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Foreword by Max Nicholas-Fulmer of Royal Coffee
In the nearly four years since this article by Jennifer Huber was originally published, the C market enjoyed a modest recovery followed by what is now one of the longest protracted periods of depressed prices in decades. Indeed, on April 11, the market made a 15-year low. We are now in what was at the start of the millennium referred to as “Coffee Crisis,” where the risk of farmers opting to simply not harvest their coffee at all becomes very real. While the scale of this challenge is enormous, even the smallest intentional actions can, if taken collectively, add up to real progress. Here, Jennifer Huber relates her personal experience conceptualizing the issue, and offers some simple wisdom that all in the industry ought take to heart. Some of the programming and product-related information in the piece below has been updated.
Just Do Something
by Jennifer Huber
A number of recent events have me thinking back to my last development studies class before graduation. As we recapped the themes and history of the many failed development projects in the Global South, the depth of those failures and the massive inequalities that persist left me with a sense of doom. What is one to do? To that question, my teacher had an answer that was so simple: just do something.
Though the issues are complex and difficult, if you are informed and working towards positive change, you will make an impact. It’s easy to feel overwhelmed while looking for the solution to global poverty, but the reality is that there are many solutions and many routes to take.
About a month ago, I was drinking coffee with Scott Brant, founder of the Coffeelands Foundation (formerly of Montana Coffee Traders). In the course of the conversation, we talked about real estate and the coffee market price, which Scott recounted was around $1 per pound in the early 1980s; it got tough for roasters when it hit $2.50 in 1986. You may notice the market has been in a similar range over the last year. The juxtaposition of the massive inflation of home values in the United States, with the complete lack of inflation for global coffee prices via the market over the last 25 or more years left me flummoxed.
Inputs for coffee production have increased, prices consumers pay have increased, but the prices that the vast majority of coffee producers receive has not. This isn’t news to any of us, but something about this conversation and the disparity hit me over the head.
Fast forward a few weeks, I am in Peru, and the market tanks to $1.20 per pound with fears of it declining further. There are a lot of unhappy people. Heads hung low. Stress.
Of course, low prices for small farmers lead to a number of issues: inability to make ends meet, or even eat in the off-season; difficulty finding the resources to improve their farming business and thus improve their prices; little access to health services; next-generation farmers choosing to move to the cities rather than farm; and so on.
What is one to do? Again, the answer is: Do something. Be informed and act.
What Roasters Can Do
There are many bright and impassioned people in the coffee industry working towards getting producers the prices that they deserve, and there are a lot of non-governmental organizations working to offset the low prices that most farmers receive by providing additional services to help them through the year — to keep them fed in the off season, to get them access to health care and education, to empower women, etc.
You, the roaster, can easily help with this side of things. We’ve mentioned it before, and at the risk of sounding like a broken record, I’m going to mention it again: Royal Coffee has set up an accounting system whereby you can elect to donate per pound 1 cent, 2 cents, 10 cents, 20 cents, or whatever you choose, to either the Coffeelands Foundation, which funds various organizations helping farmers at origin, or Grounds For Health, which provides access to cervical cancer screenings and treatments at origin. With coffee prices as low as they are now, maybe you can find some room in your budget for this tax-deductible donation.
There is a growing segment of roasters — and importers — who are opting to bypass the ICE market for purchases, instead choosing to pay prices that correlate with the quality in the cup. Royal Coffee has an alliance with Catracha Coffee, which gives monthly educational seminars to its farmers along with profit sharing at the end of the harvest. Additionally, Royal pays well for these coffees, and with all of the extra attention the farmers put into their farms, roasters end up with a coffee that is ridiculously sweet and syrupy. We talk a lot about Catracha around here because we want you to feel the love that we feel for the project and share the respect we feel for the producers of Santa Elena.
