Innovation

"I had this ideal, that something good had to come out of it. Back in the 70's and 80's, sustainability was not even a word, but I knew the concept and always strived for it." - Luis Norberto Pascoal, CEO.

Daterra defies the traditional belief that 'green is less profitable' with years of experience as proof of how relevant sustainability is to the quality and price of the end product in a global market.

When the farm was started, water resources had to be restored and maintained as the area is semi-arid. The same was true for organic matter in the soil, which was depleted and dependent on regeneration. For over 20 years Daterra developed methods to reinstate the close-to-original environment by restoring the biomass and perfecting the use of fertilizers to the minimum possible.

They created the perfect conditions for coffee plantations, with a few adaptations. For example, the original red coffee grain from Europe evolved into the yellow grain in Brazil which is far more resistant to sunlight exposure. This variation had just the needs provided by the land and, with research and development, the crops flourished.

On the business management side, the most important innovation has been the "verticalization" of operations. This process eliminated all intermediaries in the supply chain, from farming implements designed and built in-house to the distribution of the finished product. Everything is handled by Daterra. The company is determined to execute the entire product cycle from production to the final destination by removing the intermediaries that could act as a filter in the consumer feedback or result in lower quality of the product (e.g. improper handling/storage), and at the same time reduce costs and increase profitability.

Their main objective is to keep track of product quality and user experience as accurately as possible. Roasters and retailers are considered partners of the company and have their machines replicated at Daterra to perfect the roasting process, promoting consistency as a trademark. Daterra hosts annual farmers meetings in an effort to improve the overall quality of coffee - thus achieving a better price in the global market, and promoting sustainable farming methods.

Today Daterra is the only Brazilian agribusiness certified with ISO-14001, was the first Rainforest Alliance Certified farm in Brazil, Sustainable Farm Model by Illy; and first climate-friendly farm verified to meet the Sustainable Agriculture Network's Climate Module.

Inspiration

Daterra was created to produce the highest quality premium coffee through three sustainable management pillars:

1- Quality: better coffee grains sell for the best price

2- Productivity: zero waste and efficient management of resources

3- Sustainability: lowest environmental impact possible, promote social well-being and 360 degree sustainable business management "

Such an approach to management is driven mainly by the CEO's personal ideal of reducing waste in the production chain. He has tried multiple attempts in the sustainability field since the 1970’s – livestock, wood, fruits - but due to political and financial reasons decided to focus on coffee as his main research in the late 1980’s.

The automotive business also benefits from his management ideals but it is at Daterra that he makes every effort in the sustainable field; it took almost 20 years for the farm to become profitable and every year it consumed nearly U$1 million a year in research from the holding.

His vision ahead of time proved to be invaluable. Today Daterra is an example to demonstrate why a sustainable approach to business management is the way to the future, delivering a product of uncompromised quality and best market price and by assuring the continuation of the activity in the future.

Daterra's coffee is appraised as one of the best in the world, while promoting education and social actions and creating technology in the agribusiness like very few other companies.

Overall impact

Daterra is fundamentally driven by sustainable ideals. It took them over 20 years of research to deliver one of the best coffee beans in the world and become profitable, but their pioneering paid off and today they have built quite a reputation in the market.

They endorse the 360 degree management philosophy which embraces roasters and other farmers worldwide. They understand that their product is so superior it could cause an instability in the market and drive other farmers out of business and ultimately they could never account for all the demand without losing quality.

Their unique view of what an agribusiness should be has inspired many other farmers (not only in coffee) to understand the importance of sustainable practices and their role in the future. They hold workshops with national and international farmers to pass-on their knowledge. The company understands and demonstrates that quality can only be achieved through careful land and resource management, social awareness and collaboration, resulting in better market prices through better products that leave a net positive impact.

The quality of the end product is highly related to the level of preservation of the ecosystem. From the 8000 hectares of land about 50% of that is coffee, the rest is continuous preservation. Daterra reduced the use of mineral fertilizers by 20% last year with the optimization of composting techniques, but it is not currently possible to go fully organic because it would require ten times the area planted only for composting. Through all these actions, the environmental impact is net positive.

Daterra is associated with "Fundação Educar" Institution with the objective to provide superior education and training to surrounding communities. The students receive a level of instruction that allows them to work not only at Daterra but at many other companies and fields.

Business benefit

"No business can exist without profits, but without sustainability businesses will no longer be able to exist in the short-to-mid term mainly due to scarcity of resources that impede the production of any kind."- Luis Norberto Pascoal, CEO.

While businesses worldwide strive for profits at all costs, Daterra proves that through sustainable practices the best quality can be obtained, assuring better market prices and profits. The existence of the business in the future is assured by protecting the environment and renewing, not depleting, resources. By setting the example they have already inspired other farmers to follow the same ideals and multiply the same benefits to other areas. Farmers that had been losing revenues and were close to losing their businesses had a second chance. Today, most have recovered with the help from Daterra.

Daterra won't disclose their actual financial numbers but their profit margin is close to 12%, which is similar to the other companies in the coffee business that spend a lot less in R&D and social development.

Coffee retailers worldwide have also benefited from this approach by offering end consumers consistent quality they can rely upon, ultimately resulting in higher profits and solidifying their businesses as well.

It is the company’s belief that higher profits will become the ultimate driver for sustainable practices. The CEO noted how important it is for a company to have all of the board and controllers converging on this point, because the planning is fundamental and results sometimes take a little while to appear. It is common for management to do what is most immediate to return the highest profit but lack of vision makes this unsustainable over time.

Social and environmental benefit

To achieve a superior quality product, it is mandatory that the environment is preserved so the land is not depleted of nutrients and resources like water are plenty and unpolluted. To avoid plagues that would require the heavy use of pesticides, the fauna must be balanced so that the natural predators do their part.

Absolutely nothing goes to waste as all harvested non-coffee grain materials are composted and all the water used is returned to the environment.

Efficient irrigation methods were researched and today they use the minimal amounts of water necessary to ensure the quality and production levels. Water used to wash the harvested grains is carefully handled and returned to the environment with minimal impact.

The CEO has a global view of sustainability and is very careful to adapt the concept to each nations’ reality so that it does not create problems instead of solutions, such as unemployment in impoverished areas. The company promotes education courses through its foundation “Fundacao Educar” with the objective to create qualified labor that can work either at Daterra or at many other companies.

They invest heavily in the development of their own technology according to their own needs instead of buying available equipment. This promotes technological development in a sector that is traditionally labor intensive and in need of better skilled workers.

Interview

Luis Norberto Pascoal, CEO