'The industry's at risk': the high price of cheap coffees
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Seven Seeds trades outside the C market system, as do an increasing number of other players small and large. Nespresso tops up the C price by 30 to 40 per cent for 100,000 farmers who supply them in 13 countries. Starbucks owns a coffee farm in Costa Rica that supplies a small proportion of its coffee directly. FairTrade is perhaps the best known advocate for better prices and conditions for coffee farmers, working on behalf of 810,000 farmers in 30 countries to increase farm-gate prices. It’s a complicated scenario: even if buyers purchase above the market price, it’s usually with reference to it, and most farmers live hand-to-mouth. Unless help comes to them or they can access specialty buyers, they’re at the mercy of middlemen (often known as “coffee coyotes”) and the C price.
A caffe latte is $4.50 at Seven Seeds. Raising it to $5 – a reasonable bump to account for the higher, fairer purchase price, according to Dundon – would cause an uproar. “People think a $4 latte is a god-given right but that’s not the true cost of coffee,” he says. He contrasts it with craft beer. “A specialty beer – made from water, brewed down the road – is $12. I’m not knocking the beer. I think they’ve represented their product really well. We haven’t represented coffee and told the story of how hard it is to make a great cup.” He also owns two cafes in Los Angeles. “I charge $US5 [$8] there for a cup of coffee and no one bats an eyelid. That price is expected.”
To smooth a path to the higher prices that will support quality coffee production, Seven Seeds is focusing on transparency: Dundon tells me that his company (co-owned with Bridget Amor) pays producers an average 3.56 times the C price. They also print information about specific coffees onto cards given out at the cafe. Those cherry-scented Burundi beans cost Seven Seeds $10.31 a kilogram. If sold on the commodity market, the same beans would have fetched $2.91. FairTrade would have wrangled $3.95. All those figures are on the card, aiming to connect Australian latte-sippers to Third-World farmers. It’s no surprise that a small, independent buyer like Seven Seeds pays more than Nestlé, for example; the difference is that these particular Burundian smallholders are being given the financial incentive not only to stay on their farms, but also to put in the extra effort it takes to grow high-quality coffee.
“We don’t want to bash people over the head,” says Dundon. “If you want to come in and grab a coffee, that’s fine, but we want to lead by example. Previously, you would have expected politicians to do this sort of stuff. Now I don’t see hope in politics. We have to do it, we have to follow principles that we believe in.”
The other big C is climate change. According to a prediction by global collective World Coffee Research, demand for coffee will double by 2050, pushed by Millennials in the US and soaring demand in China, where rapidly expanding local chain Luckin is facing off against Starbucks to convert one billion tea drinkers. In the same period, climate change means the amount of land suitable for production will halve. Coffee plants are extremely sensitive to climatic shifts and irregularities, requiring predictable patterns of rain and dry to set fruit and help it grow and mature. Rain at the wrong time, or unexpected heat, can create ideal conditions for pests like the dreaded leaf rust which can turn a plantation into a field of dead sticks. A leaf rust epidemic in Central America in 2012 caused 1.7 million people to lose their jobs, and devastating outbreaks persist.
Article source: https://www.watoday.com.au/national/why-i-m-spending-100-million-on-the-pursuit-of-truth-20181202-p50jnv.html?ref=rss&utm_medium=rss&utm_source=rss_feed
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