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UPDATED: THE GLOBAL COFFEE FUND: INITIAL REACTION TO JEFF SACHS’ PROPOSALS

UPDATED: THE GLOBAL COFFEE FUND: INITIAL REACTION TO JEFF SACHS’ PROPOSALS



Professor Jeffrey Sachs’ long-awaited plan to help coffee farmers earn more and make the coffee supply chain more sustainable has had a mixed reaction.

Professor Sachs unveiled his plan on 10 July 2019 at the World Coffee Producers Forum in Brazil. His study was sponsored by the Colombian Coffee Federation, Agence des Cafes Robusta d’Afrique et de Madagascar, African Fine Coffees Association, Inter-American Development Bank, International Coffee Organization, Romecafe, and the Secretariat of Agriculture and Rural Development in Mexico and commissioned by the World Coffee Producers Forum.

Professor Sachs proposed the creation of a pre-competitive Global Coffee Fund to finance a public-private partnership to help farmers meet Sustainable Development Goals. He said historically low prices for green coffee make a joint effort, led by the leading actors in the industry, essential and proposed a global fund that would be used to ensure that coffee-growing was sustainable. He said a huge sum of money – US$10 billion a year – would need to be invested in the fund, with an initial contribution of US$2.5 billion from industry. Another US$2.5 billion would come from public and private contributions.

The focus of the fund would be social protection for the poorest farmers and support to farmers including access to credit, markets, inputs, science and training to increase productivity and profitability. The fund would also be used to improve access to basic services in coffee-growing regions, including health and education and to strengthen enforcement of labour laws. It would also provide insurance options to mitigate climate risks.

Responding to the plan, C&CI regular contributor Dr Peter Baker said, “The analysis is quite good, but there are some misconceptions, and it should be made clear that the stats are weak.

“Professor Sachs has Food and Agriculture Organization data for coffee area, but that data is self-reported from countries and is unreliable. They have no incentive to collect the data and tell the truth.

“As ever, Professor Sachs is trying to fix market failure by throwing money at it. US$10 billion a year is a huge sum. I can’t see it happening somehow.”

Industry sources present at the forum told C&CI it was important to bear in mind that Professor Sachs’ presentation was a work in progress. The preliminary findings were presented on 10 July and a workshop with some 150 participants took place on 11 July, when the ideas put forward were discussed.

More than 20 different concerns about the proposal were raised.  Many of these were about the practical nature of the recommendation, including governance, politics and cost. Those present also identified many things about the report that they liked.

Professor Sachs was in the room during the workshop and was invited on to the stage to reply to some of the critique – which he did to a limited extent – and said he would take the input into account as the report is finalized.

“It’s hard to predict what that means for his core recommendation, but he explicitly said that the concept is modelled on the Global Fund to Fight Aids, Tuberculosis and Malaria, a premise that some questioned, since delivering vaccines and medicines is very different from addressing the many needs of coffee farmers, who range from the quite successful to those who are struggling,” said one source.

Dr Baker said it was also a mistake to think that shade can mitigate a world of 4C warming, as Professor Sachs’ presentation seemed to suggest. “Heavy shade can definitely reduce maxima but only at the cost of reduced yield, so would only trigger area expansion,” he explained. “And it would require substantial irrigation because current and future drought is as big a problem as heat, which would be extremely costly/untenable.”

SPP Global, which represents 500,000 small coffee producers around the world said it believed the solution to the global coffee price crisis is not a fund but sustainable prices.

“We believe that sustainable prices are a better solution for small producers around the world so they are empowered to make the necessary changes and invest in their businesses, in order to increase efficiency and fight climate change,” said SPP Global President, Nelson Camilo Melo Maya.

SPP Global praised Professor Sachs’ analysis of the coffee price crisis and market drivers, but said it felt there is a risk that, if such a fund were to be created, it would be dominated by commercial interests to the detriment of small producers.

In his presentation at the forum, Professor Sachs highlighted the fact that, since 1995, Brazil and Vietnam have accounted for 83 per cent of the increase in global coffee production. “Other regions have had stagnant productivity, squeezed incomes and low business returns,” he said.

“The result of low prices, stagnant productivity and rising costs would be continued extreme poverty, child labour, deforestation, and limited access to basic services in many coffee-growing areas,” said Professor Sachs.

Under continued pressure from low prices and with climate change, a loss in coffee varieties and origins would be expected. There would also be reduced production in Colombia, India, Malaysia, Costa Rica, Madagascar and other countries. Brazil and Vietnam would be expected to increase their market share, with growing risks to global supply chains with most production occurring in just a few countries.

“It is important to remember that most of the world’s coffee is produced by small producers,” said SPP Global. It rejected assertions that there is no future for them if they are not efficient enough to compete with the world’s largest producers. “Small producers can be efficient in their own way and can have a future in coffee,” it said. “To choose what they want to do is a basic human right.”

Miguel Zamora, Director of Market Transformation at Rainforest Alliance told C&CI, “We look forward to reading the full report. The information shared at the forum remained high level and it is not possible to assess how feasible the fund is and how impactful the investments proposed would be.

“That said, we welcome the idea of sharing the responsibility for building a sustainable coffee sector between industry, producers, and governments. The burden of creating a sustainable sector should not fall only on farmers.

“We think it could be a positive development to have a fund that could help farmers fight climate change and make the necessary investments in having the right cultivars, improve sustainable practices, expand access to weather-risk insurance and investments in coffee.

“However, we also believe that we need to create solutions that recognize and reward the improvements that farmers make and that allow farmers to have access to the information/data and tools to make more informed decisions.

“We need solutions that adapt better to context, to farm size, location and where they are on the sustainability journey. And we need to work on sector-wide approaches as well as landscape approaches for the challenging issues that farmers face.”

Fairtrade International Senior Coffee Manager Peter Kettler told C&CI, “Professor Sachs offered a concise analysis of the global coffee industry, concluding that it does not seem ethical or moral that an industry that is making money pays producers below the cost of production. This confirms the stark reality that many in the industry have known for some time.

“While his suggestion to establish an annual Global Coffee Fund may seem ambitious to some and unrealistic to others, it does reflect the kind of bold, big-picture thinking that this crisis desperately needs.”

The Global Coffee Platform (GCP) told C&CI, “We acknowledge the comprehensive work done by Professor Sachs and his team and welcome the proposal for a pre-competitive global coffee fund to finance the SDGs in coffee farming.

“The GCP is proud to have the work of its members and network of national coffee platforms recognized and we look forward to continuing our collaborative efforts, as a neutral multi-stakeholder sustainability platform, to improve the livelihoods of coffee-farming families around the world.”

 

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1 Comment

  1. Dean Cycon

    I don’t understand why sectors of the industry felt the need to pay money to Sachs for an analysis we all know about and fully understand. Sachs is like the Emperor’s New Clothes in the academic world – there isn’t much there. In the real world he has been a singular flop, helping drive the post-Soviet economy into the hands of the current oligarchs, and his only attempt at real world work (Millennium Villages) were a notorious flop.

    The singular, most direct and most meaningful answer to the coffee pricing crisis and even to addressing the impacts of climate change is ridiculously simple – PAY MORE MONEY TO THE FARMERS. We don’t need engorged government top-down wasteful programs like the kind Sachs perennially advocates.

    The is especially apt for the so-called Specialty Coffee industry. How can companies offer their products to consumers as somehow special and different when at the same time they treat the coffee as a commodity when dealing with farmers?

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