Coffee

Our Approach

Coffee is among the world’s most-traded raw materials and is primarily cultivated by smallholder farmers in sub-tropical regions. There are human rights and environmental challenges when sourcing coffee and the ALDI SOUTH Group is committed to changing this by fostering fair working conditions and environmentally friendly production in the cultivation of coffee.

One of the ways we do this is by sourcing independently certified products to ensure that producers receive a fair price for their products as well as adapt to climate change and fighting deforestation. We also carry out origin visits to key sourcing countries, participate in projects on the ground and are working to improve supply chain transparency via direct sourcing models.

Our Actions

Transparency

We attach great importance to sustainable production conditions in the manufacturing of food and non-food products. Supply chain transparency is the foundation for all our sustainability measures. Without the knowledge where our products come from, we cannot ensure compliance with our requirements, analyse risks, monitor or implement projects. We work with our business partners to increase the transparency of our supply chains so that we have a better understanding of the origins of the products we sell and the raw materials we use in our products.

In 2021, we published the names and addresses of our direct business partners (tier 1 suppliers) for coffee.

Transparency in supply chains: Food

Certification and Standards

Smallholder farmers in coffee-growing regions face multiple challenges, including poverty, commodity price fluctuations and the effects of climate change. By sourcing from suppliers using the sustainability standards Fairtrade, Fairtrade USA, and UTZ/Rainforest Alliance, we can reassure our customers that we are supporting coffee growing communities and protecting biodiversity.

Due to supply chain disruptions, we are currently unable to source enough certified coffee for selected private label coffee products with the Rainforest Alliance seal. This means that from January 2023 these products contain only 70-90% Rainforest Alliance Certified coffee ingredients. As soon as this supply shortage is resolved, we expect to return to the minimum 90% certified content when sourcing Rainforest Alliance certified products. You can find more information here.

Supply Chain

Visits and Assessment

As part of our engagement, we regularly visit and assess production sites together with our business partners in our food and non-food supply chains.

Resource Efficiency

Supply Chain

Human Rights

We respect human rights and do our part to improve living and working conditions throughout our supply chains.

Human Rights Risk Assessment

We regularly conduct human rights risk assessments to examine the human rights risks within our food and agriculture supply chains. The aim of these assessments is to identify any adverse impacts our company may have on human rights, gain insights into our actual impacts and understand how we may be involved through our own activities or as a result of our business relationships.

We determined coffee as a raw material with a high risk of adverse impacts on the enjoyment of human rights and consider it most important to the ALDI SOUTH Group.

Human Rights Impact Assessment

We are developing specific measures to prevent or mitigate adverse human rights impacts identified during our risk assessment in 2018. ALDI has committed to carry out detailed human rights impact assessments (HRIAs) that follow a stringent methodological approach, including extensive background research and engagement with rightsholders. Through these studies, we strive to identify, understand and assess the potential and actual adverse impacts of our business activities on workers and other affected rightsholders, such as community members, smallholder farmers and women. We have published the results of three HRIAs in selected high-priority raw materials, including Coffee.

Human Rights Impact Assessment Report: Coffee from Brazil

Download PDF

Human Rights

Stakeholder Dialogue & Capacity Building

We believe the best way to protect the people and the environment is through joint initiatives and partnerships. For this reason, we engage in various multi-stakeholder initiatives and projects on the ground.

Multi-stakeholder initiative

Since 2020

Sustainable Coffee Challenge (SCC)

In 2020, the ALDI SOUTH Group became a member of the Sustainable Coffee Challenge (SCC). In the SCC, we collaborate with other retailers, traders, governments, NGOs, and research institutions on improving living and working conditions in the global coffee sector.

Project on the ground: Fairtrade Coffee Project

The ALDI SOUTH Group has been sourcing Fairtrade-certified coffee from Honduras since 2014. Coffee is the most important agricultural export product from Honduras with over 100,000 families growing coffee and over one million people employed by the sector during harvest. Coffee farmers in Honduras face strong challenges resulting from a volatile political situation, high poverty rates, and fluctuation in price on the world market, and the growing effects of climate change.

