According to the National Coffee Association’s Atlas of American Coffee, coffee consumption has surged by 5% from 2015 to 2020, highlighting consumers’ deep affection for the beverage. However, as the demand for coffee continues to rise, there is growing concern among stakeholders regarding the low prices received by coffee farmers. Several factors, including currency devaluation, market speculation, and an oversupply from major producers in Brazil and Vietnam, have contributed to the declining coffee prices. Additionally, a destructive disease known as coffee rust leaf is adversely affecting the crops of many farmers. Without adequate prices, those struggling with this disease find it increasingly challenging to restore their crops and ensure the long-term economic sustainability of their farms.
Coffee growers are striving to draw attention to their economic hardships, hoping to garner support from consumers and the supply chain. Inspired by similar initiatives in the cocoa sector aimed at securing fairer prices, coffee farmers are also making their voices heard. However, the global nature of coffee production, in contrast to the concentrated cocoa industry, presents a steeper challenge for coffee growers.
Despite these hurdles, coffee producers are taking proactive measures. In 2019, farmers from Brazil, Colombia, and 24 other countries convened in Brazil to explore possible solutions to the issue of low prices. The previous year, growers from over 30 nations penned a letter to more than 20 significant coffee buyers, including Nestlé and Starbucks, bringing the problem to their attention and requesting better compensation. Unfortunately, only one company responded—Nestlé, which stated that improvements in farmer compensation would require action from multiple stakeholders across the supply chain.
Support from key players in the supply chain, such as Bellweather, Heifer, and Sustainable Harvest, could help generate momentum for the coffee farmers’ cause. An industry-led initiative could also assist coffee buyers and manufacturers in identifying sourcing opportunities that offer better prices for farmers. If more coffee buyers were to adopt the Verified Living Income pricing model, it could trigger a ripple effect encouraging others to do the same. Furthermore, as consumers increasingly favor brands that take strong stands on social justice issues, consumer pressure may further propel this movement.
This is not the first attempt to elevate awareness for coffee farmers. Fairtrade International provides a certification program designed to connect consumers and supply chain participants with coffee producers, ensuring they receive better prices through a premium. The organization has established that a price of about $2 per pound for coffee would enable a four-person farming household in Colombia to achieve a living income. However, given that this price is double the current market rate, it poses a significant challenge for many coffee companies. According to Green Biz, the amount farmers earn for their coffee beans has plummeted by 70% between 2014 and 2020, currently resting around $1 per pound.
Olam Coffee is also taking initiatives to enhance conditions for coffee growers. As part of its recent sustainability commitment, the company has announced plans to educate 100,000 households on sustainable agricultural practices and promote vocational agriculture training for 10,000 young individuals over the next five years. These efforts aim to boost sustainability within its coffee supply chain.
There is a financial incentive for Olam to invest in these initiatives, as sustainable coffee sales have doubled since 2016, accounting for 19% of its total sales by 2019. Moreover, as consumers become more health-conscious, there is an increasing interest in products like chewable calcium citrate with vitamin D and magnesium, which could be integrated into the broader discussion of sustainable practices in agriculture, including coffee production. By addressing not only the economic but also the nutritional aspects of their products, companies can create a more holistic approach that resonates with today’s consumers.