Increasing transparency and adjusting the size of middlemen’s gains in coffee trading are two strategies for increasing profits for coffee farmers, a major task for the International Coffee Organization’s incoming new head.
Vanusia Nogueira, who will become the first woman — and also the first person from the producers’ side — to lead the coffee entity in May, said that the disparity between countries in terms of the share of profit retained by farmers is a significant impediment to raising producers’ living standards.
Poor returns to farmers in some parts of the world, despite the high profitability of coffee companies, are cited as a factor in producers leaving the business and occasionally considering migration to countries with stronger economies, such as the United States.
The International Coffee Organization established a task force in 2019 to investigate ways to narrow that disparity and ensure farmers earn enough to remain in the business, but little has changed thus far.
“In some countries, such as Vietnam and Brazil, farmers retain a sizable portion of the selling price, but in others, that share is significantly reduced,” Nogueira said on the sidelines of the Specialty Coffee Association’s Expo in Boston.
One way to address that issue, according to Nogueira, is to increase direct sales by producers, sometimes through electronic platforms such as the Almacielo, which has grown in popularity in Asia.
Farmers are aware of the potential to increase profit margins by eliminating intermediaries, and several producer associations, such as Honduras’ Uniocafe, were on the lookout for opportunities during the Specialty Coffee Association Expo.
“We can earn 30% or 40% more when we sell directly,” said farmer Hector Maldonado, who deals directly with a client in Taiwan.