“From all commodities being traded in the world today, there is no other crop with higher social impact than coffee, it is estimated that more than 25 million farmers grow coffee and at least 125 million people depend directly or indirectly to the industry for their livelihood. “
In 1990, Mark Pendergrast in his book “Uncommon Grounds: The History of Coffee and How it Transformed our World” said “Coffee is the world’s second-most traded commodity after oil”. Since then, the infamous sentence has become ubiquitous, from popular websites, to serious publications and even it has been brought before the US Senate Committee on Foreign Relations by Starbucks representatives. Although, years later Pendergrast wrote an article apologizing and acknowledging the error. It was too late, the catchy quote prevailed and now it is a common myth in mainstream coffee culture that we should expect to hear or read occasionally from unwary coffee professionals.
Unfortunately, it didn’t end up there, some other bold statements followed, like “Coffee is the second most popular drink in the world after water” and “Coffee is the most valuable commodity traded by developing nations” expanding misinformation and evidencing the lack of serious studies on the matter and lack of interest from the international community as well.
Although none of these claims are accurate and rather they illustrate our collective ignorance, they are a significant attempt to acknowledge the important role coffee has in our lives and in global economy.
If you want to see Pendergrast acknowledgment click here.
In this article I would like to explain what these authors unsuccessfully tried, why coffee matters and why it is as relevant today as it was in the past.
SEE ALSO: Could coffee be a sustainable crop?
Why are there so many people working in coffee?
Contrary to popular belief, green coffee beans traded in the global market today don’t quite fit the definition of a raw material, green coffee beans are indeed a finished good. Turns out, the only raw material being commercialized in the coffee value chain is the actual coffee fruit (coffee cherry); most smallholder coffee farmers produce and trade locally. In order to have an exportable product (green coffee beans), coffee cherries must be transformed first. This process includes but it’s not limited to buy, consolidate, transport, pulp, ferment, sort, dry, hull, grade, size, etc., coffee cherries and/or seeds before they can turn into exportable grade coffee beans; Nevertheless, this is not even considering the effort, green beans still require during packaging, marketing and exporting.
This peculiarity, has stretch and ravel the coffee value chain significantly enough to distribute responsibilities and value among countless stakeholders and companies, who sometimes concentrate even more value than coffee farmers themselves.
If we compare coffee with a commodity that requires less transformation before it gets commercialized. We would immediately notice the market dynamics are influenced differently.
When maize producers for instance, want to reach international markets, they are immediately exposed to international maize prices. Farmers large enough, capable of profiting regardless low international prices, would thrive while small ones would be force to switch crops, disappear or would be limited to a local market instead. This way the maize market self-regulate by incentivizing large producers over small ones.
Although coffee is subject to this phenomenon until certain extend as well, most of the coffee value is not concentrated in coffee farmers themselves, but rather higher up the value chain, allowing certain segments of the value chain to thrive while others decline.
This difference has allowed the coffee industry to expand regardless farm size, overall yield or marketed volume, encouraging millions of smallholder farmers to grow coffee regardless international coffee prices.
Today around 80% of all coffee growers are smallholder farmers who cultivate coffee in an area no larger than 2HA, in Ethiopia alone, the country that has the largest number of smallholder coffee farmers, it is estimated they exceed 4 million, that’s equivalent to the entire population of New Zeeland and if we consider all people who participate in the global coffee production one way or another, their number is equivalent to the entire population of Japan.
SEE ALSO: Are Sun-dried naturals and Honeys the future of Specialty Coffee?
How does the imbalance along the value chain affect the entire coffee industry?
For decades the coffee industry has benefited from the low cost of coffee, so much, that today the whole industry is worth more than a $100 billion dollars and just a fraction of that amount has found its way back to the farmers and the countries where coffee is being produced. The coffee value chain is as vulnerable as coffee growers are, therefore, sooner or later the whole industry will need to face the consequences of this imbalance. If the incentives to produce coffee keep failing, the future of the entire coffee industry is uncertain; starting for those segments that require most of the motivation and skill as it is case of specialty coffee.
What are we doing to support coffee farmers?
Although, coffee is a crop that enable us to access the largest number of vulnerable farmers in the world, in theory, it is a cash crop with no nutritional value, for this reason, during development work, coffee often doesn’t receive the importance and support it deserves.
While, international perception and awareness towards coffee is slowly changing, still, the potential coffee has to alleviate global poverty is generally misunderstood and underestimated.
I believe, if one day we commit to work together and finally resolve inequality in the coffee value chain, we not only would be building the foundation of a sustainable industry but at the same time facilitating millions of people to migrate out of poverty.