Around the world in eight commodities, episode two: Coffee

Around the World in Eight Commodities delves into some of the planet’s most critical commodities, exploring the complex challenges they face and the innovative solutions being implemented around the globe.

In this episode, we’re diving into coffee, the second most traded commodity in the world – which is little surprise when you consider that we drink an estimated 2.25 billion cups every single day.

Featuring:

• Melissa Salazar, program specialist, Food and Agricultural Commodity Systems team, United Nations Development Programme (UNDP)
• Raina Lang, senior director of sustainable coffee, Conservation International
• Annette Pensel, Executive Director of the Global Coffee Platform (GCP)

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“Beyond the economic aspects of coffee, it has a big personal connection to a lot of people.”

– Melissa Salazar

Transcript

Eden Flaherty 

Welcome to around the world in eight commodities, a podcast series by the Global Landscapes Forum in collaboration with the Food Systems Land Use and Restoration Impact program. This series delves into eight of the world’s most critical commodities, exploring the complex challenges they face and the innovative solutions being implemented around the globe.

In this episode, we’re diving into coffee, the second most traded commodity in the world, which is a little surprise when you consider that we get through an estimated 2.25 billion cups every single day.

Raina Lang 

Coffee is one of the largest agro-commodities in the world.

Eden Flaherty 

Raina Lang, Senior Director of sustainable coffee at Conservation International.

Raina Lang 

It has significant global impacts. The top coffee-producing countries are Brazil, Vietnam, Colombia, Indonesia, Ethiopia. So as you can tell, it’s grown throughout South America, Africa, Asia, and it has a lot of significance. It contributes to the GDP of producing countries, and as part of that, it has a large share of export earnings and also contributes to the livelihoods of over 12 million growers around the world.

Annette Pensel 

Mostly those farms are small holdings, meaning below five in one country, also below 10 hectares.

Eden Flaherty 

Annette Pensel, the Executive Director of the Global Coffee Platform.

Annette Pensel 

There are two species of coffee that’s Arabica and Robusta. And in terms of the importance of coffee being an export crop, currently, more than 70% of the coffee production is actually being exported.

Melissa Salazar 

Many coffee exporting countries depend on coffee as a big pillar of their economy.

Eden Flaherty 

Melissa Salazar, a Program Specialist with UNDP food and agricultural commodity systems team.

Melissa Salazar 

In addition to all of this, I would say coffee falls at big value on the personal lives of a lot of people, because I think a lot of us, you know, start our day with a cup of coffee, and it’s part of our daily routine. So I would say, beyond the economic aspects of coffee is just it has a big personal connection to a lot of people. I’m from Costa Rica, and I can say that, you know, in Costa Rica, not only culturally, but a lot of our history has been tied to coffee, and also day to day, like people meet for coffee, for your cafecito, you talk with your friends, and I would say, maybe not across the globe, but in many coffee producing countries, and also in coffee in countries that don’t produce coffee, there’s a big cultural and personal connection.

Eden Flaherty 

And whether that coffee is consumed in the country where it’s grown or flown around the globe, it still follows a relatively similar path from crop to cup.

Raina Lang 

So the way that coffee moves through a value chain, it starts with being produced on a farm.

Melissa Salazar 

At the farm level, it starts in the coffee-producing countries. It starts in the coffee belt, which is the area between the tropics of Capricorn and Cancer.

Raina Lang 

That coffee is then transferred to either a cooperative or trader.

Melissa Salazar 

And then it depends on the specific supply chain and country. But then it goes from, you know, from the cooperative of the farmer to the buyer. And that could be a small roaster at the national level, or it could be a small exporter at the national level, but also it could include a big trading company.

Raina Lang 

And then from the roaster to a retailer. And that retailer could be a coffee shop, or it could be a supermarket where you buy it in whole bean or ground coffee, and from there, of course, to the end consumer.

Eden Flaherty 

And while coffee production certainly has an effect on all the countries where it’s grown, the scale of that impact differs greatly.

