Lecture 10:The Case of THRIVE Farmers Co↵ee
Ali Hill
ARE 130
November 6, 2017
Ali Hill (ARE 130) Two Case Studies November 6, 2017 1 / 30
1 Accessing the Case
2 THRIVE: Case Overview
3 Background on Co↵ee Supply
4 The U.S. Co↵ee Market
5 Marketing Channels
6 Update: Where are they today?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 2 / 30
Accessing the Case
Accessing the Case
The THRIVE Farmers Co↵ee Case is available at:
https://www.ifama.org/resources/Documents/v16i3/Wilson-Wilson-Whittingham.pdf
Note: Any answers to questions discussed in lecture are fairgame for exams, even if they are subjective and not explicitlystated in the Case Study
Ali Hill (ARE 130) Two Case Studies November 6, 2017 3 / 30
THRIVE: Case Overview
Case Basics
Ali Hill (ARE 130) Two Case Studies November 6, 2017 4 / 30
THRIVE: Case Overview
Case Basics
Ali Hill (ARE 130) Two Case Studies November 6, 2017 5 / 30
THRIVE: Case Overview
Case Basics, cont.
Ali Hill (ARE 130) Two Case Studies November 6, 2017 6 / 30
THRIVE: Case Overview
Key Takeaways
What is Michael Jones’ current goal for THRIVE Farmers Co↵ee?
What major obstacles can you foresee Michael facing as heattempts to meet this goal?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 7 / 30
Background on Co↵ee Supply
Traditional and Fair Trade Co↵ee Markets
Ali Hill (ARE 130) Two Case Studies November 6, 2017 8 / 30
Background on Co↵ee Supply
THRIVE Co↵ee Market
Ali Hill (ARE 130) Two Case Studies November 6, 2017 9 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Traditional Co↵ee Market
Farmers sell their co↵ee cherries to a local association orcooperative that pays based on the current internationalcommodity market price.
Ali Hill (ARE 130) Two Case Studies November 6, 2017 10 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Traditional Co↵ee Market
The co↵ee cherries are then processed and milled.
There are three main types of processing: wet processing, dryprocessing, and semi-dry processing (honey drying).
Milling involves removing the last layers of dry skin and remainingfruit residue (done through hulling and polishing), and cleaning andsorting the beans.
After this, the green co↵ee beans are exported and roasted in thereceiving country.
Ali Hill (ARE 130) Two Case Studies November 6, 2017 11 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Traditional Co↵ee Market
This market structure puts farmers at a disadvantage in twoprimary ways:
1
2
Ali Hill (ARE 130) Two Case Studies November 6, 2017 12 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Traditional Co↵ee Market
Ali Hill (ARE 130) Two Case Studies November 6, 2017 13 / 30
Background on Co↵ee Supply
An Aside: Wet Processing/Washed Co↵ee
Ali Hill (ARE 130) Two Case Studies November 6, 2017 14 / 30
Background on Co↵ee Supply
An Aside: Dry Processing/Unwashed/Natural Co↵ee
Ali Hill (ARE 130) Two Case Studies November 6, 2017 15 / 30
Background on Co↵ee Supply
An Aside: What about the Cherries?
Source: https://munchies.vice.com/en us/article/78dqva/how-a-failed-cattle-feed-became-the-latest-gluten-free-flour
Ali Hill (ARE 130) Two Case Studies November 6, 2017 16 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Fair Trade Co↵ee Market
Has three main benefits over the traditional co↵ee market:
1 It provides a price floor and price premium. These mechanismsserve to:
2 Links producers directly with importers, reducing some transactioncosts and allowing producers to gain value added from processingand milling.
3 Fair Trade requires that the price premium be reinvested incommunity development projects in the producer community.
How do producers invest this money?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 17 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The Fair Trade Co↵ee Market
The THRIVE Case Study identifies two main flaws to Fair Trade:
1
2
According to your TA, some other flaws are:
Ali Hill (ARE 130) Two Case Studies November 6, 2017 18 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The THRIVE Model
Ali Hill (ARE 130) Two Case Studies November 6, 2017 19 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The THRIVE Model
What can we identify as the primary benefits of THRIVE forfarmers?
What do you think are the benefits to consumers?
http://thrivefarmers.com/farmer-direct/
Ali Hill (ARE 130) Two Case Studies November 6, 2017 20 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
The THRIVE Model
The case discusses two main challenges to the THRIVE model:
1 Timing of Payments.
At minimum, the wait to receive the first payment is:
THRIVE is currently developing mechanisms and partnerships tohelp producers while they wait for payment, using:
2 Di↵erentiating THRIVE from traditional and Fair Trade co↵eemarkets.
Why do we think this matters?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 21 / 30
Background on Co↵ee Supply
Di↵erences in the Co↵ee Markets
Fair Trade
https://www.youtube.com/watch?v=PLKTGWH398Q
The THRIVE Model
http://thrivefarmers.com/video/zarcero/
Ali Hill (ARE 130) Two Case Studies November 6, 2017 22 / 30
The U.S. Co↵ee Market
Background on the U.S. Co↵ee Market
Ali Hill (ARE 130) Two Case Studies November 6, 2017 23 / 30
The U.S. Co↵ee Market
Background on the U.S. Co↵ee Market
Ali Hill (ARE 130) Two Case Studies November 6, 2017 24 / 30
The U.S. Co↵ee Market
Background on the U.S. Co↵ee Market
Ali Hill (ARE 130) Two Case Studies November 6, 2017 25 / 30
The U.S. Co↵ee Market
Background on the U.S. Co↵ee Market
What are some key take-aways about the U.S. Co↵ee Market?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 26 / 30
Marketing Channels
THRIVE Marketing Channels
Ali Hill (ARE 130) Two Case Studies November 6, 2017 27 / 30
Marketing Channels
Discussion Questions
Why do you think THRIVE wants to expand?
Do you have any thoughts on ways for THRIVE to expand?
Do you think there is a Marketing Channel they should focus on?Is there a channel they are not currently considering that mayhelp?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 28 / 30
Update: Where are they today?
Where are they today?
Ali Hill (ARE 130) Two Case Studies November 6, 2017 29 / 30
Update: Where are they today?
Some Fun Facts
How do co↵ee places in Davis source their beans?
Peet’s Co↵ee
Starbucks Co↵ee
Temple Co↵ee
Pachamama
Cloud Forest
Mishka’s
Ali Hill (ARE 130) Two Case Studies November 6, 2017 30 / 30