December 15

Coffee & Cocoa: +/- 20 Years

Rick Peyser story imageJust over a year ago, I left Keurig Green Mountain after almost 27 years, and weeks later accepted a new role with Lutheran World Relief – Senior Relationship Manager, Coffee & Cocoa. In this role I have continued to work with coffee farmers and their fami­lies, and have had the wonderful oppor­tu­nity to expand my hori­zons to cocoa, meeting with cacao farming fami­lies in Nicaragua, El Salvador and Uganda.

In my supply chain outreach work I have always found it helpful to look at how others in different supply chains address their chal­lenges. As I look ahead to the future of coffee, I see many paral­lels, differ­ences, and lessons to be learned from the cocoa world.

Like coffee, cocoa (derived from the cacao plant) is an equa­to­rial product, usually found growing in a narrow belt of +/- ten degrees on either side of the equator. Cacao thrives in a humid, trop­ical climate, with plenty of rain­fall and few dry spells. According to the World Cocoa Foundation there are between 5–6 million cacao farmers around the world, with 40–50 million people depending on cocoa for their liveli­hoods. Like coffee, more than 80 percent of the world’s cocoa is produced from cacao grown on farms between two and 5 hectares. Over 70 percent of the world’s supply is grown in West Africa, from which most of the world’s milk choco­late is produced, with much of the fine-flavored cocoa produced in the Western Hemisphere, often in areas where specialty coffee is grown, but at lower alti­tudes.

In many ways the “specialty” or fine-flavored cocoa sector is at least 20 years behind specialty coffee. To date, no common sensory stan­dards have been adopted or dissem­i­nated glob­ally. Many specialty (bean-to-bar) busi­nesses are arti­sanal, like some founding members of the SCAA were 33 years ago. While their propri­etary stan­dards have worked for current volumes, in antic­i­pating growth, there are now discus­sions underway to develop uniform global stan­dards and even a cocoa grader system, much like the “Q.”

In other ways cocoa is perhaps 20 years ahead of the coffee industry. Many in cocoa foresee a supply crisis within the next 5–8 years. Globally there is growing demand for cocoa, largely driven by increased consump­tion in emerging markets with growing dispos­able income. Cocoa produc­tion is not keeping pace with this growing demand due to a variety of factors, including: poor crop manage­ment, pest infes­ta­tions, low market prices leading farmers to focus on alter­na­tive crops, and a young work­force migrating to cities. Many econ­o­mists are predicting a cocoa short­fall of 1 million metric tons by 2020.

At the farm level, small-scale coffee and cocoa fami­lies face many of the same chal­lenges: an aging farmer popu­la­tion; poor access to credit, or educa­tion for their chil­dren; limited access to medical care; and lack of nutri­tious food for many months of the year. In addi­tion, they are contending with two unprece­dented chal­lenges: the impacts of climate change and youth migra­tion.

What is the cocoa industry doing to address these chal­lenges? Over the past decade, the World Cocoa Foundation, the private sector, govern­ments, and others have invested many millions of dollars, and are contin­uing to do so to grow supply and address some of the funda­mental chal­lenges that are constraining produc­tion. Nevertheless, many industry observers predict that the resources being allo­cated are not close to enough to avert a global cocoa crisis in the near future.

What can the coffee industry learn from the cocoa industry? As an industry, we are still recov­ering from the first broad impact of climate change: la roya. While we don’t know what the next mani­fes­ta­tion will be, we do know from many in-depth studies on global warming, is that as temper­a­tures rise, many land areas currently producing coffee will no longer be suit­able for the produc­tion of high quality Arabica beans. We also know, that there is increasing volatility in weather patterns – with extended droughts, and local­ized or regional flooding becoming common in the coffee­lands.

The second great chal­lenge is urban migra­tion which is affecting all agri­cul­tural commodi­ties. Globally, it is expected that 70% of the world’s popu­la­tion will live in urban areas by 2050. Already many daugh­ters and sons of coffee farmers are moving to urban centers where they see the promise of a better life. With the average age of coffee farmers in many areas now exceeding 50 years, we have to ask ourselves “Who will grow, harvest, and process the next gener­a­tion of specialty coffee?”

What can the coffee industry do to avoid a cocoa-like supply crisis? As an industry, we can ramp up our emphasis on sustain­able prac­tices to miti­gate and adapt to climate change. We must take youth migra­tion seri­ously, and look at ways to increase future oppor­tu­ni­ties for young people in coffee farming commu­ni­ties, through their eyes. The urban magnetic pull is powerful, and unless as an industry we begin to seri­ously invest in helping coffee farming fami­lies address the chal­lenges they face at the house­hold level, coffee may not be far behind cocoa in failing to meet the growing consumer demand for our product.

The bottom line is the bottom line: coming gener­a­tions of coffee and cacao farmers and their fami­lies must see and receive greater value if they are to continue growing coffee. More successful collab­o­ra­tive and convening efforts, large and small, like the World Cocoa Foundation, Alliance for Sustainable Coffee, Temu Kopi, and the Coalition for Coffee Communities, must blossom to ensure these farming fami­lies thrive into the future.

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