Colombia Hands the Mic to Growers

By Bethany Haye

'MEDELLIN, Colombia

The inaugural World Coffee Producers Forum was a growers’ conference,the world’s first.Growers raised their voice loudly, airing grievances, and talking publicly about what they intend to do about them. But it was also largely a conference on sustainable development ― environmental, economic, and social ― with coffee as both the road and the vehicle to equitable prosperity.

Attended by 1,300 people, of which 80% were from outside Colombia, and hosted by the Colombian National Federation of Coffee Growers (FNC), the conference was opened by Colombian president Juan Manuel Santos. Speakers included four presidents and vice presidents of Latin American countries as well as American ex-president Bill Clinton of the Clinton Foundation.

All the panels and speakers addressed issues of sustainability, with President Santos deftly putting the growers’ plight into a larger worldwide perspective, observing that “The best wall you can build is to pay better prices to coffee producers.” And, he noted, paying more will guarantee the supply crucial to the whole coffee chain. Colombia is well placed to talk sustainability, having launched its 17 Goals for Sustainability in 2010.

Sharing the stage with him, Bill Clinton called coffee “an anchor crop. It can be the foundation of sustainable farming, social stability and economic growth,” because coffee supports hundreds of thousands of smallholder’s families and is biodiversity-friendly – it can grow amongst other crops and indigenous plants, echoing looming concerns about the environment and climate change. “We’ve got to build on that. Don’t put it all on coffee. Ride coffee into the future.”

The future though, is not looking great. Climate change will continue to hit the industry hard, with high temperatures and reduced water supply. Yields are declining and so are prices.

In case anyone needs reminding, the staggering drop in prices over the past 50 years has led once viable farms into debt and families into poverty: In 1970, a family lived well on four sacks of coffee beans. Today, they need to produce 34 sacks to live. Add declining yield, and the challenge is daunting. This conference aimed to help producers fight back – and get involved in the bigger cause, by being a voice against climate change. The logic was to save the industry at the source, where coffee comes from.

Producers were there in fighting mode, decrying their pitiable share of coffee profits. Various studies were whipped out to show growers taking between 3 and 5 cents on a $3.50 cup at Starbucks or in a European café. The battle cry of “5 cents more per cup” has been largely a call for consumers to pay a bit more to double the growers’ take. The idea has been picked up by many growers’ associations and NGO’s, but it hasn’t produced results.

STiR asked sustainability economist Jeffrey Sachs why. “Consumers would be willing to pay,” he said. “The problem is putting the mechanisms into place.”

Creating mechanisms for equitable pricing has been the Rubik’s cube of the industry for decades. And growers have more recently looked around and concluded that it’s not just the consumer who needs to pay more. Silas Brasileiro, chairman of Brazil’s National Coffee Council called for sharing the burden over the whole of the coffee chain. But how to achieve this?

Growers know how hard it is to get their hands on that 5 cents more a cup. Take the Sustainability Seal, they said, practically in unison. It hikes the price for the end user, but compliance imposes a lot of costs on the growers. Wholesalers and commodity traders reap the benefits, they claim. “We don’t see any of it.” As a counter measure, Alfredo Moisés, of the Mexican specialty coffee grower, Café Montegrande, suggested that smallholders work directly with small roasters as he does, to their mutual benefit. “Producers can and should sell higher up in the value chain.”

So, it’s all about collaboration. Britta Wyss of UTZ Certified built on the sharing and networking concept. Since farmers are required to log a lot of data for sustainability compliance, she urged them to “collect it, bank it and use it” to produce and share algorithms.

Big commercial players in the industry are also helping producers get a better deal.Fernando Serpa, vp of global sourcing for Latin America Walmart said the world’s biggest retailer now sources 20 products for its private-label brand including coffee only from sustainable suppliers. The company is using its power of persuasion to get others like Unilever and Nestlé to follow. Chris von Zastrow, director of coffee sustainability at Starbucks, said the chain has paid $18.5 million in additional premiums to growers, as well as investing in small holders and women producers.

Annette Pensel of the NGO Global Coffee Platform (GCP) also stressed the importance of private sector input. GCP is training small groups of farmers in new techniques that lower their production costs, linking them to think tanks, and setting up cross-border networks of smallholders to share experiences about what they’ve tried and how it worked. By employing more modern digital techniques, GCP also hopes to counter the youth drain and keep upcoming generations on family farms, an urgent response to the aging grower demographic.

 Grow the market – and the margins

Along with specialty coffees, there is massive opportunity for revitalizing the industry by increasing world consumption. In the US, per capita consumption is on average only one cup a day. Only one-sixth of the world’s population consume even one cup a day. “There is enormous potential here,” said Jeffrey Sachs, who also noted the fortuitous release of two separate articles on the benefits of coffee consumption. One, a Gallup poll of life-satisfaction among a varied mix of countries, showed that top coffee-drinking nations (The Netherlands wins hands down with 2.5 cups a day) were highest on the scale, which controlled for other factors such as income, available health care, and good governance. The other, from The Annals of Internal Medicine linked coffee- drinking to longer life. “There is a growing consensus that coffee contributes to mental and physical well-being,” he noted. “Use this! Be a voice in the marketplace. Communicate to consumers on your packaging, at points of consumption,” he said.

Specialty Coffee Association (SCA) executive director Ric Rhinehart had more good news. Specialty consumption is growing among an unexpected demographic: 13 – 24-year-olds in the US.

And there is room for expansion in tea-total countries like China, India and Russia, for example, and inEastern Europe. He seconded  Sachs on targeting the soda drinkers with the message that coffee is a higher quality, and more healthful beverage.

But by the end of the final panel, producers had heard it all one too many times. “It’s about price,” said Joseph Keiya of the Kenyan president’s office. Marcelo Caixta Paterno, director of Sincal, the Brazilian Association of Coffee Growers, took it further during a Q &A after Tuesday’s Sustainability Panel, “We are not asking for charity,” he declared. “We are demanding a fair price for our product.” Sincal is working on a plan to counter the Brazilian Agriculture Ministry’s control of coffee inventories. Incensed that “the government sold off all of Brazil’s coffee reserves—I mean, who does that?” the Brazilian Association has put forth a plan to buy up stocks from Brazilian producers and then to create a sort of international coffee bank to be run by grower’s associations internationally. “Prices should be up around $1.80 or even $2 a bag,” he said; “we’re not going to sell at current prices anymore.”

The idea was supported at a later panel by Bopanna Manavittara Belliapa of Equinox Plantation Management India: “Sixty producing countries can calculate country-specific prices and come up with an international base price.”

In another bid to place the grower’s closer to power, Sincal president Armando Mattiello, is said to be about to announce a run for the Brazilian parliament, the first grower to do so - although Brazilian MP and conference attendee Eviar de Melo is an ardent advocate for producers in Parliament.

But one smallholder voiced producers’ budding sense of revolt: “The price we get is decided in New York and London. That has to change”