WHAT’S IT WORTH?

The article that follows was written by Shizue, Content Coordinator at Kickapoo Coffee Roasters.  In last week’s coffee newsletter, Shizue shared a glimpse into how pricing works in the coffee industry, connecting issues associated with commodity pricing to the impacts a volatile market have on the coffee producers.   We invited her to share a slightly expanded version of this article with our broader membership as her article represents issues in our food system that apply to all of us, whether you are a coffee drinker or not.  Commodity pricing plays a role in agriculture, perhaps more than any of us may realize.  Anything from raisins to chocolate, coffee to potatoes, avocadoes to lettuce, milk, and the list goes on.  As a farmer with fixed costs and family members to feed, working off of a volatile commodity market is less than reassuring and in many cases proves to be less than sustainable.  When prices are based on perceived values and market demands instead of the true cost of production, it often leaves producers holding all the risk.

In this article, Shizue poses the basic question “How do we value our producers?”  We encourage everyone to be an informed consumer and eater.  The system will only change when we as consumers demand the change.  How we value our producers—both those growing and producing in our local markets as well as those more distant from us who grow products we consume are important.  The fact that many producers around the world are forced to sell to a market at a loss for their hard work is heartbreaking.  Are we willing to pay the price our producers need to stay in the game and live a sustainable life?  We’re not talking about their ability to build extravagant homes, take vacations and drive expensive cars.  We’re talking about making sure the return they get for the product they produce is enough for them to continue to farm in another year, feed their families and provide for their basic needs, and hopefully have a little bit left over so they can invest in their future.  The reality is, if we don’t support our community of growers, we will continue to lose more small farmers.  We hope you’ll take a moment to read this article and want to thank you for being part of a more sustainable food system!—Farmers Richard & Andrea

WHAT’S IT WORTH?

By:  Shizue Roche Adachi, Kickapoo Coffee Roasters

A coffee farmer walks his fields in Peru.

On August 20th, the international price for green coffee (C-Price) plummeted to less than 97 cents per pound, the lowest it’s been in 12 years. And it’s not bouncing back. With an average cost of production hovering around $1.04 per pound, the market is now paying most farmers less than it costs to grow, cultivate, and process their coffee. Coffee farmers are already the least economically empowered players in the coffee supply chain, and now they are being asked to carry the financial burden of a system that’s failed them.

So, how did we get here? Like many industries, the true economy of coffee has been manipulated by speculation. Composed of a relatively small group of individuals, the financial sector holds an immense amount of economic power over the market. And they wield that power for their benefit, profiting off of a volatile commodity price while producers face uncertainty and instability.

At its foundation, the coffee industry is made up of an intricate web of relationships that tether coffee farmers and farmworkers to millers, roasters, exporters and retailers, and ultimately to coffee consumers worldwide. But the needs and interests of this interconnected community have been drowned out by those of speculators, traders, and investors. The C-Price, as with any commodity, dips and jumps in relationship to perceived value. It bears no responsibility to the true value of a coffee bean. And this is why our farmers can grow coffee in good faith, only to have to sell to the market at a loss. The market is not invested in the long-term sustainability and success of the coffee industry. It is interested in short term profits.

In an article published by the Specialty Coffee Association, the SCA’s Chief Sustainability Officer posited that we may lose half of our coffee farmers by 2030, forced out of livelihood that may have supported multiple generations before them. This loss is not only threatens the world’s coffee supply, it threatens the welfare of coffee producers around the world and the future of coffee farming as we know it.

While explaining the fluctuations in the C-Market demands a fuller explanation than can be captured here, what it really comes down to is a question of how we value producers. This is what happens when the market isn't held accountable to farmers. This is what happens when the industry confuses opportunities for quick profits with good business. This is what happens when we fail our producers and take their livelihoods for granted. And this is when Kickapoo Coffee's commitment to #RaisetheBar by setting a minimum price to farmers irrespective of the C-Price holds real weight.

In 2017, Kickapoo Coffee announced a guaranteed minimum price of $2.75 per pound to our farmers. This baseline commitment creates the economic security for farmers to see a future in coffee. And now, even though the C-Market price has fallen, we’re raising our minimum. This year, we’ll be writing contracts with a minimum price of $2.85 per pound.

While we can never rid ourselves of the commodity market, the specialty coffee industry can divorce itself from this degrading pricing model. Specialty coffee depends upon the producers who dedicate themselves to furthering their craft and exceeding market standards. And yet most industry players continue to base their prices on the commodity market.

This expectation to follow the commodity market is like expecting a local farmer selling heirloom varieties of popcorn to determine their price per pound according to the price of corn harvested for livestock feed. Or like asking an artisan chocolate maker to price their truffles based on the price of the Hershey’s bar at the gas station. Not only is this a ridiculous expectation, it’s a degrading one, with significant financial repercussions to those least empowered in the trade of coffee: the smallholder farmer.

The market won't change until we make it. Someone, somewhere, is always paying the true cost. So let’s put people above profits and give our farmers the dignity of a living wage.

To learn more about our minimum price guarantee to farmers and our campaign to #RaisetheBar, check out our website at kickapoocoffee.com.

Kickapoo Coffee co-owner, Caleb Nicholes, visits with a
member of the Adenisa Association in 2018.