Melissa Salazar 

The largest coffee exporting country is Brazil, and then Vietnam is the second largest producer, and then other countries like Colombia, Indonesia and Ethiopia and Uganda, or so on. There’s a different impact of the coffee in the economy of those countries, because Brazil is the largest producer, but Brazil is also a very strong country with a lot of strong economic sectors, and I think maybe coffee has less of an impact in the Brazilian economy that’s in the than it does in a place like Ethiopia, where is one of the main sources of foreign currency. That’s also true for a place like Honduras.

Eden Flaherty 

But while the scale of impact may differ from country to country, many of the challenges remain the same.

Raina Lang 

One of the biggest challenges, especially from a conservation organization, is we’re really seeing climate change impacting production. And you know, of course, there’s tons of different challenges across the industry, but, but climate not only impacts production, but it has, of course, trickle-down effect on others and in the coffee supply chain. And you know, climate it’s, climate change is not something that we’re worried about into the future, it’s something that farmers have been feeling the impacts of for quite some time. We’re seeing an increase in pest and disease outbreaks.

We’re seeing that ecosystem services, including pollinators, are on the decline. You know, as we look to the future, water scarcity will impact coffee production and processing and as well as access for communities, as climate impacts continue, and you know, we’re already seeing decreases in yields and quality because of climate and increasing temperatures and kind of where coffee is suitable for growth.

Most all countries will see some sort of reduction in suitable area, so area where it presents the most apt conditions for coffee cultivation. Last year, I was in India and in Karnataka, where I was speaking. I was looking at suitable information, suitability information, and it was estimated that they were going to lose 90% of the arable area suitable for production, just in a small area of India. And when you start looking across the global map, we’ll see large impacts in Brazil. We’ll see Colombia reductions in Colombia. And these reductions, I mean, they’re ranging from on the lower scale, 20% reduction to up to, as I mentioned, for places in India, up to 90% reduction in suitable land.

Melissa Salazar 

So according to a study from the Climate Institute, it’s expected by that by 2050 half of the bean belt will no longer have the suitable conditions for coffee growing. And of course, that has the potential impact on deforestation, because if areas are no longer suitable for coffee farming, then people are likely to go look for other areas where they can do this and they can this can lead to cutting down trees and deforestation.

Raina Lang 

Coffee is grown under certain kind of climatic conditions, and so in some of those lower elevations, when higher temperatures occur, there is a risk that coffee production moves to higher altitudes and across the globe, many of the countries that have those high values of area that will become suitable for coffee production into the future, are currently considered forests, and so this could put a risk for deforestation as coffee production shifts and directly competes with those forests.

Eden Flaherty 

And it wouldn’t only be environmental losses, but cultural and economic impacts too.

Raina Lang 

As those shifts in growing in coffee growing could lead to unemployment in some regions, and really the loss of cultivation knowledge. Because the reality is, is that if production needs to move to higher altitudes, even when it’s not at direct competition with forest, even when it’s done in the correct manner, should I say. Those who likely have access to that land are not the same who might have access to coffee growing currently, right? So there could be this loss of cultivation knowledge that occurs as coffee moves.

Eden Flaherty 

And this is happening at a time when coffee cultivation is already on the precipice of a skilled labor shortage, largely due to economic inequality.

Melissa Salazar 

So one of the challenges that I would say almost every coffee exporting country is affected by is the fact that coffee farmer populations are aging and that young people don’t want to enter into the coffee sector because they don’t see it as an attractive form of livelihood. So according to a study from the Columbia Center on Sustainable Investment, they studied 10 countries, and in eight out of those 10 countries, the income that that people received from coffee was at or under the poverty line. So, many people are not earning enough, like they’re not even a living income from their coffee. That’s a huge challenge.

Also related to that young people do not want to stay in coffee or work in coffee. Another one is the coffee price volatility. So for example, back in 2019 the coffee prices were at the lowest that they had been in a decade, and they have seen an increase, but it just shows a general volatility in coffee pricing. And you know, without that stability, with that volatility, many people might want to switch to a different crop. Why do coffee if you can go to something more stable.

Eden Flaherty 

And the many challenges driven by climate change are likely to only exacerbate these economic inequalities.

