What do you think when you drink your daily cup of coffee, espresso, cappuccino or another coffee based mixture? Most likely how delicious it tastes or may be just nothing, as it is so normal to consume it. But do you realise what an effort it takes to get the (wild) coffee berries turned into your daily brew? And are you aware that we can no longer take this just for granted? Our daily coffee enjoyment is at risk, as the coffee industry is facing a number of major challenges.
1. Climate change
The Intergovernmental Panel on Climate Change (IPCC) has found that rising temperatures and changing precipitation patterns are having a significant impact on coffee production (IPCC, 2014). This is particularly true for coffee-growing regions that are located at higher elevations, which are experiencing more extreme weather events and reduced water availability (Läderach et al., 2017).
2. Increasing demand
The global demand for coffee is increasing, particularly in emerging markets like China and India (Tadesse et al., 2016). This is putting pressure on coffee farmers to increase production, which can be difficult given the challenges they are facing due to climate change.
3. Labor issues
The coffee industry is often associated with labor issues, including low wages, poor working conditions, and child labor (Fairtrade Foundation, n.d.). These issues can be difficult to address, particularly in countries where labor laws are weak and when there is a lack of government oversight. Many organisations aim to improve this and the European Union has started to address among others this issue as well. In the upcoming years, all product producers selling in the European Union, will have to prove how sustainable their resources are.
4. Price volatility
Coffee prices are highly volatile, which can make it difficult for farmers to plan for the future and invest in their operations (Eaton & Shepherd, 2014). This can lead to a lack of sustainability in the industry. Besides, the price the farmer receives is in many cases hardly sufficient to cover the costs. Among all coffee supply chain actors, farmers (especially smallholders, defined as those who grow coffee on less than 30ha of land) are generally the most economically vulnerable (Devoney, 2022). Although retail prices have started increasing, it is important to ask: just how much of the final price of a cup of coffee do farmers actually receive? You can read more about that in my blog post: “Who earns most on the coffee we consume?“. In some producing countries (e.g. Brazil, Colombia, Ethiopia, Honduras), real coffee prices have decreased since the 1970s, potentially leaving farmers worse off if falling prices have not been offset by higher productivity (ICO, 2019).
5. Lack of diversity
Since 1990 the share of top 5 producing countries in global output has increased from 57% to over 70%. Concentration of production could increase further and result in higher supply risks and less consumer choice in terms of origins (ICO, 2019). Besides, many coffee-growing regions are dominated by a single variety of coffee plant, which makes them vulnerable to diseases and pests (Bates et al., 2012). Increasing the diversity of coffee plants in these regions could help to reduce this risk.
In addition, advice on farming best practices can support the farmer in better handling his land and plants, potentially resulting in better yields and increased bean quality.
The above list is unfortunately already a rather impressive one, but the bad news is that it is rather easy to make the list even longer. For this post I have decided to focus on the above mentioned issues, as they will be critical towards the supply of our coffee beans. The market itself is facing many other challenges as well, on which I will focus in another post. The effort of many supply chain actors will be needed to start solving these challenges the coffee industry is facing, unless we would like to look for an alternative daily brew.
- Bates, B., Kundhlande, G., & Teixeira, A. (2012). “Coffee rust (Hemileia vastatrix): a story of neglected tropical diseases and global change.” Environmental Science & Policy, 15, 1-7.
- Devoney, Melina (2022). “How much of the final price of a cup of coffee do farmers receive?”, Perfect Daily Grind
- Eaton, J., & Shepherd, A. (2014). “Coffee market update 2014.” International Coffee Organization.
- European Union (2022). “Sustainable economy: Parliament adopts new reporting rules for multinationals”, EU Press release
- Fairtrade Foundation. (n.d.). “Coffee.”, https://www.fairtrade.org.uk/Standards/Coffee
- International Coffee Organisation (ICO). (2019), “Coffee Development Report 2019, Growing for prosperity”, link to PDF Report
- Intergovernmental Panel on Climate Change (IPCC). (2014). “Climate change 2014: Impacts, adaptation, and vulnerability.” Cambridge University Press.
- Läderach, P., J. D. Carvajal-Vallejos, J. L. Garcia-Santos, J. A. Vega-Garcia, H. L. Gholz, J. R. Cavelier, L. A. Merino-Pérez, K. W. Beer, and M. L. Krawchuk. (2017). “Modelling the impacts of climate change on the geographic distribution of coffee agriculture.” Environmental Research Letters, 12(2), 025005.
- Tadesse, M., S. S. Girma, T. R. Kofi, M. Mekonnen, and A. B. Gebru. (2016). “Situation analysis of the Ethiopian coffee industry.” African Journal of Agricultural Research, 11(23), 2412-2421.
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