This summer I have the privilege of being a columnist on the CBC Edmonton AM morning show. In addition of being sleep deprived out of fear of not being downtown on time, I am afforded the opportunity to talk with Mark Connolly about some timely topics facing the coffee industry.
This morning we chatted about the fact that the commodity price of coffee has essentially not changed in the last thirty years. If you look at the New York Stock Exchange price for coffee on July 27, 1999 (this was as far back as I could online), coffee was trading at $0.97 per pound. The price for coffee on the NYSE today is currently at $1.10 as I write this post. It doesn't take a rocket scientist to figure out that there is something shockingly wrong with this picture. How is it possible that the price of green coffee has only appreciated by thirteen cents when the cost of everything else has gone up significantly more - for example, the price of gas in Edmonton was $.51 per litre in 1999 and today is $1.25 per litre. Not only has the price of green coffee not kept pace with general inflation rates, the amount of money flowing back to the vast majority of coffee producers has not changed significantly. A troubling reality is that most coffee farmers globally do not get paid enough at farm gate to cover their cost of production.
There is much debate around what the true cost of production is for coffee producers, and given the global nature of the industry, and the changing economics from one country to another, this is fair. With that said, it is estimated that an average cost of production is roughly US$2 per pound. The c market price referenced above is not referring to high quality coffee, and most companies do pay price differentials for better quality coffee. However, what is clear is that despite price differentials, fair-trade, and countless other certification programs, a vast majority of coffee growers around the world live in perpetual poverty.
This reality has perpetuated during my entire tenure within this industry. What can we do about it? What can be done? As a consumer, you can begin to ask questions of your favourite coffee provider, you can start to inform yourself about the issues facing the coffee industry globally.
Ask your coffee provider if they know who grows their coffee, how much the farmer gets paid, what percentage of the price they pay goes back to the farmer. You could ask if they know what the FOB (Free on Board) price is for their coffee. If your favourite coffee purveyor can't answer these questions, you may want to start shopping around for one that can. Transparency in the coffee industry is really the best mechanism to ensure that coffee producers start to receive their fair share of the money derived from this global industry.
For more information the World Coffee Research site is a great start.
A link to the WCR Annual Report is located here for your easy access.