Climate change, coronavirus, and low coffee prices are impacting the coffee supply chain, compounding each other, and no one is immune.
The year 2020 has thrown the world new challenges and reignited ongoing ones that need urgent attention. To date, the coronavirus has infected 35 million people worldwide – and counting – while climate change and low prices have impacted approximately 12.5 million farmers and more than 100 million people connected through the supply chain, and there’s no signs of eradication for either threat.
Annette Pensel, Executive Director of Global Coffee Platform (GCP), a multi-stakeholder membership association, says this year has highlighted the fact that threats do not exist independently from each other. The impacts are compounded and the risk to the world’s most vulnerable communities are increasing exponentially.
“It’s been undeniable that coffee sustainability will not be reached without addressing all these threats simultaneously, but each of us can play a role in how we approach these challenges. By working together, we can leverage off of each other’s strengths and address coffee sustainability in a more holistic way,” Pensel says.
For the last 12 months, the livelihoods and wellbeing of coffee farming communities has been GCP’s priority, with the association calling for urgent and collective action on the coffee price crisis. Pensel says without acting boldly, we cannot achieve economic viability of sustainable coffee farming and a living income for coffee communities.
Director of Global Coffee Platform.
“With the persistent low coffee price levels in the market and additional impact from the pandemic, the livelihoods of millions of coffee farming families will be affected even more. This development also aggravates the high risk of losing origin diversity in the coffee supply if our sector continues with business as usual,” Pensel tells Global Coffee Report.
As such, GCP has published its first Sustainable Coffee Purchases Snapshot in response to its 2019 call to action to collectively address the price crisis. It documents volumes of sustainable coffee purchases by companies under multiple GCP Baseline Coffee Code-recognised sustainability schemes and includes the top 10 coffee origins sourced from.
Pensel says the five participating companies – Jacobs Douwe Egberts, Melitta, Nestlé, Strauss Coffee, and Supracafé – have taken a “clear and confident step” to supporting global progress in sustainable coffee sourcing.
CLIMATE IN CRISIS
Climate experts have defined the next decade as our “most critical”. It’s a decisive decade in which the world needs to reduce its carbon emissions to limit global warning to 1.5°C, while at the same time, find ways to counteract the impacts already being felt due to inaction.
According to World Coffee Research (WCR) CEO Jennifer ‘Vern’ Long, the climate crisis has already arrived.
“It is already affecting the choices farmers make and they are finding that their long-standing approaches to managing crops is being challenged by unexpected events. It is increasing both the uncertainty and the risk they face daily,” Long says.
“The climate crisis will drive more coffee producers out of coffee than anything else. But it doesn’t work alone. It’s really the interaction between the climate crisis and other threats that makes it so pernicious. For example, low prices mean that farmers don’t have the ability to protect their farms from the adverse effects of climate change, or to invest in adaptations that might allow them to take advantage of opportunities in normal or good years.”
What’s needed, Long says, is to improve productivity with less viable land. At the same time, shade-grown coffee production must be increased. These two things historically have been a challenge to achieve together. The solution, she says, is breeding.
“If we really want to secure a long-term future for coffee, we have to dramatically increase the amount and sophistication of breeding happening now – not just in one country, but in many. There is a huge role for industry to play in this,” Long says.
In other major commodity crops, industries have come together to spread risk and collectively fund this kind of R&D through mandatory national checkoff programs. In coffee, there is a voluntary checkoff program via WCR, which Long says is doing important work to assist coffee producing countries to modernise their breeding programs. But the levels of funding, roughly US$4 million per year, is still just a fraction of what’s needed to generate continuous impact to support farmers and coffee producing countries to continuously adapt as the climate changes.
WCR is currently working with producing countries to support their efforts to modernise their breeding pipelines and helping improve access to quality planting materials.
“High-powered modern breeding, taking advantage of modern tools, is where coffee needs to go, but very few countries are able to do this kind of breeding right now, or are trying to do it on shoestring budgets, and most can’t afford to transition their programs on their own,” Long says. “Those that can will continue to put distance between themselves and everyone else, consolidating their lead in the market. As long as origin diversity matters to the industry, access to new coffee varieties is absolutely essential.”
On 1 October, the Association of Southeast Asian Nations (ASEAN) Coffee Federation, in partnership with Food&HotelAsia (FHA) hosted a webinar on the future of its coffee production, in which it addressed the fact that South East Asia is one of the world’s most vulnerable regions to climate change.
ASEAN Coffee Federation and President
of the Philippine Coffee Board.
Vietnam, the world’s largest producer and exporter of Robusta coffee, is already experiencing rising sea levels and typhoons, while its central highlands are expected to face extended periods of drought.
“You only have to look at a mountain to see that the lower parts are facing hotter periods of increased temperature than the top. All of a sudden, the area of coffee production is moving higher and higher up the mountain, an area that’s harder for farmers to access,” Alfredo Nuno, Director of Starbucks Global Farmer Support Centres and Hacienda Alsacia, Costa Rica told the audience.
The other challenge, Vietnam Senior Coffee Expert, Dr Dave D’haeze added, is erratic or unseasonal rainfall. Vietnamese farmers traditionally sun dry their coffee, but heavy rainfall is infecting crops with mould, which can no longer be exported because it doesn’t comply with strict food quality standards.
