Coffee is a staple luxury for many. Yet behind that morning cup, and hidden in the price increases that many coffee drinkers are seeing, is a grim reality. Too many of the people who grow coffee can’t afford to live. Low coffee prices are not new news. We’ve written of them before (most recently here). Indeed, it was a price crisis even worse than this one in the 1990s that caused a minimum price to be a centerpiece of fair trade certification as it developed.

Coffee Growers in Crisis

The crisis brewing in coffee didn’t happen overnight. In addition to ongoing price volatility, coffee farmers are seeing climate change transform their farms and the harvest cycles they rely on. Coffee doesn’t grow just anywhere. There is a narrow band of mostly high elevation land around the equator where conditions are just right. Now, as rainy seasons shift, predictable patterns are getting disrupted. Both droughts and massive storms are becoming more frequent, disrupting coffee plants’ blooming and fruiting cycles. Or rain damages fruit on the trees, reducing quality—and thus price.  A changing climate also means new pest and disease pressure; the fungal disease la roya has been wreaking havoc on coffee plants and decimating yields.

Farming is neither easy nor predictable for farmers around the globe. And, as grim as the impact of climate change has been over the past decade, there are plenty of stories of ingenuity and resilience. Farmer-led solutions exist and have been making a difference. If you clicked through these links to read the amazing regenerative, organic techniques these farmers are implementing, you will quickly also see that they require work, resources – and faith in the future of coffee farming. Bottom-of-the-barrel prices provide farmers none of those things. Instead, more and more is being required of coffee farmers just to produce their crops, even as prices fall.

Coffee is not the only crop impacted by the climate crisis. Staple foods like corn are also being hard hit, forcing people to face a stark choice: Go hungry or leave their land and migrate.

Small-Scale Farmers Feel the Brunt of the Crisis

Not all coffee farmers are feeling the pressure equally. The estimated cost to grow a pound of coffee varies across Latin America from $1.05/pound to $1.91/pound for conventional commodity-grade coffee,** based on a plot size of three hectares (7.4 acres). That last bit of information is important, but also often skipped over as the statistic gets cited. The less land a farmer has, the more expensive it is to produce coffee—some fixed costs remain the same. The average plot of land a coffee farm family cultivates varies greatly. In Colombia, most farmers have fewer than two hectares, while in Brazil the average is 7.5 hectares—the larger the farm, the lower the cost of production.

Market factors come into play as well. Coffee is traded around the world in U.S. dollars. Meanwhile, the Brazilian currency is currently quite weak against the dollar, meaning that that $0.90/pound market price translates to more like $2.00/pound. The Financial Times offers an excellent explanation of just how currency fluctuations are another way that market prices impact producers, but the consequences are clear. Once again, small-scale farmers are most impacted by the volatility of global markets.

“We Cannot Live on $0.90 per Pound.”

Those are the mounting pressures that lead to the statement that the members of SPP Global issued: “We cannot live on $0.90 per pound.” The coffee industry has been grappling with elements of this issue for years. There are studies chronicling poverty in coffee lands, white papers looking at the problem of cyclical hunger even among those who grow specialty coffee. There is an ever-mounting number of company initiatives from McDonald’s to Starbucks seeking to make coffee more “sustainable.” And in grocery store aisles, certification labels make the same pledge—with varied impact. Yet far too few of them actually address price.

Instead, far too many focus on getting farmers to improve quality and run their farms more efficiently. The biggest “sustainability” certifications, Rainforest Alliance/UTZ Certified have no minimum price. Neither does Starbucks’ CAFÉ Practices.*** Collectively, we continue to require more of producers without increasing minimum prices.

There is a great deal of talk about eco-friendly coffee, about “green” coffee, about “sustainable” coffee. But at this point, we are not paying prices to make coffee a bare minimum, break-even proposal for those who grow it. That is not and can never be sustainable – or just.

