Have you noticed the recent fall in the price of coffee? You haven’t? You probably haven’t seen it in the supermarket at least, or at the coffee place at the corner of your street. But on the other side of the globe in Latin America, coffee farmers have been experiencing this fall in a much more dramatic way.
Earlier this September was held the 122nd Session of the International Coffee Council, whose conclusions were the following:
- That current market price levels do not allow coffee growers in most producing countries to cover their production costs, compromising their economic sustainability;
- And further that current prices do not reflect the physical market fundamentals;
- That consumption is a key instrument to guarantee the economic viability of the coffee value chain;
- That the World Coffee Producers Forum has already expressed its concern about the producers’ situation and will continue to address this issue in its next meeting in Brazil, July 2019”
The price of coffee has indeed hit a 12 year-low, since an oversupply of beans coming from Brazil flooded the world market this year. In less than a year, the price of Arabica coffee has plunged from 1,40$/lb. to 1,04$/lb., decreasing by 30%, a price never reached since August 2006. As for the price of Robusta coffee, it has reached its lowest level in two and a half years. We asked our Latin America project coordinators insights about how this crisis is experienced by farmers and their families.
This drastic drop is not only due to the significant volume of this year’s harvest but also to the weakness of the Brazilian real, as Brazil is the world’s biggest coffee producer and therefore drives the market. Since the beginning of the year, the Brazilian currency has fallen by over 20% against the US dollar, strongly affecting commodity prices, which are known to be highly volatile, prone to speculation markets.
To what extent does this fall affect coffee farmers and the quality of coffee itself?
What we witness firsthand discussing with the coffee producers we work with in Latin America and seeing them struggle, is the severe decrease in the surface of coffee parcels and the poor land management. In Colombia for example, the Quindío region has seen coffee parcels’ surfaces decrease from 78,000 ha to 23,000 ha in ten years, at an intensifying pace in the last months, farmers arguing that coffee farming is not profitable enough for them to get by. It also means that a plentiful harvest one year can bode ill for the following year’s harvest.
Many farmers decide to turn to more profitable crops such as avocado. Illicit crops are also seen as an alternative to coffee, at a time where the Colombian government was willing to grant significant financial support to the agricultural sector in an attempt to ease up the transition towards peace and fight illegal crops such as coca. This could all be jeopardized by the current crisis.
On August 26th, for the first time in 100 years, the FNC (Federación Nacional de Cafeteros de Colombia, leading cooperative responsible for coffee production and its commercialization in Colombia) decided not to sell its coffee production on the international market. This being said, this measure rather came as a symbolic action, as some regions like Cauca had already managed to sell their products before prices went too low. The situation does, however, remain critical.
At the same time, Colombia still supports its coffee sector financially, as the coffee industry sustains no less than 500,000 families. Following through on a request from the FNC, on August 29th, the Colombian government therefore committed to supporting the price of coffee through an emergency bailout fund of 30,000,000 US dollars. A long-term solution would lie in regulating prices internationally, but it could take a while before that actually happens. However, what coffee producers can control is the way they use their parcels, adopting alternative solutions such as agroforestry and become more resilient to such economic downturns.
How can agroforestry play an instrumental part in helping coffee farmers emancipate from volatile market prices?
Along with the adoption of new crops, we have seen farmers cut their expenses allocated to pests and diseases management, using smaller, insufficient amounts of fertilizer, whether organic or not, and decreasing the time they spend weeding. Such behaviors can lead to a certain decrease in yields and an increased probability of being affected by diseases. This is something we witnessed in Guatemala, where we’ve been operating since 2014.
This is where agroforestry becomes highly relevant. Not only does it provides environmental resilience to crops, but also, it secures financial backup to farmers, in that it helps them diversify their sources of income and thereby mitigate risks related to the dependence on the export of a single commodity.
By planting fruit trees for instance, farmers can build alternative revenue streams and adjust their harvest schedule with complementary crops so as to secure continuous income streams all along the year.
Barbara Bonnet, project coordinator in Central America in charge of handling projects supported by Nespresso, said: “Considering the present situation, the agroforestry project is experienced as a breath of oxygen (no pun intended!). As it happens, the meetings between farmers’ associations and cooperatives have been tensed lately, and mainly revolving around emergency rescue plans with the goal of financing cheaper fertilizers and helping farmers gain access to credits. In the middle of all this, the distribution of tree seedlings in June came as a moment of hope and joy, but also as a moment of sharing between families. Some producers I met even had their whole family participate in the planting in the region of Fraijanes. I could tell that they were feeling truly happy for receiving and planting these trees, because it gave them the opportunity to think over a long-term perspective, but also short-term if you take the case of fruit trees. The project is therefore key to helping farmers hold steady, and the incentive distribution that occured in March and April was particularly welcomed as a way of creating much needed liquidity, even in small amounts.”
A lot of farmers are drowning in debt and are strongly affected by the erratic fluctuations of the market, which is why sustainable sources of income are more than ever strategic for them. When the weight of debt becomes too strenuous for families, children tend to try crossing the US border hoping for the possibility of a better life. Rural exodus towards the US has increased over the past years, especially among young generations living in countries close to the US border, leading to the risk of workforce shortages for the harvests to come.
In hard times like these, farmers see agroforestry as a way out of the poverty trap, in other words as a way of diversifying and stabilizing their revenues, but also protecting their crops against extreme climatic events, whose frequency has been increasing in South American countries over the past decades. Trees protect coffee plots against heavy rains, droughts or storms, limiting risks of erosion and loss of soil quality thus preventing from yield decrease.
In addition to these environmental benefits, planting trees is a way for farmers to maintain social and family link. To a certain extent, they also represent a bond between generations, a legacy that parents will leave to their children, with a value that is at once environmental, economic and emotional.