Pacita Juan, 2nd Vice President of the ASEAN Coffee Federation and President of the Philippine Coffee Board, also fears for Vietnam’s future, telling GCR that due to the country’s high yields – producing five times more than the Philippines’ 750 kilograms per hectare – its economy will be impacted.
What’s needed, Juan says, is a collective responsibility to push consumers to buy local, traceable coffee.
“I really do think domestic consumption will be the game changer for many countries,” Juan says.
“I think a balance of production and domestic consumption will save us, but for countries like Indonesia and Vietnam who have buffer stock because they produce more than they consume, it will be more of a challenge. It will definitely drive prices down, but if people start looking for traceable coffee then farmers will benefit in that consumers will be willing to pay more.”
No matter the origin in question, Tim Scharrer, Managing Director and Vice President of Green Coffee & Cocoa at Starbucks Coffee Trading Company, also joined the webinar in saying it’s important to remember that there’s no “one size fits all” approach to climate solutions.
“In some countries we’re seeing a drastic weather change from too little rain to too much rain. So, we [at Starbucks] are looking into supply chains around the world and specific areas that we believe are having the biggest impact on global carbon emissions in each specific country, such as the use of fertiliser without targeted soil analysis, and wet milling, which is heavily used in Central and Latin America and takes up a lot of energy,” Tim said.
As part of its global initiative, Starbucks is working with WCR at Hacienda Alsacia, Starbucks’ research centre in Costa Rica to evaluate candidates for possible future release to farmers. And in Sumatra, it is building greater shade areas, using native tree species to provide extra nitrogen in the soil, and looking at crop diversification and intercropping methods.
A CHANGING WORLD
COVID-19 has paused travel opportunities for many in the coffee industry. Zoom meetings have become a suitable replacement, but for WCR, travel restrictions have halted critical care for plants in research trial networks and delayed planting of new trees.
What’s more, WCR’s Long says labour availability due to movement restrictions in a number of countries has been a challenge for producers.
“Anything that hinders a farmer’s ability to care for his or her plants has consequences that play out over time – an inability to purchase or apply fertilisers this year will impact production next year,” she says.
GCP’s Pensel says the COVID-19 pandemic has compounded the challenges being faced by coffee-producing communities and has further negatively impacted many parts of the coffee sector.
In some countries, the impact has been directly related to the number of infections and the capacities of the health system. In others, Pensel says the impact has been felt through market changes and restrictions imposed by governments, including social distancing, travel restriction, curfews, and lockdowns.
Some coffee producing countries like Honduras, Uganda and Kenya, saw strict curfews and lockdowns early in the pandemic. Several others, including Ethiopia, Indonesia, and Vietnam, have increased their production compared to the previous coffee year, with Vietnam having ended its harvesting before the start of the global pandemic. Pensel says changes to the way coffee farming communities’ work are largely caused by measures to ensure health and safety, with implication on the workforce.
Disruption in logistics and transport have caused challenges in export, while Pensel predicts we might see the effect from possibly reduced global demand, especially for specialty coffees, going forward.
“The impact on coffee production and global output is expected to become more visible in the coming months as harvesting season has started in more coffee producing countries,” she says.
Whereas in the Philippines, President of the Philippine Coffee Board, Juan, says the coronavirus has resulted in 20 million people unemployed, resulting in a surge of young workers heading to the provinces in search of job opportunities.
“The average age of coffee farmer in the Philippines is 60, so to see a movement of younger people engage in the backend of the supply chain has been one positive outcome of this pandemic,” Juan says. “Many millennials have been displaced from their 9am to 5pm jobs and are looking for something to do. Our government is supporting young farmers by providing interest free loans for those aged between 18 to 35 to go into agriculture enterprise. Billions are being poured into this de-migration initiative to ‘go back to the province’.”
GCP’s Pensel says perhaps the current pandemic, which only reveals the underlaying, systemic challenges of the coffee sector with a magnifying glass, will push the industry harder to “step up and go beyond business as usual” to achieve our shared vision of a thriving, sustainable coffee sector.
“We need shared responsibility in individual company commitments along with healthy competition in the supply chains and the market. We also need shared responsibility in pre-competitive, joint action on the industry’s greatest challenges, such as the effects from COVID-19, the coffee price crisis, and climate change,” she says.
Importantly, Pensel says people have to be at the centre of any approach to these challenges. GCP’s locally designed National Coffee Sustainability Curricula provide coffee farmers with essential knowledge about sustainable farming practices. GCP tools at local and global level enable measuring sustainability progress over time in an aligned way. Based on analysis and evidence, sustainability gaps that influence profitability can then be identified and addressed.
Examples of this kind of approach can be found in GCP’s Collective Action Initiatives. Co-funded by GCP Members and others, these open-source multi-year programs address complex sustainability issues such as agrochemicals and agro-inputs such as glyphosate, water, social wellbeing and labour conditions, and effective extension services.
“Not only do these initiatives and the broader work of the Country Platforms benefit coffee farmers, they also influence policy and contribute to a more conducive business environment for sustainable, profitable coffee production,” Pensel says.
She says low price levels and volatility, along with the slowly recovering economy are likely to continue in 2021, however, she also expects to see coffee companies and coffee farming communities find new ways to adapt to a world that is not likely going to return to “normal” any time soon. And that, she says, will be evidence of our industry’s resilience.
This article appears in the November/December 2020 edition of Global Coffee Report. Subscribe HERE.