Over the past several years, global coffee consumption has been increasing. In the International Coffee Organisation’s February 2022 report, the organisation estimated a global deficit of more than 3.1 million 60kg bags of coffee. Effectively, this means that the signs point to coffee consumption around the world outpacing global production.
If the coffee industry is to tackle this problem, it needs to address the increasing need for long-term sustainable coffee sourcing. By doing so, we can support more socially and environmentally-friendly coffee production, as well as empowering smallholder farmers to improve their socioeconomic livelihoods and grow more climate-resilient coffee in the future.
So what exactly is long-term sustainable sourcing and how can it be achieved? To find out more, I spoke with three industry professionals sourcing Fairtrade coffee. Read on to learn more about their insight.
You may also like our article on what to consider when developing a sourcing programme.
What is long-term sustainable sourcing?
Sustainability has become something of a buzzword in the coffee sector over the past decade – so what do we actually mean when we talk about sustainable sourcing?
Green coffee buyers and roasters need to source green coffee, either from traders or directly from producers. In order to do so sustainably, a number of needs should be met that account for various social, economic, and environmental factors.
It’s estimated that smallholders produce up to 70 to 80% of the global coffee supply – making them an essential part of a sustainable coffee industry. However, many of them currently don’t earn a living income, which leaves them and their families economically vulnerable.
What’s more, despite the current high C price, the coffee market has historically been volatile. As recently as 2018, the market price fluctuated around US $1/lb – undoubtedly leading many smallholders into further poverty.
Without the financial capability to invest in farm management, some farmers are forced to abandon coffee production altogether in search of more profitable cash crops. And with climate change increasingly threatening the future of the coffee industry, safeguarding coffee production has never been so important.
As a means of doing so, a large part of sustainable coffee sourcing can be encapsulated in the concept of “relationship coffee”. This is when producers, traders, and roasters all work closely together to build strong, mutually-beneficial partnerships.
In the long term, this can lead to working relationships that not only guarantee roasters a certain volume and level of quality, but also reassures farmers that their coffee will be purchased for a set number of years.
“We focus on developing longer-term relationships with our core, large-volume suppliers – it’s not uncommon for us to have been working with them for at least 10 years,” she tells me.
Ultimately, the longer that producers can closely work with traders and roasters, the more open communication can be. For instance, roasters can let producers know which coffees are the most popular with consumers, while farmers can be upfront about the support they might need to keep growing these coffees.
Certifications can be a significant component of direct trade models. One example is Fairtrade, which consults with major supply chain stakeholders (including co-operatives, governments, and the private sector) when setting or revising its social, economic, and environmental standards in the coffee sector.
“Direct trade and certifications aren’t mutually exclusive, but rather an opportunity to harness the best of both worlds,” Amy says. “They allow supply chain actors to benefit from certifications and long-term relationships with producers.”
Priscilla Daniel is a senior coffee trader and Q Grader at DRWakefield. The green coffee trader was the first in the UK to receive a Fairtrade certification.
“Sustainability is integral not only to the coffee we source, but to our business as a whole,” she explains. “Certifications are an important part of that – around 30% of our coffee is Fairtrade-certified.”
Why is long-term sourcing important?
It goes without saying that there are a number of benefits to sustainable long-term coffee sourcing – including ensuring farmers receive more money for their coffee.
A large part of the Fairtrade model is focused on ensuring companies pay the Fairtrade Minimum Price and Fairtrade Premium to improve the socioeconomic livelihoods of smallholder coffee producers around the world.
The two price models work differently. While the former guarantees a minimum price for their Fairtrade coffee during market fluctuations, the latter allows them to earn US 20 cents/lb on top of the price paid for the coffee. In turn, at least 25% of the Fairtrade Premium is invested in training and support to improve coffee quality, productivity, and sustainability.
Carlos Renato Alvarenga is the president of Cafésul, a Brazilian co-operative with more than 180 members that has been Fairtrade-certified since 2008.
“One of the pillars of the Fairtrade certification is that it guarantees the Fairtrade Minimum Price for our producers,” he says. “This can cover their production costs and also provide them with enough income to improve quality of life for them and their families.”
Carlos goes on to explain how the Fairtrade Minimum Price guarantee works.
“The guarantee can be used whenever the market price falls below a certain value, so the buyer cannot purchase coffee below this minimum price,” he says. “This protects farmers from negative market fluctuations.
“When the market is above minimum price, producers receive market price and a premium based on the quality of the coffee,” he adds.
And with the coffee market prices fluctuating significantly over the past year or so, stabilising farmers’ income has never been as important.
“Having the Fairtrade Minimum Price guarantee in-built into your supply chain is particularly important when coffee prices are low,” Amy tells me. “Previously, some producers struggled with farm profitability.
“The guarantee reassures that the co-operatives we work with are receiving a fairer price,” she adds. “The traceability of payments is also important.”
With more and more consumers demanding more sustainable coffee, factors like traceability and transparency are becoming increasingly necessary for roasters and traders to adhere to.
Alongside this, improving coffee quality is also an essential part of growing consumer demand.
“Further education and investment allows producers to improve coffee quality, which helps them to receive Fairtrade Premium Prices,” Priscilla explains. “Fairtrade certification can allow farmers to receive more stable income in the long term.
