The World Coffee Producers Forum has condemned the global coffee industry and the price currently being paid for the coffee its members produce.
With the ‘C’ price in New York at a historically low level, the forum says a social and economic crisis has been created, a crisis that is so serious that the coffee value chain as a whole “cannot just continue talking about it,” and must take immediate action.
“According to the International Coffee Organization, about 25 million families – mostly smallholders –produce coffee. Today, most of them cannot even cover their production costs and many of them cannot make a living for themselves and their families,” said the forum.
“The world drinks 1.4 billion cups of coffee every day and consumers pay very high prices. In many cases, those prices are reached with the promise of the coffee being ‘sustainable.’
“However, the sustainability promise usually focuses only on two of its three aspects: environmental and social. Economic sustainability, the income of the farmers, has been neglected by the coffee value chain under the premise that ‘the market is the market,’” said the forum in an end of March 2019 statement.
“The ‘C’ futures contract was created as the price reference for a basket of mild Arabica coffees of similar quality known as ‘Centrals’. Today, with several changes introduced over time, it is widely acknowledged that the ‘C’ contract does not cover production costs for most producers. This is due to several factors, including speculation by hedge funds that do not understand or care about coffee,” the forum said.
“In 1982, the price of coffee fluctuated between US$1.18 and US$1.41 in the international market and a cup of coffee averaged US$ 1.10 in the US. In 2018, the price of a pound of Arabica coffee in the international market averaged US$1.01. On 22 March 2019, the price closed below US$0.95.”
The statement issued by the forum said, “The pauperization of coffee producers is destroying the social fabric in the rural areas of more than 40 countries in Africa, Asia and Latin America, leading to increased criminality, more poverty and migration towards the US and Europe. In some countries, the crisis has become an incentive to shift to illegal crops because farmers cannot make a living from coffee alone.
“Quality and availability are also threatened. Producers who stay in coffee will not be able to afford to care for their farms and their coffee which leads to improper fertilization and care for trees, affects quality and deprives consumers of the diversity that they enjoy today. Adaptation and mitigation of the effects of climate change are other burdens that falls on the shoulders of producers.
“Producing countries and other players are concerned that today’s ‘C’ contract is not the right price discovery mechanism and that by allowing the impoverishment of producers, the coffee industry is compromising its own future.
“The current economic sustainability crisis of coffee producers needs to be addressed immediately before it becomes a humanitarian crisis. An approach based on the principle of co-responsibility and total transparency must be implemented to ensure that all the links of the value chain are profitable and healthy,” said the forum.
“Even if coffee results in a great beverage, if it does so at the cost of the dignity, value or well-being of the people and the land involved it cannot truly be a sustainable coffee.
“ICE cannot be absent in this discussion,” said the forum. “Coffee farmers from all over the world have been reaching out for years to the rest of the value chain hoping for a collective, constructive and realistic approach to secure the economic sustainability of producers. The response has been very weak. When it comes to economic sustainability of coffee producers, it is clear, inaction is not an option.”