Is There an Equitable Solution?
Jaramillo Coffee Farm in Colombia
Is there an equitable solution to raising coffee producers’ profitability? A few weeks ago, I attended the World Coffee Producers Forum in Medellin, Colombia (I recapped the event in my blog that week). The Forum was the first of its kind—a conference created for producers in which they had the opportunity to share their feelings, thoughts, perspectives, et al, on coffee production and earnings. A Final Declaration discussing the critical situation regarding profitability of coffee farming in many producing countries and an Action Plan, was drafted at the conclusion of the Forum (see T&CTJ’s upcoming September issue for the full Declaration).
I admit that before I attended, I thought the Forum would offer an open an exchange of ideas between all the stakeholders in the global coffee supply chain, as well as researchers and industry experts. That did not exactly happen. There were enlightening educational panels discussing economic sustainability, rural development and socioeconomic indicators, and climate change, which I won’t discuss again (see Editor’s Blog, “Producers Have a ‘Forum’ to Speak”) and the producers had numerous opportunities to address participants in each session. However, I would have liked to have seen more of a dialogue between all involved in the event. Because, while I now have a deeper understanding of producers’ situations after listening to speeches and speaking with individual producers (and truly empathising with the situation—if producers can’t afford to grow the coffee, there will be no coffee), I’m not sure if many producers are aware of all the costs involved in producing a cup of coffee once it leaves the origin country.
The consensus–from producers and presenters–was to increase the cost of the “end cup of coffee,” which was estimated to cost $3.50 in the United States (New York City was the base market for this price). Jeffrey Sachs, economics professor, senior adviser to the United Nations (UN) and director of the Center for Sustainable Development at Columbia University and the UN Sustainable Development Solutions Network, during his keynote presentation said, “We need to revisit mechanisms that make consumers pay a little more and producers receive a little more (…). While acknowledging that there are implicit costs in the cup’s final price, Sachs noted that if consumers pay (USD) 5-cents more per cup of coffee, “producers will receive twice what they receive today.” He stated that in high-purchasing power markets, such as the US or Europe, this slight increase would not be detrimental for consumers, especially if it is on a voluntary basis. Furthermore, Sachs said that if consumption increased one cup per day, there would be a substantial increase in demand that would stimulate production and raise the international price. Is a (USD) 5-cent increase per cup of coffee feasible?
Fernando Morales de la Cruz, founder of Café for Change, who contacted me following my previous blog, believes 5 cents is not enough. He proposes charging (USD) 10-cent extra per cup of coffee. In an article for the BBC, he writes, “With $0.10, all children in all rural communities in all communities that produce coffee will be guaranteed that there will not only be schools, but also teachers, drinking water, basic infrastructure, and that their parents are going to have a living cost salary.” Is a 10-cent increase per cup doable?
One producer I spoke with at the Forum, who runs a large-scale coffee farm in Nicaragua with his brothers, and who worked for a roaster in the US for several years, has a different idea to increase producers’ profitability. Rather than the (USD) 2-cent tax on each pound of coffee exported producers must pay to their governments, he proposes a 2-cent tax be placed on each pound of coffee imported. Those taxes would be paid to the producing countries and then distributed to the producers (I’m drastically simplifying his well-researched concept). Intriguing notion. Is this practical?
So, readers, what do you think of the three aforementioned ideas? Would any of them work? Which would work best or not at all? Or, do you have any suggestions as to how to help increase coffee producers’ profitability in order to make coffee growing more viable? I welcome your thoughts. Please leave a comment in the reply section below or email me directly at: [email protected]. I look forward to your comments!