Coffee Barometer 2018 report finds production under threat

While investors spend billions in coffee company acquisitions and mergers, coffee production on the ground is under threat from all sides, according to the Coffee Barometer 2018 report, a collaboration between Conservation International, Cosa, Hivos, Oxfam-Worldshops and Solidaridad.  The report says that without major efforts to adapt production to climate change, increase transparency in the value chain and improve social conditions on farms, global production will not be able to keep pace with rising demand. Trouble is brewing due to a wide variety of complex and systemic issues – social, economic and environmental – threatening the future of coffee production. Economic inequality between roasters and producers is rising as a result of downward pressure in the value chain coupled with falling coffee prices since the early ‘80s. Moreover, there is a lack of transparency about costs and benefits along the coffee production chain, which impedes value redistribution. Consequently, many producers are leaving coffee farming for other crops.  
 
While coffee is increasingly lucrative with an estimated global turnover of $200billion, the report says less than 10 per cent is earned in coffee producing countries.
 
Behind the brand image, the report says sustainability often 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 continue to relegate social and environmental issues to their corporate social responsibility 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.” In crop year 2016/17, coffee farmers produced a record crop of almost 160 million 60-kilogram bags according to the International Coffee Organisation 2018 report. In nearly all countries where coffee production is expanding rapidly, such as Vietnam, Indonesia, Ethiopia and Peru, deforestation is the primary source of new coffee lands.
 
If coffee consumption continues to rise at a rate of 2 per cent per year, the coffee sector will need 300 million bags of coffee by 2050, doubling the current world production and potentially doubling the amount of land needed for 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 absence of effective public regulations in many coffee producing countries, the Barometer 2018 report says the coffee sector has invested in Voluntary Sustainability Standards (VSS) to drive improvements in the economic, environmental and social sustainability of coffee production. While nearly half of production meets one of these standards, they do not provide a “magic bullet” and require a commitment to ongoing capacity building and long-term investment.
 
“In the face of climate change, it is paramount the coffee sector encourages an integrated coffee production system with lower environmental impact at landscape level, to meet both economic, social and environmental goals,” the report says. “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.”