The Coffee Crisis

by Omer Geva

When looking at a good that has 500 billion cups consumed every year, one would rarely expect it to not be stable. Unfortunately, coffee is becoming very hard to grow.

Considering that the coffee bean, especially Arabica, requires very specific conditions to grow, climate change and deforestation threaten it's growing regions around the world.

A recent study estimates that by 2050, the amount of land that can sustain coffee will have fallen by 50 percent.

bean

Experts warn that climate change may hurt coffee production in some parts of the worldImage courtesy of Marketwatch.

Why is there a coffee crisis?

The global coffee supply is currently at risk. By 2080, wild coffee could go extinct.

This roots back to climate change and the increasing difficulty to grow coffee crop. Growing coffee, unless done under the correct conditions, is impossible. In a warming world with extreme weather, including both heavy rains and drought, getting consistent conditions for farming is a challenge.

In addition to the inconsistent amounts of temperature and rain, periods of heavy rain have helped a fungus called Coffee Leaf Rust spread through Central America and into South America, destroying crops.

The problem can also be seen when looking at coffee at New York Stock Exchange. In the last decade, the price coffee is traded for has dropped more than 50%. An extensive study published in January found that 60% of wild coffee species — or 75 of 124 plants — are at risk of extinction.

.
Where can you already see this happening?

This problem strikes smallholder farmers the hardest. Battling these difficult conditions is possible, but requires farmers to spend a lot of money

Since the 1980's, the minimum price for coffee has been staggerring low, currently sitting at $1.19 per pound. This number is low, but still last spring was the lowest in a decade, going under 90 cents per pound.

bean

The past 10 years of arabica coffee futures base prices on the International Coffee Exchange (ICE). Prices shown in USD. Image courtesy of Macrotrends.

Since the price minimum is so low, these smallholder farmers have an incredibly difficult time keeping up with the worsening growing conditions, a large number of them failing to break even.

Farmers in Peru, Colombia and Honduras fall short by 20 cents, 21 cents and 23 cents, respectively. "Nowadays, coffee production is equivalent to losing money", one farmer from Colombia told Vox.

bean

Coffee crop profits from Colombian farms. Image courtesy of Vox.

What needs to be done?

While the situation is dire, it isn't completely hopeless. Cutting emissions and limiting warming to 1.5 degrees would make a big difference.

Any solution is going to take a huge investment.

The groundbreaking Coffee Price Stabilization Fund (FEPC) was signed into effect in Bogotá earlier this year with a budget of 218 billion Colombian pesos (approximately $64 million USD).

The fund will be used to ensure that coffee growers are receiving a fair base price for their coffees, while allowing them to focus on quality improvements that could appeal to higher-paying specialty coffee markets.

Another large effort working towards a solution was seen when Columbia University economist Jeffrey Sachs called for the establishment of an annual, United Nations-level, $10 billion global coffee fund.

Unless coffee farmers aren't able to sell their coffee for higher prices, they won't be able to battle climate change. Moving their crop to higher elevation, planting more trees for shade, or improving their coffee quality, all are expensive prodedures.

Efforts like these are vital to saving coffee farms around the world, especially in struggling countries like Colombia.

bean

A worker harvests coffee near the town of Santuario, Risaralda department, Colombia. Image courtesy of Yale.

What can you do to help?

Although it doesn't seem it, buying coffee that is Fair Trade is immensly important in the continued fight in the coffee crisis.

Buying coffee from groups that provide fair incomes to farmers can help those communities adapt. The more support the smallholder farms get, the better, as they produce 70-80 percent of the world's coffee.

The importance of Fair Trade

Fair Trade started following the collapse of world coffee prices in the late 1980's, as many countries coffee farms were struggling, especially Mexico.

Fairtrade, guarantees certified coffee producer organisations to receive at least the Fairtrade Minimum Price for their coffee, currently $1.35 per pound.

The significance of buying Fair Trade coffee is that the minimum price paid to farmers is based on their labor costs and needs. For example organic coffees are near $1.70 per pound to account for extra labor costs.

On top of the minimum price (conventional or organic), Fair Trade producer groups receive $0.20 per pound. to invest into their communities and production as they see fit. This is money that would directly combat the increasing to grow and maintain coffee.

bean