Since 2016, ALDI SOUTH has funded a project initiated by Fairtrade to support coffee cooperatives in Honduras. The project aims to

improve the administrative and organisational capacities of smallholder producers,
increase the amount of sustainable coffee production by smallholders and their resilience to climate change,
increase coffee quality, sales and marketing capacities of cooperatives, and
integrate vulnerable groups (women, youth, children, workers, indigenous people) more strongly into development and decision-making processes, the implementation of policies and advocacy initiatives at community level.

The Fairtrade premium which is paid to cooperatives for each Fairtrade certified product as well as ALDI’s additional project funds, enable solutions to be found for the above-mentioned challenges, and ensure the long-term sustainability of smallholder coffee production in Honduras. Through these efforts, farmers will become more resilient and prosperous so that a daily cup of coffee purchased from ALDI remains sustainable for all.

Direct sourcing

ALDI sources coffee directly from Organic and Fairtrade certified coffee cooperatives in Honduras, who are direct beneficiaries of our project.

16	Organisations and producer members of small to medium size smallholder coffee producer organisations
2,929	Direct participants (smallholders and workers)
24%	Female smallholders
76%	Male smallholders

Find out who produced your coffee by clicking on the cooperatives below.

Climate change resilience

Workshop with young coffee farmers to produce organic fertilizer (2020) © Fairtrade Deutschland

Climate change is already a reality for coffee farmers in Central America. Weather patterns have changed and become unpredictable in many regions.

The project supports cooperatives and their members to prevent losses from climate change through more resilient agriculture, while also reducing their own environmental footprint. Farmers are trained for instance on shadow growing, improving soil and plant health through self-produced compost and organic fertilizer, integrated pest management, organic agriculture and agroforestry systems.

These activities can be seen as a win-win situation: “Waste” from coffee production like the water with which the coffee cherry pulp is washed away from the beans and the pulp itself can be used to produce highly nutritional compost and organic fertilizer or to produce biogas. While in some regions the discharge of water previously put a strain on local water sources, it has now become a valuable resource for the cooperatives. Agro-ecological practices improve plant and soil health, coffee quality, biodiversity and climate change resilience at the same time.

Human rights

Gender and vulnerable groups

A key element of the project is to ensure that coffee cultivation is seen as an attractive proposition for female farmers and young workers. The project funds group workshops and trainings to equip young people with knowledge in agroecology and the ability to generate income from activities such as running composting facilities and selling compost to local farms.

There are far fewer female than male coffee farmers in Honduras, and women are less likely to have seats on management boards. Self-organised and financial independent female coffee traders are not automatically accepted. The project enables capacity building for women’s groups in coffee production and income diversification. This leads to a higher representation of women in cooperative decision-making bodies, and more young women are given positions of responsibility, e.g. accountants, agricultural advisors, and quality controllers.

Sourcing Fairtrade certified coffee promotes gender equality and non-discrimination also in a number of additional ways. The Fairtrade smallholder standard for instance has the following requirements:

No tolerance of gender based violence and other forms of violence
Identification of disadvantaged/minority groups
Development and implementation of a gender policy by every cooperative
Implementation of activities to improve the social and economic position of identified, disadvantaged/minority groups by every cooperative .

Living income

Inequality in the coffee value chain and the resulting extreme poverty are the root cause of human rights risks and migration. Working towards the payment of a living income and wage are an important part of a sustainable supply chain.

The coffee sector faces a global crisis and with only short-term exceptions, the world market price for Arabica coffee has been below the Fairtrade minimum price since 2017. Enabling farmers to earn a living income requires a strategy with interventions at many levels:

good agricultural practices for higher productivity and quality
the ability to adapt to changing climate conditions,
better market access and higher sales under Fairtrade terms,
strong cooperatives, who can provide efficient services to their members,
a good regulatory environment, and
income diversification to reduce the dependency on coffee.

Sourcing coffee on Fairtrade terms means that the Fairtrade minimum price or higher must be paid based on the costs of sustainable production. In addition, cooperatives receive the Fairtrade premium for development projects and improvements of their efficiency and services contributing to better living conditions and higher incomes of their members.

