Climate change and low farmer profitability threaten specialty coffee’s future

The negative effects of climate change on the viability of coffee production are well documented. But research led by Dr Aaron Davis, Senior Research Leader of Plant Resources at Kew, shows the coffee industry must embrace sustainable trade with producers – or risk losing some specialty varieties forever. By Tobias Pearce

A walk through the archives of the Royal Botanical Gardens, Kew, in London reveals a cornucopia of coffee species collected from around the world over more than 150 years. From the winged fruits of Namorko coffee adapted to dispersal on water, to the yellow pear-shaped fruits of Ambongo coffee that bear little resemblance the humble coffee cherry – the genetic variation of the world’s preferred pick-me-up is astounding.

But research from Kew reveals coffee diversity is in danger. Not just the many weird and wonderful species of wild coffee, but varieties we consume daily. Along with a small area in southern Sudan, Ethiopia is the only place in the world where specialty staple Arabica coffee (Coffea arabica) grows in the wild. Yet 60% of this coffee-growing area could become unsuitable for cultivation by the end of the century due to climate change. In fact, if current climate trends continue, Arabica could become extinct in the wild by the end of the century.

Dr Aaron Davis has been undertaking research on coffee for over 20 years, and for the last decade has led the botanical garden’s ground-breaking investigation into the effects of climate change on wild and farmed coffee in Ethiopia. But it’s low coffee prices that his latest research identifies as the most immediate threat to the region’s coffee production. He argues that declining farm profitability will only compound the negative impacts of climate change.

“Ethiopia has the potential to double coffee production in five years – but it’s not currently profitable for many farmers to invest in coffee”

Since 2015, Davis and his team have been working with communities at the Yayu Biosphere Reserve in south-eastern Ethiopia, one of the world’s most important refuges of wild Arabica. The project aims to support biodiversity, improve climate resilience, and crucially, increase revenues from coffee to improve livelihoods. These objectives are intrinsically linked, as increasing revenue from coffee places greater value on the forest where the crop is grown and provides the financial flexibility to invest in climate resilience. Moreover, sustaining forest coffee production at Yayu will help preserve key genetic diversity for wild Arabica coffee.

Conducted in partnership with UK-based specialty roastery and direct-trade pioneer, Union Hand-Roasted Coffee, the ambitious project responds to a growing profitability crisis in Ethiopia, an issue that is affecting coffee producers globally. To achieve these goals, Kew and Union teamed up with coffee forest expert Dr Tadesse Woldermariam Gole, coffee processing guru Graciano Cruz, and coffee socio-economist Pascale Schuit, who spent considerable time interviewing Yayu farmers to better understand coffee income and profitability.

“Climate change is not the major issue for the short-term future of coffee,” explains Davis, who led the cost-benefit analyses for on-farm climate change adaptation. “We could grow plenty more coffee and Ethiopia has the potential to double production in five years – but it’s not currently profitable for many farmers to invest in coffee.”

 

Global coffee prices are at a 12-year low, falling below a record $1/lb in August 2018. While this may be good news for an increasingly consolidated coffee industry, business models based on unsustainable prices could prove disastrous for the specialty sector if action isn’t taken to secure the viability of some of the world’s impoverished coffee producers.

For coffee farmers, low prices mean an already insecure and low-profit cash crop becomes increasingly unviable. In Ethiopia alone, there are up to four million smallholder farms grappling with the existential threats of climate change and unsustainable crop prices. And while the mark-up on specialty coffee crops is huge in developed markets, the average annual income for an Ethiopian coffee farming family is less than $1,000, and sometimes considerably less.

“A lot of farmers would move out of coffee tomorrow if there was another option – but for many there aren’t any”

Data from the International Coffee Organization (ICO) shows that in the 2016-17 coffee season, Ethiopia exported around 221,000 metric tonnes of coffee at an estimated value of more than US$860m. Clearly, something is being lost in the coffee industry’s increasingly lucrative ‘crop to cup’ narrative.
 

Tackling generational climate change today

There’s little doubt from the research conducted by Davis and his team, and feedback from Ethiopia’s coffee growing communities, that climate change is reducing coffee crop yields over a generational time-scale. In some locations the grandparents of Ethiopian producers could expect a coffee harvest every year, their parents perhaps every three years and today a five-year yield cycle has become increasingly normalised.

But downward price pressure generated far up the supply chain is thwarting the ability of producers to prepare for climate change today. It simply isn’t financially feasible for most Ethiopian farmers to make the most rudimentary steps towards climate-resilience, or invest in pest and disease management.

To give an idea of the challenges facing Ethiopian farmers on the ground, Davis explained a recent experiment using mulch to boost soil moisture and nutrient levels across a single hectare of farmland. Although the mulch was free and located just 1km from the coffee plantation, the farmer would need to pay for around 100 vehicle movements, as well as materials for transport and labour to lay the mulch.

“We did some calculations and realised the total value of the coffee crop was less than the cost of applying the mulch. Even with additional income generated by a substantially higher yield via mulching, the profitability just wasn’t there. A lot of farmers would move out of coffee tomorrow if there was another option – but for many there aren’t any,” says Davis.

