THE COFFEE CRISIS
Around the turn of the last century, two events occurred that influenced the way that the global coffee community thinks about how it sources coffee and engages with the people who grow it. These events were not cataclysmic detonations that changed the coffee landscape from one day to the next, but rather two waves gathering force and momentum as they approached one another.
The first wave was the rise of the specialty coffee movement, pioneered by a handful of roasting companies mainly from the west coast of the US, driven to international stardom by Starbucks through the 1990s, and carried ever further today by the third wave movement and energetic newcomers. With this movement came the beginning of the de-commoditisation of coffee. Buying coffee became about establishing a relationship and understanding between coffee grower and roaster and inviting the consumer to be more involved, more discerning. Information sharing and storytelling proliferated. A new awareness developed around both quality differentiation and the ways that coffee can be ordered and served. Exotic regional and farm names augmented expanding menus and fed a growing interest in coffee origins and producers.
The second event, by contrast, was catastrophic. Global coffee prices, as a result of over-production, collapsed in 1999 to levels far below the cost of production. They remained in the price doldrums until the end of 2004, driving millions of households deeper into poverty and many below the breadline. This event is referred to within our industry as the Coffee Crisis. Far more than a coffee crisis, it was a humanitarian crisis.
These two events cannot be credited with starting the coffee sustainability movement but combined they acted as an accelerant, spreading awareness of the very real threat to global coffee supply and to the future health of our industry. This recognition of shared risk fuelled our sense of collective responsibility. The short-term gain for roasters from low prices was outweighed by the long-term loss of farmers and their coffee.
This was the start of a paradigm shift. Sustainability moved from the margins of the specialty roasting community towards the mainstream, more commercial channels. We began to explore a new vocabulary. Terms like ‘sustainability’, ‘ethical sourcing’, ‘traceability’, and ‘transparency’ seeped into our daily commercial dialogue and our contractual terms and conditions.
While the Coffee Crisis wave would eventually break towards the end of 2004, (with a rise in coffee prices back to levels profitable for farmers), the residue of depleted soils, neglected trees, and crushing debt would continue for years, leaving scars on the coffee terrain that are still evident today.
The sustainability movement did not break. It has continued to gather force and momentum, bolstered by an intensification of conversation around problems such as climate change, nancial crises, urbanisation, poverty, racism, gender inequality, and conflict. These problems require a global response of a complexity and depth that is, at times, daunting and difficult to comprehend.
How do we as individuals and business people combine our familial and professional roles with our responsibilities as global citizens willing to work towards the greater good? What is our contribution going to be and how will we make it?
There is an opportunity for those of us in coffee to contribute significantly, an opportunity that holds the latent potential to drive socio-economic change beyond coffee, on a scale that is difficult to quantify.
In the early part of my coffee career, I had a mentor whose mantra was ‘timing is everything’. As the years pass by, the truth of that statement is often reaffirmed for me.
The coffee industry has arrived at a point in time where a confluence of market forces and a growing, long-term sustainability crisis have created the motivation and focus to build something that could benefit the world. This is our time.
To understand the breadth and nature of this opportunity, we need to step back and survey the entire coffee landscape. An estimated 25 million smallholder farmers produce 70 per cent of the world’s coffee in over 50 countries. What these people have in common, outside of coffee, is that they live in poverty.
In his 2007 book, The Bottom Billion, author and economist Paul Collier describes the four poverty traps that the poorest nations on earth fall into:
In conflict or post conflict
Land locked with poor neighbours
Mineral wealth trap
If you consider coffee-producing countries in relation to these poverty traps, virtually every country falls into at least one. The DRC falls into all four. In Peru there are the Shining Path Guerillas, Colombia has the farc, and there is civil war in Nicaragua, El Salvador, Guatemala, and Honduras. Genocide in Rwanda, Idi Amin in Uganda, ethnic cleansing in Kenya, and the Durg in Ethiopia. The litany continues with war in Vietnam, Laos, and Cambodia. You get the picture.
These are not farmers held captive in poverty through a predatory coffee trading culture. The problem is far greater: these communities lack personal and food security, access to credit, agricultural inputs, land ownership, education, healthcare, and market access.
What this means, from a business perspective, is that everyone else in coffee — exporters, traders, importers, roasters, baristas, and café owners — are entirely reliant on a vast number of extremely vulnerable people, farming in high-risk environments, to produce the raw material we all depend on for our livelihood. This idea of shared risk is not a new perspective: all of the current sustainability endeavours within the coffee industry are focused on these issues. Coffee is not the cause, but the opportunity. We can lift hundreds of millions of people out of poverty. We could drive change across entire economies.
Ours is an industry riding the crest of growth and prosperity in consuming markets. We have shrugged off the global recession and are enjoying sustained growth of nearly two per cent per year. Innovation is constant and the rising popularity of specialty coffee continues unabated. Asian markets promise growth for decades to come. To respond to this commercial opportunity, we must answer the question of where we will get the raw material to feed the roasting factories of tomorrow.
This commercial driver represents a tipping point in business. Sustainability has embraced altruism not only as the case for social justice and human decency, but as the case for business. The welfare of vulnerable farmers is paramount to the bottom line of every business involved in coffee. Profitability, the economics of business, is the one language spoken and understood throughout our monetised global economy. Our understanding of sustainability is moving from what we ought to do, to what we must do to ensure our commercial survival.
This shift is forcing a rapid maturation of corporate social responsibility. Greenwashing to protect and enhance a brand isn’t enough. There is an urgency around understanding the hard economics of each element of the supply chain from the time the trees are planted to the point of final delivery to the consumer.
There are now programmes aimed at soil protection, variety selection, yield increase, plant nutrition, working capital access, climate change analysis, certification, gender equity, and agronomy training underway across the globe. These initiatives are nanced by private and public sector funds, and driven by NGOs, local government, and private sector workers.
While there is still much to be done, significant work is already underway. A unique feature of the growing sustainability movement is the amount of collaboration, even between market competitors. While at a coffee convention recently, our banker remarked that he was amazed by the open dialogue, information sharing, and the atmosphere of friendliness amongst all the attendees. He contrasted this with a metals convention that he had recently attended that ‘felt more like yard time’ at a maximum security penitentiary, with rivals huddled in corners of the hall, like prison gangs sticking to their patch.
Our understanding of sustainability as a vital component of business represents a cultural revolution. There is no other private-sector industry committing the same resources, in open collaboration, towards solving problems for people in distant economies, as if those problems were its own. We understand that these problems are ours too.
The consequences of our actions could be more significant than we anticipate. Coffee growers are part of a far larger community. This community of 500 million smallholders grows 70 per cent of the world’s staple food crops. The United Nations Food and Agriculture Organisation confirms that the majority of these farmers are equally vulnerable, facing identical challenges to those faced by coffee producers. Our farmers are part of this far larger, far more critical, supply chain. This suggests that if we, the global coffee community and our collaborative partners, are able to build a model for sustainable smallholder agriculture, we will have contributed to the blueprint for addressing the challenge of global food security.
This could be our legacy.
This article was taken from Falcon Speciality and was published in October 2016. The article is the first in a four part series written by our CEO Konrad Brits for Standart Magazine. It was originally published in issue 4, March 2016.