Sustainable Coffee and Meaningful Economic Benefit

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by Tracy Ging, Director of Sustainability, S&D Coffee

Sustainability is a tricky thing to define. Much the like the term “specialty,” the more you try to define it, the more elusive the concept becomes. I’d rather leave it open-ended, and make room for the possibility that even once the right words are found, there will still be something more to pursue. Still, it’s easy to get hung up on the question, “what is sustainable coffee?”

One reason it’s difficult to define sustainable coffee is, in truth, it’s hard to say decisively that coffee as an industry is not sustainable. We can certainly see sustainability challenges and even risks in the coffee sector. At a macro-level, the world is readying to feed a population of 9+ billion—demand for agricultural commodities is rising faster than supply, which may very well bleed over into coffee. Water and phosphorous resources are strained. Challenges for coffee farmers are well documented, namely around food insecurity, and the next generation of farmers are migrating to cities. But some shrug all of that off—it’s a long time from now, coffee doesn’t face agricultural competition because of the altitude at which it is grown, and who knows what breakthrough is on the horizon? There are many reasons not to pursue sustainability solutions—the issues are complex, murky, and currently, undefinable. And, there is a lot of coffee out there at  the moment.

Still, there are many people and companies pursuing sustainable coffee because they see what gets lost in the macro-view: livelihood challenges, soil degradation, water strain, land use pressures, and rust disease. They don’t need sustainability defined, don’t disbelieve the increasing challenges of the world, and aren’t waiting for more data points. In many ways, they just look at the world in front of them. In coffee, they look at a market that has been hovering around a $1.00 per pound and question, “How is that sustainable?” In countries like Costa Rica, it’s clearly not sustainable, as evidenced by all the beautiful new condos and commercial developments that are steadily taking over former coffee farms in prime growing regions. In other areas, where land and labor are more abundant, coffee is more likely to hang on. It’s hard to predict the timeframe, but at least for the foreseeable future, coffee may be technically sustainable in these areas. A farmer may stay in coffee regardless of market conditions, riding the highs and lows as he always has. However, it is unlikely that farmer will stay focused on coffee. The lower and more prolonged the lows, the more incentive there is to seek alternatives. It’s not uncommon for a farmer to diversify and take other jobs. I visited a group of farmers around Lake Atitlá0n in Guatemala and all the men were day laboring while the women picked coffee, took care of children and elderly parents, tended the garden, etc. In this scenario, coffee becomes a secondary activity or moves even further down the list of things for a family to do.

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Smallholder production of coffee may be “sustainable,” but coffee may be less and less of a priority for farmers. Which means there may be coffee, but not necessarily grown and handled with the same care, and grown by farmers who are increasingly likely to invest in areas other than their farms. Limited farm re-investment creates new vulnerabilities and ultimately undermines capacity for supply. Fundamentally, a sustainable coffee is one that will always be there—at the quantities and qualities demanded by the marketplace. This is where coffee’s sustainability looks less certain. All this points to at least part of the definition for sustainable coffee: coffee that provides meaningful economic benefit to the farmer, encourages investment, and assures supply. Then another challenge of definition arises—what does “meaningful,” well… mean?

Currently there are two main models for making coffee more economically compelling: pay more or do more. Either pay a higher price for coffee, guarantee a greater share of return, or support the farmer in building greater economic opportunities by helping with credit access, technical assistance, or reaching new markets. However, while undeniably helpful, these solutions don’t necessarily add up to economic viability. It’s isn’t just about how much the farmer grows or earns, it’s about what those activities yield in relation to a host of economic and family activities a farmer has to pursue.

Typical measures of price and yield aren’t measures of profitability, nor do they take into account opportunity cost. In my role, as I’ve been working through various supply chain strategies to deliver meaningful economic benefit to our producer partners, I engaged with a consultant, Christophe Montagnon. One aspect of his work with us was to really look at inputs—how much does it cost a farmer to achieve the level of quality that is suitable for higher-value markets, or to obtain a sustainability certification?  Christophe illuminated that it is not always in the farmer’s best interest to do more on the farm. If there are other streams of economic activity, coffee may very well be most useful only as a side activity. His findings were a humbling reminder that as much as we may sometimes think so, coffee is not at the center of the universe.

That doesn’t mean we stop working to deliver meaningful economic benefit, and we will continue to invest in technical assistance and other producer support programs—paying more and doing more are great things—but we are now approaching the subject with a broader, more inclusive perspective. I want nothing more than for farmers to realize the true value of their production, but there is the possibility we’re approaching the concept of value too much through a buying-side lens.

There also seems to be a strong narrative in our industry that quality, and subsequently quality incentives, are the paths toward economic sustainability. Is that necessarily true? I offer this exploration not as a critique of existing models, or to dissuade anyone from pursuing direct relationships and alternate-pricing or contract models, but simply as a reminder that sustainability isn’t fully defined yet for a reason. The economic component of sustainability is layered. For a farmer, it includes credit and financing, farm-level considerations (costs of production, yield, and productivity), payment and pricing, ownership, level of diversification, and financial management skill. The issue goes well beyond quality. We haven’t yet answered the question of what it takes for coffee to become a viable economic activity. While that is not an excuse for inaction, it also isn’t an excuse to tread too hard on one particular pathway. We have to continually challenge ourselves to seek new routes.

It isn’t just about what we want to buy and how much we pay, or how much we “help,” but also about what makes coffee a worthwhile activity for a farmer to pursue. At the most basic level, we lack good information about costs of production, farm profitability, and what it takes for a smallholder to be economically successful. If we are going to understand what sustainability means for our sector or pursue strategies that promote things the sector values, like assured supply and quality, then we have to understand what “meaningful economic benefit” means, and we need the farmer perspective for that. Building lasting supplies of great coffee requires farmers for whom it’s in their best interest to be a partner in that process. Only a farmer can really define what’s “meaningful” to them.

ging Tracy Ging is the director of sustainability and corporate social responsibility for S&D Coffee and Tea, Inc.. Her responsibilities span sustainable supply chain development, environmental efficiency in operations and distribution, workplace performance, and community affairs—weaving sustainability into core business strategies. She is deeply and personally committed to making sure coffee drinkers enjoy their favorite beverages with the confidence of responsible sourcing practices. 

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