Coffee and Social Sustainability
In 2015, the United Nations set the Sustainable Development Goals (SDGs), a set of seventeen interrelated goals, many of them socially-focused, meant to be the blueprint toward an equitable future for all. The goals range from ending poverty to gender to climate action and responsible consumption & production. The UN set 2030 as the year by which to achieve these goals, and as we are nearing 2021, we are ever closer to the "deadline," and it's important for us to ask ourselves: how is the coffee industry doing when it comes to these goals?
It's difficult to give an answer, especially when there are so many goals (seventeen is a lot to analyze!) and they are all connected, so in this blog, we will delve into the first Sustainable Development Goal: ending poverty.
Coffee and the Goal to End Poverty
How much coffee is bought and sold for is dictated by c-price, the price of one pound of coffee. The c-price changes every minute based on speculation about future conditions and price of coffee upon delivery. If there is speculation that the price of coffee will increase in the future due to, say, limited supply, the current c-price will go up. The opposite is true as well: if there is speculation that the price will drop in the future, the current c-price will go down as well. Effectively, this removes the c-price - and the price at which farmers can sell their coffee - from real market conditions, production costs, and farmers' living expenses. This c-price fluctuation causes the producers' profit to fluctuate, even dipping in the negatives, all of which affects the livelihood of farmers.
One study focusing on fair-trade coffee farms in countries in East Africa, India, and Southeast Asia found that only farmers in Indonesia were able to earn a living income solely from coffee production. None of the other farmers in any of the other countries made a living income from coffee production, and some did not make a living income at all.
Another study conducted by Caravela Coffee looked at coffee farm profitability across six Latin American countries, the the results showed that a farm would need to be at least three hectares producing five 133-155lb bags of coffee per hectare in order for one member of the farmer's family to live slightly above the poverty line.
However, with over 70% of the world's coffee produced by small farmers operating 1-2 hectares (or less), the economic impact of low coffee prices, bad harvests, and market fluctuations are very real. Low or negative profit affects not only affect a farmer's current livelihood and business, but also feeds a vicious cycle where the producer is not able to invest in their farm so that it can function and bring profit in the future.
So where is the coffee industry on its journey to end poverty? There is definitely work to be done, but the good news is that we, on the consumer end, can help make a difference. At its core and in theory, the price of coffee is determined by supply and demand: by the producer and consumer. As a society, we can drive the demand for fairly traded coffee where the farmers were paid livable wages by purchasing coffee from companies and businesses that directly trade with farmers or otherwise ensure that the farmers have a say in the pricing of their crop and are paid for their hard work. As we do that, the demand for fairly-priced coffee will increase, farmers can re-invest in their businesses, and the coffee industry can get just a little closer to ending poverty.