Coffee meeting should ensure binding commitment to pay farmers better

As demand for Rwandan coffee continues to grow internationally, it is a measure of its quality that one profile appreciatively describes the blend on the palate as “a fusion of sweet, buttery and caramel notes with surprising citrusy and fruity overtones.”

For a bean provoking such a superlatively elegant description, is the farmer earning what she deserves?

This is a serious question, and it is not just about the Rwandan farmer. Coffee prices have not been good for growers of the beverage in Africa and the developing world.

In an example one may find anywhere on the continent, a coffee farmer profiled in a recent Reuters feature report paints a familiar picture of exploitation:  The farmer’s earnings for a kilogram of coffee beans has in the recent past fallen a third to 8 birr, or just 29 US cents, reducing his income from a cappuccino sold in the West for $3 to $4 to under a cent.

The low remuneration has been cause of some outrage. But where some activists charge neo-colonialism and exploitation of farmers by the multinationals in the lopsided prices, the more diplomatic language in UN assessments has been predictably calmer, though no less discerning.

The International Coffee Organisation (ICO), the UN body charged with administrating the sector, observes that the internationalisation of coffee sourcing through the strong involvement of international companies in coffee buying might significantly be contributing to producer price volatility.

The ICO comprises of 44 exporting countries, including East African countries except for South Sudan. It also includes importing countries in its membership, including European Union countries as well as Japan, Norway, Russian Federation, Switzerland and Tunisia.

The price volatility, which has resulted in ever reducing remuneration, has often been because these companies often adjust their strategies to fit their own interests, which may not necessarily coincide with those of producers or the governments in the countries where they operate.

The multinationals have their foothold in the region for a reason. East Africa coffee farmers, including Ethiopia which is categorised under the region, accounting for over 80 per cent of the continent’s total production.

This means that East Africans comprise a significant number of the 10 million individual farmers and workers deriving their livelihoods from the African coffee economy.

But the poor prices have prompted some farmers, in Kenya for example, to uproot their coffee trees in favour of better-paying crops.

The Reuters report explains how growers around the world have warned coffee company executives in the West of a growing “social catastrophe”, unless they can help to raise farmers’ incomes.

In a letter last year to chief executives at companies such as Starbucks, Jacobs Douwe Egberts (JDE) and Nestle, a group representing growers in more than 30 countries said there was a risk farms would be abandoned, fuelling social and political unrest as well as more illegal migration.

While it was necessary to make the point to the multinationals, the solution requires a more concerted effort.

Thus, among the most anticipated issues to be addressed at the 124th Session of the International Coffee Council (ICC) starting Monday in Nairobi, Kenya, is the global price of coffee.

Under the theme, “Profitability, Consumption and Productivity", the meeting will assess the current economy and look at ways to set up a system for monitoring pricing, and creating an early warning system.

The ICO is cognisant that since 2016 the coffee market has experienced a continued downward trend.

Coffee prices are 30 per cent below the 10-year average with many of the more than 20 million coffee farmers worldwide facing losses as they struggle to cover their operating costs.

During the International Coffee Council’s session in September, the ICO members discussed the fact that current market price levels do not allow coffee growers to cover their production costs, compromising their economic sustainability, and that current prices do not reflect the physical market fundamentals.

This resulted in the adoption of Resolution 465 on Coffee Prices Levels. Monitoring progress in the implementation of the Resolution will be part of the agenda at the Nairobi meeting.

The price woes and other challenges that bedevilled the international coffee sector in recent decades have led to many analyses and suggestions on how to overcome them. Exploiting high-value niche markets such as those for specialty coffees have occasionally been mentioned.

The Reuters report, for instance, notes how millennials in the West have fuelled a proliferation of coffee shops and pricey innovations from cold brew to nitrogen coffee.

On the other hand, exporting countries keep on being urged to adopt programs to further raise internal coffee consumption levels.

In the meantime, while the ICO says it is working to update its 2004 “Step-by-Step Guide to Promote Coffee in Consumption in Producing Countries”, it is the price disparities keeping many of our farmers in poverty that must be looked into.

It will, therefore, be worth watching out what new resolutions will come out of the Nairobi ICC session.

The views expressed in this article are of the author.