“Some Fairtrade-certified coffees score 87 points or higher,” she adds. “Moreover, they can be fully traced back [to the individual farmer or co-op].”
How do sustainable sourcing models work?
In order for sustainable coffee sourcing models to be effective in the long-term, all of the major industry stakeholders must benefit. When considering smallholder producers and roasters, for example, this can mean improving the socioeconomic livelihoods of the former while ensuring the latter receives high-quality, environmentally-friendly coffee.
Carlos tells me about a number of Fairtrade initiatives at Cafésul which align with sustainable sourcing.
“Our Fairtrade-certified Small Producer Organisations (OPPs) develop projects which help our smallholder farmers to increase coffee quality and yields,” he says. “OPPs provide technical assistance on how to grow more productive, climate-resilient varieties.
“The organisations also support farmers in transitioning to organic coffee production, as well as guidance on sustainable farm management techniques,” he adds.
However, it’s also important to ensure farmers and co-ops have the autonomy to invest where they see fit.
“Receiving the Fairtrade Premium price allows co-operatives to make democratic decisions on how the money is spent,” Amy tells me. “For instance, our partner co-ops spend around 25% of the Premium price on improving productivity and quality.
“The Capucas co-operative invested in new sustainable facilities, such as solar dryers and processing equipment,” she adds.
Priscilla also elaborates on how other co-ops are able to invest in quality and productivity through long-term sustainable sourcing.
“Since 2012, we have worked with Fairtrade-certified co-op Coope Tarrazú because of the quality of its coffee,” she says. “The farmers chose to invest the Fairtrade Premium on building a road which connected the farms to main roads, [so they could transport their coffee to export].”
Having access to international markets can be challenging, especially for smallholder farmers. Sustainable sourcing models, however, can help connect farmers to more markets.
“For farmers who are part of a Fairtrade-certified co-operative, the sourcing model can provide them with access to both domestic and global markets,” Carlos explains. “As they sell coffee collectively, producers can sometimes have more bargaining power [to potentially receive higher prices].”
“DRWakefield works with Café Femenino which supports women coffee growers,” Priscilla says. “To be involved in the programme, the coffee needs to be Fairtrade-certified.
“We also work with Cencoic in Cauca, Colombia – an indigeneous group which is part of the Cosurca co-operative,” she adds. “We developed a programme with them which helped to improve the traceability of their coffee.”
Understanding the benefits of long-term sourcing
Despite the obvious advantages to sustainable long-term sourcing models, there are still many challenges that producers face in the coffee industry.
“One of the biggest challenges is labour,” Amy says. “Even on smaller farms, producers rely on seasonal workers for specific tasks like coffee picking.
“Furthermore, programmes like the one developed by Asocafé in Bolivia help producers deal with issues around pest and disease management,” she adds. “Fairtrade was able to source funding to increase the scale and impact of the project.”
The impact of pests and disease can be exacerbated by climate change – which is already having a detrimental impact on the coffee industry. It’s estimated that four of the top five coffee-growing countries will experience a reduction in the size of the land suitable for growing coffee by 2050.
“At Capucas, a co-operative in Western Honduras which Matthew Algie has worked with for more than ten years, producers invested their Fairtrade Premium Price on seedling development,” Amy explains.
“This helped to cultivate new varieties which are more climate-resilient – particularly important during the recovery from damage caused by a coffee leaf rust outbreak a few years ago.”
Making sure coffee production is sustainable extends beyond the farmers, too.
“Around 100 million people are involved in smallholder coffee production,” Priscilla tells me. “Through the Fairtrade Premium Price, they are able to invest in what many of us would consider necessities, such as roads, schools, access to fresh water, and good healthcare.”
Carlos also mentions how long-term sustainable sourcing can support coffee-growing communities more widely.
“The Fairtrade Premium price of each bag of coffee that our OPPs sell is used to invest in social and environmental projects, as well as improving coffee quality and productivity,” he explains.
“Examples of these projects include selling locally-made goods to support underprivileged communities, donating equipment to local hospitals, protecting water reserves, constructing wastewater treatment facilities, and donating school supplies to the children of co-op members.”
Finally, Amy tells me that consumers can also benefit from long-term sustainable sourcing.
“It’s important for consumers that they know where their coffee comes from,” she says. “Our commitment to sourcing Fairtrade-certified coffee also gives our suppliers confidence to continue investing in the coffee.
“[Certifications require independent] audits, which ensure that documents are correct and up to date and that farmers are following strict standards,” she adds. “It creates a powerful connection with our suppliers.”
When implemented properly, long-term sustainable sourcing models can support stakeholders across the supply chain, and improve outcomes for everyone. It also provides producers, traders, roasters, and consumers alike to set realistic expectations when they buy coffee – whether green or roasted.
Ultimately, sustainable sourcing helps to build long-term, mutually-beneficial working relationships, which can also improve environmental efforts at origin and better support smallholder producers to earn a living income.
Enjoyed this? Then read our article on how private label roasting can drive sustainability.
Perfect Daily Grind
Please note: Fairtrade UK is a sponsor of Perfect Daily Grind.
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