Price Crisis Response Initiative Part 4

PART 4: POTENTIAL FUTURE IMPACTS

(these are my personal notes from reading through the SCA price crisis response initiative to be used for a summary for my clients and coffee friends)

Farmers may transition to more viable agriculture alternatives/leave coffee all together

Production levels of others will suffer due to the lack of investment. Some of these effects are already in play.

5 countries produce over 70% of the worlds’ coffee.

Production will shift to large scale farming operation- most of these are already in those top 5 producing countries.

The shut down of small scale farms and production shifting to those 5 countries will limit availability of particular flavour characteristics.

Makes coffee supply and price increasingly vulnerable to climatic and geopolitical events!

BRAZIL  

If brazil continues to increase efficiency in production- it means that production in the rest of the world will decrease even more… this threatens the diversity of origins that all strong brands rely on.

For farmers that continue to produce coffe, low and volatile prices will reduce their ability and desire to invest in modernisation and purchase inputs.

These are both essential to achieve maximum quality and yields- especially with the looming threat of climate change.

INCREASED DEMANDS

While coffee prices are partly low because of oversupply in the market, global demand for coffee is increasing rapidly and predicted to outpace supply in near future. At the current pace we will need 500 million bags of coffee per year by 2050, doubling or tripling the current annual production.

THIS WILL BE SUPER HARD AS THERE IS LIMITED AMOUNT OF LAND SUITABLE FOR COFFEE DUE TO CLIMATE CHANGE.

BY 2050, THE AMOUNT OF LAND SUITABLE FOR ARABICA GROWTH WILL BE REDUCED BY 75% AND FOR ROBUSTA REDUCED BY 63%!

These impacts threaten sustainability of the coffee industry and livelihoods of MILLIONS of coffee growing families and the viability of businesses who rely on green coffee supply.  In particular threatening specialty coffee who rely on SMALL SCALE GROWERS.

WE HAVE A RESPONSIBILITY TO ADDRESS THIS CRISIS.

Concentration of production is a problem within the infrastructure.

Export of Specialty coffee relies on infrastructure including mills, transportation, market places etc that were built to export LARGE VOLUMES OF COFFEE.

If volume dips too low, the cost of the infrastructure becomes prohibitive at low specialty volumes!!

We need action from specialty community but also to include participants of large buyers of all grades of coffee.

Without the exporting scale of commodity coffee, specialty will become too expensive and potentially impossible in many countries.

Meanwhile- specialty coffee HAS paved a path to make coffee environmentally and socially sustainable as a product. Entrepreneurs have been innovative and had strong brands that communicate with consumers well. Specialty coffee led coffee out of a decline in the end of the 20th Century along with a rise of consumers who care about where their food and drink comes from.

The SCA’s role is a neutral organisation with far reaching authority and influence. They will address the issue which requires challenging the status quo, changing business practices and reconsidering assumptions.

Read the full SCA Research document here