Raina Lang 

The outcome of climate change impacts on production is lower yields, right? And so lower yields means less money and that the farmer is able to generate on the same piece of land. And so I think that there’s been a big concerted effort, even before, you know, climate change was spoken about by everyone across the industry. I think that there’s been, over the last decade or even more, this acknowledgement that really focusing on supporting increasing yield per hectare, you know, on coffee’s current footprint and has been one of the ways that we can also buffer farmers from economic distress.

Eden Flaherty 

Keeping that current footprint also means protecting against new deforestation, an issue that’s being spotlighted by new regulations.

Melissa Salazar 

I would say that one of the newer challenges, which also can bring an opportunity, are the new due diligence regulations. So specifically I’m talking about the new European Union Deforestation Regulation, and also the corporate sustainability due diligence directive. So the EU deforestation regulation is basically, it applies to seven commodities. It’s cocoa, coffee, wood, soy, cattle, rubber and palm. So those seven and basically, in order for these commodities, or products made of these commodities, to enter the European Union Market, companies need to prove that they were not cultivated in deforested land for that led to any deforestation.

So although it’s not for countries to comply with the regulations, they do need to have the right enabling environment for companies to want to work in this country, so that they can continue to source from there. Because if they don’t have the right enabling environment, then companies are likely to go to less risky origins, and then coffee farmer livelihoods are going to be at stake.

Eden Flaherty 

Climate change, disease, economic hardship and a crop that’s unattractive to young farmers, all in the shadow of necessary but daunting new regulations seem to throw the future of this ubiquitous commodity into doubt. But that’s not the full story. People around the world are implementing new and innovative practices to future-proof the world’s coffee.

Raina Lang 

So in coffee, I think try as we think about, how do we adapt and mitigate further climate change impacts and risks for production, we’ve been emphasizing a lot the importance around Good Agricultural Practices. And some of these practices aren’t anything new, but really taking a focus on regenerative ag and soil health as kind of the basis for adaptation. So you know, thinking about farming approaches that put an emphasis on that soil health, biodiversity and conservation and protection of ecosystem services, with the hope that by promoting those sort of practices that we also will buffer any economic impacts that farmers might see through declines in yields.

So we’re seeing that farmers and industry and not-for-profits, those who are supporting farmers, are really in terms of practices, are thinking about things like erosion control, ground cover to ensure that soil nutrients are improved, or soil is not lost through erosion. Also things like windbreaks to protect areas from changes in, you know, weather patterns.

So when I’m talking about ground cover, I’m really talking not artificial, but using other plants and approaches to either between rows of coffee or around the coffee trees themselves, that in some cases could be temporary crops like beans, so you might even be able to harvest, you know, for food consumption or local sale, but also nitrogen-fixing kind of ground cover, and that is a really great way to build nutrients in the soil between production cycles.

For windbreaks, we’re talking about using trees or hedges, shall we say, so always using natural elements and promoting native tree cover as kind of one of the best approaches. So, that’s not something that’s like an infrastructure, like a wall or cloth, or something that would be of that sort. But really, you know, using nature to be part of that solution.

Melissa Salazar 

In coffee, I would say a lot of it has to do with aging coffee trees that can actually be improved by a series of simple Good Agricultural Practices, such as something actually, one interesting example is in Ethiopia.  Ethiopia has over 1 million hectares of coffee farms, coffee plots, and according to the World Bank, back in 2021, 80% of those hectares were underproductive and there was a simple way to improve that. And we learned this because, you know, TechnoServe, who has been working in Ethiopia for many years as this project called Coffee Farm College, where they do demonstration thoughts and they show how sustainable and cultural practices can help you increase the productivity and quality of your coffee. And actually, through this college coffee farm, they showed the stumping technique. So the stumping technique is basically cutting and pruning older and less productive coffee trees down to just stump. And this stimulates new growth. And they showed that by doing this, Ethiopian coffee farmers could increase their yield from two to three times, and also efficiently triple their income from coffee.

