Barista Magazine

JUN-JUL 2016

Serving People Serving Coffee Since 2005

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before. In such desperate, challenging conditions, impoverished producers' needs are often pitted against businesses' need to keep costs down throughout the value chain. In keeping green-coffee costs down, we continue to weaken the supply chain and leave our industry vulnerable to a forthcoming loss of supply partners as they face the growing challenges of responding to climate change, disease outbreaks, labor scarcity, and local concerns like urban sprawl. These factors taken together mean that probably sooner than we think, we will face challenges in securing our raw material. Sadly, it is already a loathsome product category to work within—in some places you hear talk of coffee fieldwork as a kind of punishment; it's more often than not an under-rewarded hardship. Gabriel Agrelli from Daterra Coffee in Brazil explains how expected reactions to commodities or currency market prices do not support realities faced at the farm level. "People often look at the cost-price equation too simply, considering only the most obvious elements," he says. "For example, when the market goes down, pressure for producers to lower prices is immediate even when our costs of production were mostly paid in the previous year and will not change with the current C market. In Brazil, we are dealing with radical changes in our currency, the real's, value. The real is becoming much weaker compared to the U.S. dollar, and coffee buyers ask why growers are not reducing prices along with the currency devaluation." Says producer Aida Batlle, who manages four family farms in El Salvador, as well as the Aida Batlle Selection brand, which partners with ECOM to certify farms in other producing countries: "Well, regardless of currency exchange rates, at the farm plants are growing and need to be fed and protected against diseases and plagues, and all those inputs are quoted in foreign currency, as well. Equipment has to be maintained or replaced, often with imported parts (which mean costs are incurred in more valuable currencies). The markets do not consider this—or all of the investment in research and technology required to produce quality, dignified wages, and fair working conditions, and practices necessary to uphold the environmental standards a good farmer should comply with. There are so many parts to this pricing equation; looking at a market price to make assumptions that prices should be lower or higher is a mistake. "The challenges producers are f acing right now in El Salvador make it difficult to maintain profitable farms. Production costs and other financial obligations (like bank loan payments for farms), combined with significant incremental expenses to combat roya and add necessary security, are not covered by pricing determined by current C-market prices. Many producers are actually losing money by continuing to produce coffee, and thus many have just abandoned their farms." Competitive businesses and sustainable practices: Can they coexist? Companies of all shapes and sizes are trying to stay competitive with one another even as more of them understand these complex issues and recognize that we are remunerating growers unfairly (and often below the cost of production) when compared to profit margins earned on the consuming end of the value chain. We lack industry leadership: No one wants to take the risk of sticking his or her neck out to say, "Hold up! We have a problem here! As we maintain our profit margins and low costs, we are forgetting that to safeguard access to supply, we need to value our raw material and the people who produce it!" Yet, we must always keep in mind that ultimately coffee is a luxury, and as an opportunity crop, we could work to evolve coffee's value commensurate to the economics of producing it efficiently. We increasingly recognize fancy coffees and have introduced connoisseur nomenclature to how we consume coffee at the top of the quality pyramid, but this only happens at the tippy-top of that pyramid, and those rare, fancy, and newsworthy prices aren't enough to change the culture in the coffee value chain for the majority of global producers. The top echelon does create influence, however, and has had a lasting, positive pricing impact. Certainly the increased demand for high-quality coffees has influenced pricing for specific regions, and that is a step in the right direction. These prices, however, do not and cannot have a broad or quick enough impact. Scale and widespread adjustment of the economic opportunity of this luxury product can only come from having open and honest conversations with consumers, and even investigative reporters, about the cost of responsible supply-chain efforts so that consumers PHOTOS BY SARAH ALLEN 78 barista magazine

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