Of course, Royal buys many other microlots, and pays a premium for their stellar qualities, including, but certainly not limited to: Sulawesi Toarco Jaya Peaberry, Colombia Huila San Agustin, Colombia Huila Finca Buenos Aires, Ethiopia Yirgacheffe 1 Bedhatu, Ethiopia Gedeb 1, Mexico Mayan Harvest, Rwanda Kivubelt, Timor-Leste Organic Ermera. This list is constantly growing.
Along with microlots, Royal also helps roasters with the importing logistics for their direct trade purchases. I have a lot of admiration for the effort in sourcing, production, and education these roasters have taken on, with an outcome that has improved prices for their farmer partners and improved the quality of coffee for their customers. Clearly, the increased prices are a good thing, but possibly my favorite aspect of these “relationship coffees” is that there is a close link between consumer and farmer. The green buyers, roasters, and baristas have a story to share with the person drinking the coffee. The more that the consumer thinks about how their coffee got to them, the better.
As much as I love this method of increasing the price of coffee in an effort to support producers — and hope it continues to gain traction — the reality of global coffee production is that the volumes are huge, and most coffee is grown, harvested, and milled by farmers on very small lots. Most often, there isn’t an infrastructure set up for separating varieties or microlots, and all of the logistics that entails.
Another Option
With that in mind, I’d like to discuss another option for improving the price of coffee that benefits the small producer. It’s a system of paying an alliance of small producers a guaranteed minimum price that is well over the going rate of the C market (and similar coffees at origin). Most of that money goes directly to the farmer, but some of it gets pooled, and the cooperative management, who are democratically elected, decide on projects to fund using the money. Often the money is used for quality improvement (solar dryers, depulpers at the farm level, farm renovations, better storage or transport to reduce the occurrence of defects) or for social projects (education, health care, etc).
This method is called Fair Trade. Maybe you’ve heard of it.
Fair Trade has lost some popularity over the years, and it seems a new critique comes out semi-annually, but I and, more importantly, the farmer cooperative members, still see value in the program. Visiting with cooperative members and with unassociated small farmers, you see that their lives are better with Fair Trade than without.
While in Peru, I met with well-organized cooperatives (Sol & Cafe, Palto Amazonas, and Norandino) that are producing and exporting quality coffees; working on further improvements to quality; cupping extensively; meticulously keeping track of each cooperative member’s production volume, humidity levels, defect counts, certifications and such; and providing producers with access to agronomists and technicians to help them better their farms. I met with producers who are carrying out these and other efforts at the farm level. They are planting new trees, cutting back old trees to get new and more productive growth, building solar dryers to improve drying time, building new fermentation tanks, and investing in new depulpers — all of which help decrease risk of defects.
Maria Elena of Catracha Coffee in Honduras. 2018 photo by Royal Coffee.
In the face of hardships that persist for many certified small coffee producers, it is easy to conclude that Fair Trade and other certifications aren’t really helping farmers, and that projects such as Catracha Coffee offer the best route to take. The clash that has been created by various media, studies, and marketing strategies is counterproductive. Catracha Coffee and similar buying approaches stand on their own merits and do not need to be pitted against Fair Trade to prove their worth. Likewise, Fair Trade has helped provide good opportunities to small farmers, and although it could arguably be doing more, I can name some producers that would be disappointed, to say the least, if not for Fair Trade.
In an industry as diverse as ours, and with issues at origin as complicated as they are, there are many paths towards a better future. Since we would be nowhere without the coffee that is so painstakingly produced for us, I hope you’ll choose at least one.
Jennifer Huber
Jennifer Huber is a Trader and the Director of Operations at Royal Coffee, where she’s spent the past 18 years making, tasting, sourcing, and connecting people with coffee.
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A great article. To me, at the heart of the problem lies this; when roasters look at their customers, they talk about coffee as a specialty product. When roasters look at farmers they think about coffee as a commodity. When roasters and importers stop this schizophrenic split of how they feel about coffee, then we can get down to solutions. Either specialty coffee is worth paying for and therefore worth the out rages prices most roasters charge their customers relative to what they pay for the coffee Or it is merely a commodity and roaster should knock their prices down to the customers to reflect that.
