By Maytaal Angel

LONDON Nestle is piloting a scheme to give cash to coffee farmers who grow beans sustainably as part of its plan to halve greenhouse gas emissions in its coffee business by 2030, the food company said on Tuesday.

The move comes as major consumer goods companies face increased reputational and legal pressure to clean up their supply chains globally.

Nestle, the world's largest packaged food company has pledged to spend $1 billion by 2030 on its plan to source coffee sustainably, which now includes efforts to boost farmer income.

The company said it has, under the plan, offered some 3,000 coffee farmers in developing countries like Ivory Coast, Indonesia and Mexico conditional cash incentives to encourage them to transition to regenerative agricultural practices.

These include using organic fertilisers to improve soil fertility, planting shade trees that protect coffee beans and intercropping to preserve biodiversity. The latter two measures also aim to give farmers additional revenue streams.

"We have observed encouraging trends, including improved incomes in some countries, and increased adoption of important regenerative practices," said environmental group Rainforest Alliance, which helps Nestle conduct impact assessments.

A major coffee report published in 2021 said there was little evidence that efforts by the world's top coffee firms to protect human rights and the environment were having any impact, with most farmers unable to fund sustainable coffee farming.

Partly as a result of failed voluntary efforts by companies to source sustainably, the European Union has agreed a landmark law aimed at preventing companies importing commodities and related products linked to deforestation anywhere in the world.

The coffee sector is valued at $200-250 billion a year at the retail level, based on the report, but producing countries receive less than 10% of that value when exporting beans, and farmers even less than that.

Around 125 million people around the world depend on coffee for their livelihoods, while an estimated 80% of coffee-farming families live at or below the poverty line, according to non-profit organisations Fairtrade and Technoserve.

(This story has been refiled to remove extraneous words in paragraph 2)

(Reporting by Maytaal Angel; Editing by Bernadette Baum)