Through the looking glasses

Imagine having the land above as your backyard.

Now throw you back into the intense scene of the New York coffee trade floor, of yearly price predictions, of crop area and production strategies.

On the one hand, the beauty of nature has instilled in you an appreciation for the beauty and power of nature. You have the wisdom of tending to your farm and processing your products in certain ways over other simply because it is better, of being content with small scale, high quality production. Your farm is only a speck on these mountain ranges. Human is only a cell that need nutrients from other cells in the body. On the other hand, such perspective may distant you from the politics of trade routes. Suddenly, the only way for farmers to connect with consumers is to go around ‘the Big Guys’.

This is the impression that I gathered from visiting several coffee farmers in the last few days. Each farmer has very different opinions about coffee farming, except for one remark: the return on investment for high quality coffee is often not enough to justify the farming of them. Several causes are mentioned: complex value chain that pays farmers the least while they are the ones who invest the most, processors’ inclination to use Robusta beans as filler to lower the price – thus depresses the value of the superior Arabica varieties because they are not sufficiently desired, biases for big farms and producers with connections over less powerful growers, the list goes on. Farmers deal with the problems in many ways: to utilize the Internets to find customers that care about social responsibilities, to make a network among farmers and eliminate middlemen, or simply diversify farm products as coffee price drops or diseases surge. These solutions are small scale, and while some of them increase the negotiating power of farmers, channels for dialogues between price markers and farmers are still lacking, not to mention there are many farmers who are not aware of the unfairness of the value chain. Due to small scale, farmers who connect directly with consumers often have to bear high post-processing cost, and elevated price in turn limits the reach of the product. A better model is to join force, such as in the THR!VE model, but political differences are still prohibitive (in THR!VE’s case, enough to make a founding member leave). Finally, farmer’s choice to diversify production and move away from coffee when production is too costly, while is a perfectly reasonable philosophy, is also the greatest weakness of the coffee industry in its present set up. Demand for Arabica is constantly rising, yet the return on investment in recent years are so low that coffee growing areas are continuing to shrink. Price fluctuates strongly depending on the productivity of the crop – a good year for the coffee trees can make farmers lose money. Such volatile and stressful situations can drive farmers toward more stable crops, especially for small farmers. Meanwhile, small farmers make up the majority of specialty coffee growers. In this vicious cycle, we love coffee but punish ourselves by not supporting better products. Even if we consciously seek sellers with good practice, the power to change the system is still unidentified.

In the next two days, we hope to learn more from the trading perspective on the coffee industry. Maybe more light will be shed on the complexity of the current system.

Side note: I checked some information on coffee production of Vietnam, which I am more familiar with. Vietnam is a major Robusta producing nation, with only 3% bean production being Arabica. The plan to 2020 is to continue to increase growing area and have Arabica accounting for 5% of production, based on global demand. Reports from recent years show a definite trend in farmers who are forced to move from coffee to fruits, pepper, macadamia, etc. Arabica has higher price but are more expensive to grow, making the return on investment not always higher than that of Robusta. With such outlooks, I wonder how much Vietnamese farmers will actually benefit from reaching these goals.