ADB, Timor-Leste Sign $3 Million Grant Agreement Supporting Coffee Sector Development

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New Delhi: The Asian Development Bank (ADB) and the Government of Timor-Leste today signed a $3 million grant agreement to support 2,000 coffee-farming households on good agricultural practices and access to finance, while also boosting coffee quality and market links and improving rural livelihoods amid the coronavirus disease (COVID-19) pandemic.

“The development of Timor-Leste’s coffee sector is a national priority, as it offers one of the best pathways to reducing poverty and inequality, improving food security, and expanding Timor-Leste’s non-oil economy,” said ADB Senior Natural Resources and Agriculture Specialist for Southeast Asia Stefania Dina. “The project will boost coffee quality and market access. It will also support the country’s post-COVID-19 economic recovery by helping improve rural livelihoods and promote private sector development.”

The agreement was signed by Finance Minister Fernando Hanjam and ADB Country Director for Timor-Leste Sunil Mitra. Agriculture and Fisheries Minister Pedro dos Reis, Vice Finance Minister Sara Lobo Brites, Ambassador of Japan for Timor-Leste Kinefuchi Masami, and other government officials attended the signing ceremony.

Coffee is Timor-Leste’s largest non-oil export. About 37.5% of Timorese households grow coffee, with half of them relying on the crop for income. The sector, however, operates far below its long-term potential due to low and volatile production, inconsistent product quality, and weak sector management. As a result, many coffee-producing households live in extreme poverty.

The Coffee and Agroforestry Livelihood Improvement Project, which is funded by the Japan Fund for Poverty Reduction, focuses on the coffee-producing municipalities of Aileu, Ainaro, Bobonaro, Ermera, Liquica, and Manufahi. It aims to double the country’s coffee and agroforestry production and pave the way for a 270% increase in coffee export earnings by 2030. It also will help the government strengthen information management, sector coordination, and knowledge sharing.

The project will facilitate the implementation of Timor-Leste’s 11-year Coffee Sector Development Plan, which was approved by the government in 2019 with support from ADB and the global nonprofit Coffee Quality Institute. Under the plan, the government will invest $38 million in 6 core areas: research and development; production and productivity; quality and value addition; market access; domestic consumption and tourism; and sector management coordination.

The project builds on ADB’s previous work in the coffee sector, including a $1 million grant approved in 2018 to help smallholder coffee farmers in Timor-Leste improve their productivity and crop quality to meet international certification standards.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

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