Coffee Barometer 2018 Released
These are the main conclusions of the recently released Coffee Barometer 2018 report, a collaboration of Conservation International, COSA, Hivos, Oxfam-Worldshops, Safe Platform and Solidaridad.
While coffee is increasingly lucrative, with an estimated global turn-over of $200bn, less than 10% of this number is earned in coffee producing countries. Further, 350 million per year, a futile two thousandth of the turn-over is invested in sustainability by the industry (less than a 0,002 share).
Sustainability Needs to Be a Core Priority
Behind the brand image, sustainability seems to be an afterthought for too many CEOs, especially when it does not directly coincide with the business goals of increased sales, profits and market control. Most companies relegate social and environmental issues to their CSR departments perpetuating the separation from core operations and strategies.
“The fact that companies are preoccupied with scaling their business seems to undermine the level of ambition, investment and impact of their sustainability commitments”, says Sjoerd Panhuysen, lead-author of the Coffee Barometer and Project Manager at Hivos.
“What’s more, companies shy away from incorporating social and environmental costs of coffee production. This hampers a more fundamental shift in the industry’s business model and is a real threat for value-creation in the long run.”
Myriad, Complex Issues Facing The Supply Chain
Since the early 1980’s, economic inequality has been rising as a result of downward pressure in the value chain coupled with falling coffee prices. In addition, a lack of transparency about costs and benefits along the production chain impedes value redistribution.
In the absence of effective public regulations in many coffee producing countries, Voluntary Sustainability Standards (VSS) have emerged as a promising regulatory tool to improve the economic, environmental and social sustainability of coffee production. These standards exist next to independent monitoring and certification, but require a commitment to ongoing capacity building and long-term investment.
Coffee Production Needs to be Adapted for Climate Change
If coffee consumption continues to rise at 2% per year, the coffee sector will need 300 million bags of coffee by 2050, doubling the current world production. However, without major efforts to adapt coffee production for climate change, global production will likely be lower in 2050 than it is today.
In the face of climate change, it is paramount that the coffee sector encourages an integrated coffee production system with lower environmental impact at landscape level, to meet both economic and environmental goals.
Economic Structures in Countries of Origin Need to be Strengthened
Furthermore, to sustain coffee production, the economic structures in countries of origin need to be strengthened through close collaboration of producers, exporters and national governments. This will improve the economic viability of farmers and strengthen the bargaining position of exporters.
Key Role of National Platforms
A good example of a successful national programme is the Sustainable Trade Platform in Colombia. Solidaridad is building other national platforms in countries like Honduras, Nicaragua, Mexico and Kenya, to strengthen production structures and promote transparency.
The sustainability stress factors – poverty and labour shortages at grass roots level, lack of transparency through the value chain and climate change – will bring shocks and surprises. Unless drastic action is taken, global production will simply not be able to keep pace with rising demand.
To avoid this, major stakeholders have to be proactive and define collaborative responses to deal with these challenges. Solidaridad invites the industry and donors to join and support these initiatives.
Download the report here.