chains and smallholder farmers whose livelihoods have been affected by the Covid-19 pandemic in East and West Africa. 

Grants provided by the facility are used as interest-free working capital to purchase coffee and cocoa. Once the coffee or cocoa is sold on to the end buyer the grant is repaid by recipient companies. 

The Rebuild Facility is delivered by Regeneration, a joint venture between Palladium and SYSTEMIQ, with anchor funding from the German Ministry for the Environment. 

In the period 2020-2022, the facility targets to ensure 100,000 ha of land is under sustainable land use management, protect 10,000 smallholder farmer livelihoods, and mobilise EUR 14,000,000 of private finance toward investment in sustainable coffee and cocoa production.

Detrimental environmental impact of coffee and cocoa production

The premium cocoa and coffee value chains in West and East Africa stem from landscapes in the tropical and sub-tropical forest belts. Forests in these landscapes absorb carbon from the atmosphere and help to stabilise the region’s climate. Deforestation releases carbon into the atmosphere and threatens the climate and biodiversity of the region. This in turn reduces the region’s resilience to climate change and damages the security of farmer livelihoods. 

The Rebuild Facility’s returnable grants assist to protect these valuable forests by supporting local companies that invest in sustainable production and providing an economic incentive to protect and restore forests.

Land clearance for cocoa and coffee plantations are leading causes of deforestation in Africa. In the Côte d'Ivoire, more than 80% of forest loss is linked to cocoa production. Deforestation is often driven by farmers’ efforts to expand farmland to sustain or increase income, and this risk has increased during the Covid-19 pandemic. 

Impacts of the pandemic on coffee and cocoa value chains

At smallholder farmer level, local lockdowns delayed the purchase of beans and reduced farmer mobility. Co-operatives also suffered from country-wide or regional lockdowns, limiting their ability to trade. For exporting companies, global lockdowns introduced logistical delays and increased operating costs, which have been further exacerbated by global container shortages. Additionally, many exporters suffered from reduced offtake contracts enforced by buyers following the severe drop in out-of-home consumption of coffee and cocoa products due to global lockdowns. 

Protecting the Mountain Gorillas in Uganda

Gorilla Summit, a Ugandan coffee producing, processing, and exporting company, works with Bwindi farmers near the Bwindi Forest. Gorilla Summit supports coffee farmers to ensure their coffee is produced in ways that protect and restore the land bordering the Bwindi Forest, a UNESCO Heritage Site, home to roughly half the world’s population of mountain gorillas. Gorilla Summit have introduced new, regenerative farming practices to the Bwindi farmers, which supports regeneration of degraded land as part of coffee production.  

When the pandemic hit, Gorilla Summit was faced with the prospect of contract cancellations and an increase in labour and logistical costs. The returnable grant from the Rebuild Facility enabled Gorilla Summit to continue purchasing coffee from the Bwindi Farmers, thereby supporting the livelihoods of 2,100 smallholder farmers. Gerald Mbabazi, Gorilla Summit’s General Manager, acknowledged the support of the Rebuild Facility saying,

“Gorilla Summit would not have survived the financial hit from the pandemic and would have ultimately gone out of business without the support of the Rebuild Facility.”

The intervention is also forecast to protect 4,000 hectares of land and mobilise EUR 876,520 of private finance, which ensures continued protection of ecosystems on the fringes of the Bwindi Forest.

The Rebuild Facility Portfolio 

As of January 2022, the Rebuild Facility provides funding to 11 companies in five countries. In East Africa, it has eight active coffee projects with a total approved funding of EUR 5.6 million. In West Africa, it has three active cocoa projects, with a total approved funding of EUR 4.5 million. From a total EUR 5.3 million disbursed, EUR 1.9 million has already been returned to the facility for reinvestment. 

The Rebuild Facility works with a wide variety of organisations including multi-national commodity traders, international specialty coffee and cocoa traders and national exporters based in the country of origin. Environmental and social standards are the priority, and any company that they work with must have the highest environmental and social standards including controls on child labour. 

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