Farmers Can’t Keep Footing the Bill for our Coffee

The challenges facing coffee farmers are enormous and systemic. The coffee trade has been built on colonial models of extraction—farmers’ labor is treated as cheap or free. When stories of hunger or of forced labor on coffee farms come out over and over, the only true surprise is that we don’t hear of them more often. We can’t expect coffee farmers to keep footing the bill for our morning cup.

Even as coffee prices fall for farmers, coffee drinkers see prices stay steady or increase. Part of that is that the price of a pound of green coffee is just a fraction of the cost of a latte. And part of that is that farmers capture just 6-10% of the $200 billion dollars of coffee sales annually. Even as coffee farmers make a plea for their lives and livelihoods, investment advisors are noting that Starbucks shareholders are doing well, with a nod to the low cost of coffee. Most small coffee roasters aren’t getting rich on coffee, but they certainly aren’t losing money at the rate that coffee farmers are expected to. It’s clear that the system needs to change.

While there are no easy answers, there are a few steps to take today.

• Add your name to the petition in solidarity with small-scale coffee farmers: Sign here.
• Where do you drink coffee every day? Ask your coffee supplier where your coffee comes from and how much the farmers get paid.
• Looking for coffee that pays farmers fairly? Check our list of Mission-Driven Brands. All members of Cooperative Coffees and coffees that are SPP certified pay a minimum of $2.20/pound for organic coffee, and often more.

*Arabica coffee from around the world is traded based on the price set on the ICE Futures market or New York Stock Exchange, often referred to as the C Market. That price, often abbreviated to the “C Price” is the basis for most coffee contracts with the price per pound often calculated as the C Price plus a “differential” for coffee from different origins and premiums for organic or quality. Most, although not all, fair trade minimum prices for coffee are also set relative to the C Market: the commonly expressed “fair trade minimum price” is actually whichever is higher of that minimum price or the C price + fair trade and organic (if relevant) premiums.

**Coffee is graded on a very specific set of standards to determine the score based on the number of defects, etc., found in the green coffee. Commodity grade what you’d be likely to find in a can of Folgers or the like. Specialty grade coffee is what goes into basically all of your local coffee shops’ brew. The price for specialty grade coffee is often calculated based on the C price with additional money for quality.

***Although it is unlikely that Starbucks is buying coffee at the ultra-low commodity market price, they have not been transparent over the last few years about how much they are paying.

Banner Photo Credit:  Rodrigo Flores on Unsplash

The post Low Coffee Prices – A Dire Call to Action appeared first on Fair World Project.

In December, Nestle announced plans to build a massive $154-million-dollar coffee processing plant in the Mexican state of Veracruz. The plant would process Robusta coffee, a variety of coffee that commonly goes into instant coffee and cheaper blends (think Nescafe, for example). Much of the world’s supply of Robusta is grown in Brazil and Vietnam at lower elevations than the high mountain Arabica coffee that dominates Mexico’s coffee industry.  To support this plant, Nestle is asking the government to subsidize the planting of 80,000 hectares of Robusta, a volume that would make Mexico rival Brazil in coffee production.

Such an investment would dramatically change the face of Mexico’s coffee industry. For many years, Mexico was one of the top producers of organic and fair trade coffee and still the coffee industry there is dominated by small-scale coffee farmers whose families tend small diverse plots of land in the mountains. Robusta variety coffee, by contrast, is generally farmed on in large plantations where full sun and monoculture plantings mean heavy chemical fertilizer use.

Low Coffee Prices, Climate Change Threaten Livelihoods

This proposal comes at a particularly bad time for coffee farmers around the globe. While Nestle reported $7.3 billion dollars in profit last year, coffee farmers are seeing prices hit historic lows, hovering around $1/pound on the commodity market for much of 2018. These low prices come as many farmers are already struggling with the impacts of climate change. Irregular weather patterns mean increased drought and unseasonable rain washing away hillsides or damaging blossoms, and making plants more susceptible to fungal diseases like la roya. All these pressures drive down yields and quality—and these pressures have been building over the past half-decade or more.