The use of cover crops is very common in coffee production. Actually, Cafe de Sombra, as we call it in Spanish, is very common and can also be tied to diversifying incomes and also diversifying your crops and whatnot.

I know of a project that is being implemented by the Global Coffee Platform. So they have this concept called Collective Action Initiatives, where they bring public and private partners around this specific topic and they have this one that’s called Youth for Coffee in Uganda. So for that project, they’re looking at agroforestry as a way to increase income. So not only as a way to improve the yield of your coffee, make sure you have good quality coffee, having climate-smart coffee, but also looking at it as a way to increase people’s incomes.

Raina Lang 

When we think about biodiversity and conservation, of course, there’s just the maintained importance around preserving forests within uh coffee producing areas, and not just on farm, but within landscapes. So that’s a big one. But we’re also seeing farmers beginning to restore land, so either restoring degraded lands or increasing tree cover in areas that you know were pasture.

That also helps on the biodiversity front and at the landscape level, by increasing kind of tree cover throughout a landscape, a mosaic of a landscape, there’s also an opportunity to promote kind of biodiversity corridors and connectivity between large patches of forests in in some of these coffee regions.

Melissa Salazar 

Regarding like the price volatility, but also leading income. I know that the International Coffee Organization created, a couple of years ago, a coffee public-private task force, which was meant to bring together stakeholders from both public and private sectors to collectively create responses to this long term price and negative income challenges. I think we need to talk about the importance of multi-stakeholder and sectoral approaches to address this.

Annette Pensel 

There are solutions available. There is innovation happening. Some coffee-producing countries, in some parts of their country, are doing well, but actually, largely what we have been seeing in the last decades is that solutions are project-oriented, are kind of one and done, and that despite good intentions, often we see reinvention of the same wheel that then doesn’t get us to scale in terms of being able to scale the solutions.

Another aspect that is connected to that challenge is these solutions are often not really incorporated into the coffee growers, the coffee-producers practices. So there is a project that comes with great, great ideas, they are being applied, and then the project is over, and without this kind of integration into the practices, into the extension systems on the public and private side, into kind of follow up, into the normal way of doing in a longer term, it falls back to to where the project started.

Melissa Salazar 

Over the last few decades, we’ve seen a lot of investment going forward, making, you know, the coffee sector sustainable and profitable for farmers. But you know, we’re in 2024 and we haven’t seen any real transformation yet. And what we’ve learned from all of those efforts is that in order to create real and systemic change, we need all stakeholders involved in the sector to get involved and collaborate, because otherwise we’re not going to change the current paradigm.

Annette Pensel 

One learning that we had after actually decades, and we as a sector, speaking as a sector, we after decades of a lot of investments and projects and grant funding going into better and sustainable practices, adoption at the farm level, and then along the value chains as well, was the fact that there is not necessarily this knowledge shared at the local level. So projects are then in isolated groups. The knowledge sticks there in isolated groups.

So one way to overcome, to address and overcome that is what we have been supporting as the Global Coffee Platform by helping local stakeholders from the public and the private side from coffee, including farmer organizations, local NGOs, research to come together at a national level and form coffee sustainability platforms, to basically come together and see, ah, what is government doing? Where are the efforts there, and what are the policies and where are the investments going? Where’s what is the private sector doing? Oh, a lot is being done and we didn’t know. What is it that NGOs are working with cooperatives, for example, and the research, etc. So basically convening the relevant public, private stakeholder that included, in the case of the work that GCP supported in defining what does a sustainable coffee production look like for that particular country, bringing all these good agricultural practices and sustainability practices together and harmonizing them, aligning them, having agreement at a national level in what we call a National Coffee Sustainability Curriculum.

So it’s very much about bringing stakeholders together that perhaps don’t usually talk to each other, and then creating an environment where learnings can be shared and where then challenges can really be dealt with at a higher level of performance. What, of course, is the next step there is to now co-invest also together. That is what we call collective action. We have programs there, multi-year programs lined up that were locally designed and are connected with sector global priorities. And that is now the next challenge, to bring these investments to scale to really help transformational change to happen in coffee producing countries.