Concerning what a roaster can do at origin, our entire business bank model is based on this dynamic. There is nothing to prevent a roaster from contacting farmers, be they independent or cooperative, and talking to them about their developmental priorities. You don’t have to be a giant company to do it. We’ve been around for 26 years and have been doing this since day one. Even small efforts have large impact on the ground. Whether it’s supporting a women’s loan fund, well building, giving support to local schools in coffee communities, or a dozen other ways that the farmers prioritize as their road out of their current economic situation, it is incumbent upon us – the people making a great living off their back‘s – to work with those communities to achieve those goals. It is especially ironic that people who claim to have direct relationships, which of course we know is mostly marketing nonsense, those people should certainly be funding or participating in community development at the farm level. What’s the excuse for anything else?
I can’t understand why people have been talking about this issue for the entire 30 years that I’ve been in coffee and still haven’t realized the basic equation. If you want the farmers to have more money, simply pay more money. Even small roosters can tell their brokers that they want to pay more on a contract . The C price isn’t etched in stone as the 11th commandment, it is merely a market convention created by and for exporters, importers and large roasters, that has now been taken over by speculative interests. We don’t need to buy into that system any longer.
Impact washing is the term given to companies who subscribe to one or more sustainable initiatives in order to hide all of the less sustainable things they do.
Supermarket shelves are bursting with coffee labels claiming that a particular brand of coffee is fairly traded and as a result they are not part of the problem.
The problem is created purely and simply by coffee companies taking the farming community out of the production process before any value is generated – before roasting.
Whilst companies strip producing countries of their raw materials in order to maximise profits overseas then the term impact washing is perfectly suited.
We roast at source, no poverty in our supply lines, none. Others create a problem by diverting this vital revenue into their own pockets in the first place then filter back a fraction and subsequently claim they are not part of the problem.
And the reason every single roaster gives for not leaving this income within a farming community that already lives in abject poverty? … freshness… “we simply have to roast in consumer countries for freshness.”
Walk around any supermarket and the shortest sell by dates are 9 months in advance, in most cases in excess of a year, so roasters are either misleading their supermarket clients or they are providing stale coffee – which is it?
Supermarkets and consumers are being misled by the very people causing this problem in the first place. Every bean roasted in London or Amsterdam or Chicago could be roasted in the coffee community, but then that would hit the bottom line of 99% of coffee companies.
Roasted coffee is around 20% lighter than green leading to massive decreases in coffee shipments polluting the atmosphere, (lets not even go into those who buy green coffee transported to Germany then re shipped still green to other countries).
Not us, Not 1 bean. http://www.not1bean.com, as a certified social enterprise we feed at least 50% of our profits back into farming communities after buying roasted coffee from them at prices where all of this poverty and child labour are eradicated.
Impact washing – nothing more.
Si realmente quieren ayudar a resolver el problema de sobreexplotación del productor , deben las entidades relacionadas , fomentar la creación de una infraestructura que permita al pequeño productor acceder a dicha infraestructura, llevando sus microlotes directamente a los compradores que previamente le han enseñado cómo producir la calidad de café requerido y que consecuentemente le van a reconocer en precio, el cumplimiento de los factores de calidad requeridos. Ahí está el meollo del asunto.
