Farmers and producing countries receive the lowest share of coffee market value.
The Specialty Coffee Association (SCA) recently released a new report on Equitable Value Distribution in the coffee industry. The report summarizes the results of online and in-person surveys conducted in 2023. 406 participants from 58 different countries represented every sector of the coffee industry. The results of the survey will be used as a baseline to measure the effectiveness of any future actions taken to resolve the inequality in coffee value distribution.
According to the SCA Equitable Value Distribution (EVD) refers to all actors in the coffee system receiving the right return for the value they add, the costs they bear, and the risks they take. It does not mean everyone earns the same amount. The goal is to leverage equitable value distribution as a tool that makes specialty coffee a sustainable profession for all participants in the industry.
Results from the survey indicate that the majority of participants feel that value needs to be distributed differently than it currently is. The general consensus is that supply-side actors, typically producers, receive a much lower share of coffee’s total value when compared with the value they create.
According to the 2020 Coffee Barometer, producing countries currently receive 10% of the market share. While the average amount that respondents stated it should be is 38%. This represents a fundamental flaw seen in supply chains all over the agricultural food industry. The closer a participant is to the final consumer the more value they receive.
The “gap” in value distribution is supported by research on the difficulties that coffee farmers and producing countries face in the wake of climate change and increasing inflation. Over the past 30 years, the share of coffee value received by coffee-farming families has actually decreased. A survey conducted by the ICO of 13 coffee-producing countries tracked an increase in the number of farmers living below the extreme poverty line, earning about $1.90 a day.
Creating value and implementing innovations that support all supply chain actors requires a shift in perspective and attitude. However, there are examples of businesses that use inclusive methods to share value intentionally. Pachamama Coffee, founded in 2006 is a consortium of coffee farmer cooperatives and companies like Equal Exchange and Gimme Coffee also employ similar business models.
In the EVD report, the SCA states “If we shape mindsets and business behaviors, and generate actionable knowledge needed to build a thriving coffee industry, then we could foster equitable value distribution as a tool to make specialty coffee a thriving, equitable, and sustainable activity for all actors in the value chain.”
Andrés Montenegro, sustainability director for the SCA, will be holding a dialogue on interpreting and evolving specialty coffee mindsets on value distribution at the Specialty Coffee Expo being held in Chicago between April 12-14.