Big Food vs. Small-scale Farmers

In Mexico, coffee farmers are facing all these challenges, and some additional ones too. While their new president, Andres Manuel Lopez-Obrador (often shortened to AMLO) was elected in part on a platform of standing up for small-scale farmers and rural people and speaking out against neoliberalism, so far his administration has not followed through. Instead, the latest budget slashes funding for the coffee sector, support that is vital for a sector that’s largely made up of small-scale, often indigenous farmers.

Pulling support from small-scale farmers and funneling it to corporate interests is a pattern that is, unfortunately, far too familiar. And the complaints that coffee producers raised as they took to the streets in Veracruz sound familiar as well.

While government officials promote the coffee processing plant as a potential source of jobs and growth for the region, farmer groups are skeptical. Nestle’s press release promises 250 new jobs and the potential to create up to 1200 jobs in the region. Yet this sort of investment only serves to further concentrate wealth and vertical integration in an industry that continues to consolidate.  According to the 2018 Coffee Barometer study, “Only 10% of the aggregate wealth of coffee stays in the producing countries,” and this extraction of wealth is noted as an obstacle to a sustainable coffee sector as well as economic development for coffee producers.

Invest in Agroforestry Not Industrial Farming

The Coordinadora Nacional de Organizaciones Cafetaleras (CNOC), the National Coalition of Coffee Organizations, has expressed concern that this will drive prices down for coffee farmers and push the market further towards low-quality instant coffee. Instead, they argue, the government should be supporting the growth of domestic coffee markets, allowing Mexican farmers to keep more of the value of their crop in the country.

Channeling this investment to Nestle is supporting the wrong kind of farming. An expansion of Robusta coffee planting has the potential to drive land grabs to build the massive plantations needed, fueling deforestation and squeezing out small-scale diverse farmers. There’s plenty of evidence that coffee farms, when planted with a diversity of trees and well-managed, can help sequester carbon and combat climate change. But that’s likely not what Nestle has in mind as such diverse agroforestry systems tend to require more investment of time and labor and yield diverse crops not the industrial stream of a single ingredient that they require.

No to Nestle, No to More Corporate Coffee

In a letter to the President and the Secretary of Agriculture and Rural Development, members of CNOC make a series of demands to make this proposal a better deal for small-scale coffee producers—and everyone aside from the very few who stand to benefit from making Nestles more money:

• Not to provide financial support for Nestle’s proposed plantations.
• Not to fund robusta plantations through reforestation programs.
• To assess the environmental impact of developing Robusta plantations in Veracruz and surrounding states.
• To engage in dialogue with President Lopez-Obrador and the Secretary of Agriculture and Rural Development on their specific policy proposals for a stronger coffee sector that benefits the people of Mexico, not just massive multinational corporations.

Let President AMLO know that the international community of coffee drinkers is concerned about small-scale farmers—sign the petition today.

Who Profits from Your Coffee?

Deals like this offer a concrete reminder of why we highlight the importance of knowing who owns the company you’re buying coffee from. While the marketing materials of some of Nestle’s more premium brands like Blue Bottle Coffee or Chameleon Cold Brew may highlight their farmer partners and sustainability initiatives, their parent company is investing far more resources in projects that are bad for coffee producers and the planet. (And this project is just one of many—Nestle routinely comes in near the top of lists of corporate abusers for human and labor rights, water rights, and environmental issues).

If you’re looking to support small-scale coffee farmers, our list of mission-driven brands collects companies who are committed to working ethically throughout all their supply chains. Companies like Equal Exchange have been committed to working with small-scale farmers for more than three decades and others like Higher Grounds Coffee, Just Coffee, and Peace Coffee grew out of solidarity projects with Mexican coffee farmers.

Small-scale farmers around the world struggle to earn a livelihood. Meanwhile, multinational corporations like Nestle rake in the profits (in their case, $7.3 billion dollars per year). Show your support for small-scale farmers and against yet another project to make the second biggest food company a little bigger

The post Small-scale Farmers Stand Up to Nestle Coffee Processing Plant appeared first on Fair World Project.