Price Crisis Response Initiative Part 7

PRICE CRISIS RESPONSE INITIATIVE:

PART 7: STAKEHOLDER MEETINGS

(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)

NEW YORK, USA

Initial meeting in new York inviting everyone to be critical friends of the initiative and help make it better. The first thing they did was to create the problem statement.

They wanted to look at why does the sector face these problems and dig deeper? E.g. why is there a power imbalance? Why are chains opaque? The aim was to create a common framework of understanding.

They created some immediate actions that they could take with no regrets- these actions were not allowed to reinforce current unsustainable power dynamics, and were intended to help the price crisis response to build long lasting momentum.

It was agreed upon:

-        Represent coffee industry in calling for humanitarian support

-        Raise awareness of a price crisis and need for action

-        Provide inspiration to the specialty coffee community

-        Develop an SCA position on competition law

-        Amplify the living income movement.

Strengths of the sector were identified :

-        Highly differentiated products to empowered consumers

-        Role of coffee in building relationships

-        Fostering community

-        Stimulating progress

Weaknesses:

-        Lack of clear/cohesive message of what ‘specialty’ is

-        Challenges consumers face in identifying qualitative difference

-        Failure of specialty coffee to break away from traditional market mechanisms

They also decided that SCA should focus on the behaviour changes in the middle of the supply cahin- where most of the power is condensed: roasting & trading

CAMPINAS, BRAZIL

Systems mapping workshop- there was an increased attendance of producers at this event.

Goals of the workshop included :

1.     Create shared understanding of coffee system beyond status quo- including where they may be coplicit and where they have the power to act

2.     Foster understanding about interconnections in coffee system and make choice about what is in scope and not for action

3.     Identify challenges and opportunities to address root causes of price crisis

They started off with stories from attendees who suggested that the elements for true change might include:

-        Mindset shifts

-        Access to information

-        Inclusivity

-        Collaboration

-        Resilience in the face of resistance

They looked at the seed to cup diagram

And realised that it was used a lot on the consuming side of coffee- it is a map of sorts but misses out a lot of steps. The group challenged this linear model and thought about system elements, players, relationships, flows of power, flows of assets, money distribution, knowledge centres

It missed out key things like waste disposal, transportation, plant fertilisation as well as dozens of actors contributing at every stage in value chain from marginalised farm workers through to powerful financial institutions.

They continued to dig deeper and question it further.

KEY INSIGHTS FROM ANALYSIS

-        Producer is far from the consumer and industry actors perpetuate that

-        Understanding of environmental and social costs of coffee production doesn’t transfer along chain from producers to consumers.

-        Information flows but from producers to consumers but not the other way.

-        Easy to make assumptions about others in the supply chain

-        Original map ignores different modes of consumption (e.g domestic consumption)

-        Of many connections along the chain, consumer has the fewest

Draft list of intervention areas and points of leverage:

-        Encouraging a living income/wage

-        Reimagine anti-trust laws

-        Support a consumer movement to send a demand signal to industry

-        Boost domestic consumption

-        Deliver full price transparency across the supply chain

-        Enable technology driven traceability

-        Establish new price discovery mechanisms

WASHINGTON DC, USA

Private sector businesses and NGOs linked to coffee and not linked to coffee attended. The goal was to decide best intervention points. Create a plan against the 3 chosen points.

They used the 3 horizon frameworks and basically came up with 3 horizons/possibilities. H1: business as usual- where is the Specialty coffee industry going anyway if we carry on as normal. H2: disruptive innovation. H3: emerging future- come up with a future in line with the vision and goals of specialty coffee association and sustainability.

Identify innovations in horizon 2 space to improve distribution of value, risk and costs so that they could move from H1 towards H3 where farmers at least cover costs and externalities are valued at scale.

1.     Two way transparency is essential- online platform housing contract data and cost information from both buyers and producers. Rebalance power by demystifying costs associated further down the supply chain rather than producers making assumptions.

2.     Institutional innovation- identify opportunities to strengthen institutions that support coffee products (via a needs assessment)

3.     Consumer engagement: activate consumers to drive change in sector by a campaign that focuses on prioritizing stories of producers over score and flavours of coffee. This will create demand signal and exert pressure on industry actors

4.     B Corp Model: accelerate momentum of B Corp movement among specialty coffee businesses

5.     Social and ecosystem services market: define and quantify value of social and ecosystem services in coffee supply chain. Coffee not being only product in the system already and additional products could supplement producer incomes.

6.     Crop insurance: levy a tax on coffee trades to fund insurance for producers (see nespresso for example)

7.     Shared risk management strategies: train producers and buyers to co-develop high level risk management strategy for their relationship that ensures risks and benefits from market movement are shared.

PEER REVIEWS

They involved other coffee professionals and particularly sought out growers and producers in Indonesia and Asia pacific and various producers from Africa (established and emerging countries).

It meant that they had valuable feedback, opportunity to socialise concepts of PCR early on and uphold commitments to SCA inclusive values and not limiting feedback to existing relationships and networks. 

Read the full SCA Research document here