The price for Arabica coffee beans has plummeted in recent weeks to below production costs, jeopardising the livelihoods of 25 million coffee farming families worldwide. Peter d’Angremond of Max Havelaar Foundation discusses the impact of the price crash and what we must do now to protect coffee farmers.
Coffee farmers rang the alarm bell this week due to the price of coffee beans dropping to a dramatic low. This threatens the already fragile existence of 25 million farming families worldwide. We can no longer turn a blind eye to what is happening.
This week, Brazil and Colombia, who together produce half of the world’s coffee, published a joint statement affirming the fact that farmers are forced to sell their coffee far below cost price. (Read the joint statement here.)
The disastrous situation in the coffee sector is confirmed by recent figures. At the end of 2016, the price of Arabica coffee on the New York Stock Exchange was $1.55 per pound (454 grams). Since then the price has dropped further to a dramatic low point this week of less than one dollar per pound. Due to the extreme decline of 30% in price, farmers could be facing an annual loss of more than 11 billion dollars of income. No development programme can bridge this gap.
Sustainability is on everyone’s lips these days and often we think we are doing a good job. The coffee-producing countries state that while many large multinational companies do promote and act on sustainability, these activities are completely negated by their commercial practices. The recently released ‘Coffee Barometer’ report (pdf) comes to the same conclusion. Of the total value of coffee (around 200 billion dollars in 2015), only 10% stays in the countries of origin. In total, large companies spend approximately 350 million dollars a year on sustainability. Set against the income loss of 11 billion dollars, this is a drop in the ocean.
By paying prices that are too low, the coffee industry is at least partly responsible for human rights issues such as poverty, child labour, poor working conditions as well as environmental damage. In sustainability discussions, talking about a ‘decent price’ is taboo. Industry largely refuses to commit to decent prices for farmers.
In the UK, Fairtrade, which is the only certification mark that requires a minimum price of coffee buyers ($1.40 per pound), has a market share of around 25%. This means that for 3 quarters of all packs of coffee in the UK supermarket, no price security is offered for coffee farmers. They are then dependent on the vagaries of the market.
It is time that coffee brands, supermarkets and the industry take structural responsibility by adjusting their purchasing policy.
And do we, as consumers, want to be involved in the exploitation of coffee farmers by buying their products?