As students, a trio of Broad Spartans visited Guatemala, where they worked to give budding entrepreneurs microloans as a foundation to better futures. While there, they came across coffee farmers trapped in poverty, in part due to a lack of leverage in accessing the marketplace.
Now, as alums, they’re doing something about it.
They created the Radical Coffee Project, which buys raw, unroasted beans directly from the Chacaya Coffee Cooperative in Guatemala. That gives the cooperative’s members a route around monopolistic intermediaries, allowing them to earn fair prices for their labors.
Radical Coffee is part of Spartan Global Development Fund, the non-profit organization that oversees the student group of the same name. SGDF has handed out more than $100,000 in interest-free microloans — many totaling just a few hundred dollars — to help aspiring entrepreneurs get started. Almost all loans are repaid.
“At its simplest state, Radical provides a market to a small cooperative of farmers in Guatemala,” said Morgan Burns (BA Accounting ’18), one of the alums who helped launch the project. “However, in providing that market in a direct, transparent, and sustainable way, Radical also challenges the norm within the coffee industry — a norm that is predatory, hazy, and unsustainable. And the consumer is brought along on the journey as well. A win-win.”
The win is significant for the farmers. Radical Coffee pays them $4.25 per pound of coffee, which is around four times as much they would normally get in their limited market, according to Radical Coffee.
“We do not want to be like everyone else and want to prove a point: you can run an incredibly successful business while being environmentally, socially and profit-oriented,” said another one of the alums, Scott Lyman (BA Finance and Social Relations & Policy ’18). “For me, the Radical Coffee Project embodies a movement that challenges the status quo and what business is and can be. While the globalization of our economy has brought countless benefits, it has also socially and economically disenfranchised consumers and producers, domestically and abroad.”
The challenge facing the Chacaya coffee farmers is not unusual, said Tobias Schoenherr, Hoagland-Metzler Endowed Professor of Purchasing and Supply Chain Management at the Broad College.
“Intermediaries have been playing a central role in the coffee supply chain, connecting individual farmers and smallholders to larger corporations responsible for the export and sale of the coffee around the world … small growers generally lack the clout, expertise or means to interact with larger coffee companies directly, making them dependent on these intermediaries,” Schoenherr said. “A further complicating factor is that due to their often small size, farmers do not have the bargaining power to demand reasonable prices for their coffee beans, enabling intermediaries to dictate the rates.”
“The Radical Coffee Project is a laudable exception to this pattern, with their work fueled by passion and motivation to make a difference, rather than financial gain,” Schoenherr said. “Through their work, the Radical Coffee Project has taken out the middlemen, and connected directly with a small group of coffee farmers at Santiago Chacaya. This initiative offers the project to pay a rate that is significantly greater than what they would receive from intermediaries, where oftentimes up to five intermediaries in the supply chain demand a portion of the profit as well.”
The beans are fire-roasted in Lansing in collaboration with Rust Belt Roastery, and then the coffee is sold online and at Old Town General Store in Lansing’s Old Town district. Radical Coffee is looking to expand its sales points in mid-Michigan and Metro Detroit. All proceeds go back to SGDF to underwrite microloans.
Running the start-up is “crazy hard,” Lyman said. Especially since the recent grads have day jobs.
“There is no sugarcoating the strain between starting my career and trying to build the Radical Coffee Project … (the project) is truly a labor of love and I always find myself working on it when I am exhausted at the end of the work week,” Lyman said. “Plus, the opportunity to do this with some of my closest friends provides an extra level of motivation, enjoyment and laughs.”
Agreed, said Kathryn Smith (BA Finance ’18), another one of the alums: “It is work that we all love to do. It is work that we are passionate about. It is work that we get the opportunity to do with our best friends. There is nothing I’d rather be doing than working on this business with the people involved.”
Their time at the Broad College gave them the tools to help make their vision a reality.
“The ability to take interdisciplinary courses at Broad really helped me jump into working on the Radical Coffee Project,” Lyman said. “I had the opportunity to go on several study abroad programs, take a wide range of electives and even completed an independent study. This exposure to different cultures, ideas and contexts of business helped solidify my understanding of the wide range of business models, inclusive finance and socially responsible business. In the end, this laid the groundwork to establish the Radical Coffee Project.”
Burns said “the most important thing I learned during my time at Broad was that there is a whole other aspect of business — a human side — that is just as important as the more well-known aspects like finance of operations. Business does not exist without a person and being aware of how your business actions affect each person in the process is necessary and powerful.”