To further progress on living incomes, the project in Honduras contributes to data collection and training in two participating coffee cooperatives as well as to the implementation of a roadmap towards closing the potential income gap once the reference prices and the level of current incomes are determined. Incomes are also evaluated from a gender perspective.

Child labour

Exchange visit with Child Protection Committees in San Juan, Intibuca, facilitated by Fairtrade within the joint project with ALDI. — Exchange visit with Child Protection Committees in San Juan, Intibuca, facilitated by Fairtrade within the joint project with ALDI (2020). © Fairtrade Deutschland

Illegal child labour remains a prevalent problem in the coffee supply chain due to severe poverty. ALDI does not tolerate illegal child labour in any areas of its operations, including its supply chains. The coffee used in many of ALDI’s coffee products is certified according to UTZ/Rainforest Alliance and Fairtrade. All of these standards set requirements for the prevention of child labour in supply chains.

The project supports four coffee cooperatives to set-up and strengthen Child Protection Committees who work with the farmer members and also local child protection agencies to build awareness and processes to prevent and remediate child labour cases in the surrounding communities.

Progress from 2016 – 2019

GOAL: The project contributes to sustainable livelihoods of smallholder coffee producers and their right to a living income.

22	smallholder producer organisations (SPOs) participated
4,656	direct beneficiaries (producer members of SPOs)
20,000	estimated indirect beneficiaries (family members and other dependents of producers)
83%	of project cooperatives made a profit
68%	have reduced the use of agrochemicals and are supporting new income streams

Project on the ground: Living income gap

The ALDI SOUTH Group is partnering with Olam Food Ingredients’ (“OFI”) coffee business on a four-year project in Honduras, which aims to narrow the living income gap by improving market access and coffee quality.

The global coffee supply chain is very complex. To get the coffee beans to port for export, they are typically bought and sold by several intermediaries. On top of this, low yields, fluctuating prices and the climate crisis can make it even harder for farmers to earn a reliable income.

The new joint project aims to create a transparent and traceable coffee supply chain all the way to farm level, and narrow the living income gap of 1,000 coffee producers in Honduras by helping them to increase yields, improve coffee quality and achieve Rainforest Alliance certification. Local representatives and farmers will be trained with an innovative smartphone app that enables them to make informed decisions and directly trade their coffee with Olam. Over four years, each farmer will receive tailored trainings, agricultural inputs and tools to help narrow the living income gap.

Tracking the project’s progress will ensure we are not only meeting our shared goals but learning how to make our impact scalable in a way that lifts farmers out of poverty, and that offers a more promising future for generations to come.

More: Olam

Project on the ground: Ethical recruitment on coffee farms in Brazil

Following the development of the Human Rights Impact Assessment (HRIA) action plan, ALDI is partnering with the non-profit civil society organisation Verité on a pilot project on “Promoting Ethical Recruitment in the Coffee Sector of Minas Gerais, Brazil” within Verité’s U.S. Department of Labor-funded Cooperation On Fair, Free, Equitable Employment (COFFEE) Project.

After conducting an HRIA on coffee in Brazil in 2021, ALDI is excited to be able to take immediate action through participating in Verité’s project in Brazil. The aim of this pilot is to better understand and respond to recruitment and labour risks in the Brazilian coffee sector.

The effort is part of Verité’s “COFFEE” Project, which includes pilot projects in Mexico, Colombia and Brazil, along with the development of an open-source Socially Sustainable Sourcing Toolkit (S3T) and online training modules focused on promoting decent labour conditions and fair recruitment in the coffee sector. The tools will be piloted by ALDI and its supply chain actors, such as coffee roasters, traders, and farms.

Together, we are looking forward to improving the adoption and successful execution of ethical and sustainable sourcing practices in coffee supply chains, promoting acceptable working conditions by strengthening the knowledge and capacities of key actors in the supply chain, and supporting the elimination of child labour and forced labour in the coffee sector.

More about the project