I always roll my eyes when someone simple states, “if you want the farmer to get better prices for their coffee, just pay them more.” First, let’s consider breaking up the us/them mentality, and remember coffee is not a charity-based enterprise, it is a complex international market system based primarily on capitalist principles). From my experience as a coffee buyer, it is typically much harder to “pay more” without a strong financial case to present why a company should pay higher prices for the same quality if you can find the product through an alternative, less expensive supplier. Typically, coffee buyers are not at the sole discretion of determining annual budgets for green coffee procurement. Therefore, buyers typically need to justify their expense. When financial analysts look at the “c” market and ask why you (the buyer) want to “pay more” than necessary, you need to have a good argument in place to justify this otherwise insane business statement. Buyers can influence and shift purchasing practices to an extent, but simplifying purchasing decisions to “just pay more” is a grossly simplified statement. However, what a buyer can do is build a case for why a company should pay more for their green coffee inventories. One argument would be for a company to ensure consistency in delivery times and consistency in cup quality by developing longer term relationships with the same suppliers, if these suppliers have proven to be able to provide these demands. When the market is low and prices are terrible, producers are more apt to find the best paying options, defaulting on some of these more aggressively low paying contracts, which puts the buyer (and company) in a precarious inventory position. If you want to continue to receive consistent quality and delivery times, paying a bit more per pound can justify this. But by simply “paying more” without a solid financial reason usually doesn’t work beyond a certain scale of operations (full containers, etc). Once you present the “ensure consistency and quality” to your team, you may then need to present a financial historical analysis and the financial risks presented if you simply refuse to “pay more” than what the market otherwise implies. Does paying more to ensure consistency and quality expectations offset the premium paid, even though the c market guides you into making other more frugal financial decisions? If so, prove it through some sort of financial quantitative analysis (does it make financial sense to pay more), and perhaps add some empathetic qualification too, but please do not simply present this argument simply as “just pay more” because its the right thing to do. That doesn’t work. It hasn’t worked, and it will continue not to work. Coffee is charity. Coffee is business.
*coffee is NOT charity. Coffee is business. (edit)
“From my experience as a coffee buyer, it is typically much harder to “pay more” without a strong financial case to present”
Always the same arguments from those who condone paying below the costs of production in order to maximise their own profits. It’s not complex, we are not a charity yet there are no children working in our supplier lines.
“From my experience as a coffee buyer, it is typically much harder to “pay more” without a strong financial case to present”
How about re-wording it then. “Pay costs of production”. Easy.
** assuming some profit is calculated into that production cost.
I would object to the idea of “simply paying more” that was suggested by a few other commenters. “Simply paying more” isn’t economically sustainable or consistent with the intended function of an open market system. It’s more of a charitable gesture, and a business-to-business transaction (IMO) isn’t the place for donations. If you want to donate money, then don’t do it by just paying more money, but do it by finding one of the many awesome organizations that are listed in this article or elsewhere.
Although, I’m assuming the people that are asking us to “simply pay more” are also asking us to read between the lines. There are a handful of obvious, market-driven reasons that we should all pay more for our coffee without further justification. Perhaps the most obvious reason is that consuming coffee markets are booming, and our partners at origin who bear greater risks and the heavier workload aren’t benefiting from this economic growth. The consumers are voting with their dollars, and they’re saying that coffee is worth more by paying more, so when will coffee company’s do the same by paying more for their green coffee? Jennifer also seems to be assuming that most coffee companies have the financial means to “just do something,” and I would assume that just as well.
Sidenote on paying more: How do we calculate these higher prices? It’s worth noting that the commodity price is useless in valuing specialty coffee. I know this leaves us in the dark without a baseline to work with, but the commodity price is truly irrelevant. In most cases, the c price is lower than the COP. I know many small to medium-sized farmers don’t have the means for calculating their COP, but they can tell you how much money they made last year and whether or not that was enough for them. I’ve had this conversation with at least one smallholder farmer and she was able to drum up a target Farmgate price right on the spot. Conversations with farmers or with your supplying partner (importer) about what farmers are being paid is a great place to start. If that’s not practical, then you can use tools already developed by some people in the industry like RTO (Return to Origin, created by Temple Coffee Roasters) or the Specialty Coffee Transaction Guide (created by Transparent Trade Coffee).
this is horrible!
https://news.mongabay.com/2019/05/slave-labor-found-at-second-starbucks-certified-brazilian-coffee-farm/
I’m investor I’m looking for the investment in Timor I have Libyan investor they want to invest 2 Billions USD. If possible to invest in timo me know