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Is coffee sustainable and fair?

From a rare pleasure drink to a staple food: for many people, it is impossible to imagine everyday life without good morning coffee. While our consumption is increasing every year, coffee farmers are earning less and less from it. Why is that?

Coffee cup with coffee beans

Coffee and the waste problem

Coffee and sustainability - many people think of the countless to-go cups that are often covered with plastic and disposed of after only a short time.

Or coffee capsules and coffee pods, which also contribute massively to the waste problem. They are usually made of aluminium, which requires a lot of energy to produce. Every year, we Germans dispose of around 3.5 billion coffee capsules (as of 2018).

However, many consumers are not aware of the conditions under which coffee is produced.

Coffee consumption in Germany

The consumption of coffee has been increasing worldwide for years. Germany is one of the most important sales markets. In 2017, German consumption per person was 162 litres - almost half a litre a day. Not even mineral water is drunk in these quantities in this country. 

Coffee cup with heart
Drinking coffee is an important ritual for many people.

We drink coffee at home, at work and in cafés - and we differ greatly in how much money we are willing to spend on it. While the vast majority of coffee is sold in retail outlets (and thus drunk at home), there most people pay attention to a very low purchase price. 61% of the coffee sold in the first half of 2019 was on sale at that time.

At the same time, we are willing to spend a lot of money for a cup of coffee in a café. Overall, we therefore even pay more money for coffees outside the home than for those at home - even though we consume the lion's share (between 65 and 80%) within our own four walls.

Starbucks and Co. are benefiting from this. They are serving an increasing demand, while at the same time the purchase prices for green coffee are falling.

How is coffee grown and produced?

A large part of the world's coffee is grown on plantations by smallholders, but there are also larger plantations with wage labourers. In total, at least 25 million families live from self-cultivation or wage labour on the plantations, i.e. at least 60 million people.

Growing coffee requires a lot of care. The plant does not like temperature fluctuations, too much sun or strong winds. It has to ripen for months before the fruit can be harvested. There are two seeds in a coffee cherry - the coffee beans.

Care and harvesting is mostly done by hand: One reason for this is that coffee plantations are often established on uneven terrain where machines cannot work.
Another reason is the plant itself: Since the fruits are not all ripe at the same time, the harvest takes two to three months. Every 8-10 days, the farmers work their way through the plantation again to harvest the now post-ripened fruits.

The coffee beans are then freed from the pulp, partially fermented, and finally dried.

Further processing - roasting - then takes place in the countries of distribution.

Falling prices for coffee farmers

In 1989, the global coffee agreement collapsed after three decades. It was supposed to provide more stable prices, and in fact the price of green coffee plummeted immediately after the agreement ended. On average, the (inflation-adjusted) price of coffee between 1960 and 1989had been about twice as high as in the last 30 years.

The following developments contribute to a further decline in prices:

The two main coffee-growing countries are Brazil (mainly with the Arabica variety) and Vietnam (mainly with Robusta) - together they produce about half of the world's exported coffee.

Coffee fruits on the bush
Ripe fruits of the coffee plant

Brazil has managed to lower its prices in the last 20 years - and thus exerts a lot of pressure on other growing countries due to its market position. What makes Brazil different, however, are, among other things, the high plateaus on which cultivation is as possible. Since they are relatively flat, they allow the use of machinery. This lowers (labour) costs significantly.
At the same time, a devaluation of the Brazilian real against the euro and the dollar could help to further reduce prices.

Impact of low coffee prices

unroasted coffee beans
Unroasted coffee beans

Since coffee grows mainly in countries that already have low wage levels, further price cutsare serious

The majority of coffee farmers can no longer cover their costs and live below the poverty line.

In concrete terms, this means that these people do not know whether they will be able to afford enough to eat in the future. Child labour is on the rise because parents cannot afford harvest workers. Medical care is deteriorating and access to education is becoming more difficult. Some coffee farmers have to give up their plantations and migrate.

Climate change is also contributing to the tense situation: Rising temperatures are causing more pests and crop failures, and cultivation costs are rising. In some regions, coffee cultivation will no longer be possible, so production will have to shift. This in turn results in forest clearances.

The market concentrates

For the smallholders themselves, it is very difficult to change anything about their situation; especially since the trading and rust companies have concentrated steadily in recent years: There are now only a few large companies that dominate the market.
The three largest companies, which market 35% of the world's traded coffee, include JAB, Nestlé and Lavazza/Keurig. JAB is a German holding company and owns Senseo, Jacobs and Kaffee Hag, among others.

The same concentration on a few market participants takes place in the trade. The largest company, with about 10 % of the coffee sold worldwide, is the German Neumann Kaffee Gruppe. It is therefore not really surprising that Germany - without growing coffee itself - is the world's third largest coffee exporter! The "German" coffee comes mainly from Brazil and Vietnam and is sold on to other European countries.

INTERIM SUMMARY

Coffee has become an everyday product; while we spend a lot of money on the "coffee experience with friends", we save on the morning coffee at home.

Although demand is rising globally, farmers are struggling with ever-decreasing prices and climate change.

Read on now: What can we do? 5 tips for sustainable coffee consumption!