Global Coffee Fund proposed to finance stability of the sector

At the Second World Forum of Coffee Producers, attended by more than 1,500 producers of coffee from all continents, keynote speaker, Professor Jeffrey D. Sachs, proposed the creation of a Global Coffee Fund to co-finance the sustainability of the coffee growers.

This fund, which would be USD$10 billion a year, would be initially fed with USD$2.5 bn in resources from the industry, which would be added to public and private contributions for direct investments in farm for another USD$2.5 bn, budget disbursements for the same value and contributions from donors for the same amount.

Without the fund, it is difficult for many producers to subsist in the absence of support for reinvestment in technology and productivity, which would lead to the desertion of more and more farms, as already seen in Central America and would put the global coffee supply at risk.

In presenting the results of the study “Economic and policy analysis for improve the income of small coffee producers”, Sachs explained that Brazil and Vietnam, as producers of 50% of coffee in the world, have made important investments in mechanization and productivity and therefore have a great weight in determining the international price; since 1995 they represent 83% of the increase in world production.

Therefore, if the Brazilian real appreciates, the international price of the grain increases, whereas, if the real devaluates, the price of coffee goes down. At current levels, prices are only viable for mechanized producers, not for traditional ones.

In addition, other producing countries such as those of soft washed mountains grown coffees, face limitations including lack of investment in science and technology to increase their agricultural frontier or mechanize harvesting, which puts them at a disadvantage in the industry. In this sense, despite the limitations, Colombia has been an example, said Sachs.

On the other hand, the increasing temperatures due to climate change foresee lower yields in countries and regions such as Colombia, India, Malaysia and Central America, which would accentuate not only the risks of deforestation, poverty and inequality, but the co-dependency of the global supply of Vietnam and Brazil.

All this requires a joint effort of the main actors of the industry, in co-ordination with governments, to invest in the sustainability of the coffee sector, which, if successful, would become an example for the world.

During his presentation, Sachs showed that Nestlé and the JAB Group distribute almost 40% of coffee sales in the world, followed by companies such as Lavazza, JM Smucker, Kraft Heinz and Tchibo.

A total of 25 million families are engaged in the cultivation of coffee in the world.

Related content

Leave a reply