Scenarios of this kind are playing out in differing scales across coffee farms globally. Central and South America may have better potential to adapt to climate change, but leaf rust continues to ravage crops year-on-year. Even with the introduction of rust-resistant hybrids, replacing a hectare of coffee costs around $2,300 – and climate change means that instead of replacing crops every 10–15 years, an 8-year turnaround could become more frequent, further eroding farmer profitability.
 

Is the smallholder farmer model sustainable?

The reality is that addressing supply chain pressures to increase profitability is much easier than tackling the monumental challenges posed by climate change and large-scale disease outbreaks. If buyers are failing to pass crop value to the primary producers, then improving prices for farmers is an achievable part of the solution.

With incomes low and prospects often dire, many African coffee farmers are switching crops or leaving their farms altogether. A recent Reuters report highlighted that many Kenyan coffee farmers are switching to more commercial crops, such as avocado, which can command up to ten times the price of coffee. In Ethiopia, Davis reports that many farmers, particularly in the Harar coffee producing zone, have already converted to the lucrative narcotic crop khat.

The impact of farmers abandoning coffee isn’t just societal, it can quickly become an environmental problem too. “Ethiopian academics tell me that without coffee there’d be almost no humid forest left in the country, and research supports this,” says Davis. “If you convert a forest production system to a crop like maize, you lose carbon storage, water and nutrient recycling, and increase local and regional air temperatures.”

There are no easy fixes for the farmer profitability crisis, but the reality is that larger farming operations are far better equipped to ameliorate climate change and climatic perturbations, such as drought. “There’s a clear statement to be made about economy of scale,” says Davis, “We see farmers juggling fresh cherry, cherry sent for washing and cherry they dry themselves to balance the household economy. Ideally, they would send everything to be wet processed because the value increase on higher quality coffee can be profound – but they cannot afford to do that”.

“A lot of people criticise large plantations and even out-growing schemes, but models involving smallholder farmers might actually be the way forward in many circumstances. Some of the most profitable smallholders use a system where a high proportion of the crop is converted into higher value washed coffee via a centralised washing station. A further improvement is that farmers get paid soon after processing, not six months or even a year later as with current practices.”
 

A more profitable future for coffee farmers

One of the big successes of the collaboration between Kew and Union Hand-Roasted Coffee in Yayu Forest has been to deliver quantifiable benefits for farmers they work with. Coffee generates up 70% of the cash income for more than 90% of the population of Yayu, an area that could suffer further biodiversity loss and deforestation if struggling coffee farmers clear traditional forest-based agriculture for more lucrative crops, such as maize.

As well as successfully helping to raise producers’ coffee score over the crucial 80 specialty threshold score, Union pay $2.80 per pound for washed coffee, rather than a benchmark market price of $1.50. They also pay an up-front 20c per-pound premium back to farmers they work with. And even though the project may not purchase the entirety of a farmer’s lot, Union prices improved producers’ total household income by around 25%.

To achieve its key goal of increasing farmers’ income by 30%, the project has also worked to extract better trade value from local cooperatives. Union was instrumental in the shift to a new secondary cooperative at Yayu, which reduced the commission paid by farmers from 30% to 10%, thus further boosting profitability. Importantly, Yayu Wild Forest coffee is selling well in the UK from 200 Waitrose supermarkets, where a further 25p from these sales goes directly back into the Yayu project to maintain coffee quality and help support sustainable cooperative management. Since launching at independent cafes on the campus of Warwick University, it is also now available through a partnership with Kew Gardens’ café and visitors’ shop, and nationwide through Union’s online store for home delivery.
 

Saving coffee diversity

But Davis remains deeply concerned about the future of many prized specialty coffee origins. What’s at stake is a significant loss of coffee diversity – not only from serious threats like climate and disease – but also inaction by parts of the coffee sector to improve profitability among producers.

“I think we’ll always have coffee, but for specialty it’s a case of do we want to lose the incredible diversity found in Ethiopia, or the unique profiles of Kenya and Rwanda? Diversity is specialty coffee’s USP – do we want to be drinking undifferentiated coffees, which taste very similar? I think the answer is no,” says Davis.

The project at Yayu Forest offers a glimpse of what a more sustainable future could look like, and could provide a useful model for preserving wild coffee genetic resources. One thing’s for sure, if buyers and operators want to continue offering consumers an increasingly sophisticated array of specialty coffees, then developed markets must ensure farmers also receive a fairer share of the premium as coffee crop becomes coffee product.

Ultimately, it’s small-scale farmers that preserve coffee diversity. The specialty coffee industry must act now to develop a viable framework to safeguard future production and diversity – and this means looking after the livelihoods of farmers who cultivate the extraordinary coffees we cherish.

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Editorial acknowledgement: ‘Mainstreaming biodiversity conservation and climate resilience at Yayu Biosphere Reserve (Ethiopia)’ is a project funded by the UK Department of International Development (DFiD) through the Darwin Initiative.