The future of the coffee industry depends on our ability to meet the challenges confronting us today to ensure a long term supply of high-quality coffees, generating value and well-being for all members of the industry. To accomplish this objective, high-quality coffee growers need to be profitable and at the same time confront price volatility, attract new generations of coffee growers to rural areas, face climate change, provide the information and content that the market demands and maintain the social balance required to make a positive impact on the families and communities in our growing regions, among other challenges.
Can most of the 25 million coffee growers in the world face these challenges by themselves? Just take climate change as an example. Colombia, the world’s largest producer of the Mild Washed Arabica coffee, has been among the first countries to face nationwide difficulties due to the impact of climate change on coffee plantations. From my perspective, working institutions are needed to confront these and many other challenges. In fact, from our point of view, when it comes to ensuring the future of high-grown high quality coffees, the most organized countries, those with the best quality information and with solid institutions, have the best chance of overcoming the challenges ahead.
A Solid Institution
In Colombia, we have a strong, solid institution in place, with a significant track record of meeting and overcoming challenges: The Colombian Coffee Growers Federation (FNC). Our conviction is that through collective action and cooperation with the different actors in the chain, we can generate wealth and value for coffee growing families. Acting on that, the FNC has created far-reaching programs that involve farmers, government, clients, international cooperation agencies, the financial industry and many other stakeholders.
One prime example is the FNC’s ability to get Colombia back on its feet after the coffee leaf rust attacks that drastically reduced farm yields and farmer profitability a few years ago. Our objective was focused on coffee crop renovation with coffee leaf rust resistant varieties that are better adapted to climate change. Our plant renovation program has become a reference and case study on how institutions can achieve positive change to overcome climate variability-induced difficulties and coffee leaf rust epidemics.
A subtler problem, shared by the agricultural sector as a whole, is that of attracting new generations of coffee growers to the industry. With the average age of coffee growers in Colombia and other producing nations rising, the FNC is conscious that a number of strategies need to be developed. These include changes in the education model to prepare and encourage younger generations to continue farming traditions after finishing school, obtaining financing, and ensuring that when they become old they will have access to a retirement plan or pension. Such packages will be impossible to devise and deliver without strong institutions.
Next Wave: The Sustainability and Information Imperative
Younger consumers are placing a greater emphasis on social and environmental responsibility linked to the origin of coffee. A growing body of research confirms that the bulk of future consumers, led by the millennial generation, is emphatically discerning in their purchasing decisions. To win their trust, the industry must be open about where and how our products are grown, the environmental footprint we leave behind, and the impact of our products on local communities. At the same time, the industry must acknowledge that we need to overcome problems that threaten to put pressure on our economic, social or environmental sustainability indicators. Transparency, and the ability to provide reliable data and information to show our commitment to sustainability, are going to be essential.
That’s a lot to ask, perhaps, but there is an upside. According to Nielsen research, more than half (55%) of the respondents to a 2014 global corporate social responsibility survey say they are willing to pay extra for products from companies that are committed to positive social and environmental impact. For this group, personal values are more important than personal benefits, such as cost or convenience.
We believe that in the future, those coffee growing origins that demonstrate a strong and coherent action plan to improve sustainability indicators will outperform those who do not. The link between doing good in the community, and doing well in the marketplace is clear. In 2014, 65% of total sales measured globally were generated by companies that communicated positive values for the environment as well as for social issues (Nielsen.)
With our renewed focus on achieving a more profitable and less risky business environment for coffee growers, the FNC is preparing to continue developing strong collective action initiatives to overcome our common challenges. Our Denomination of Origin programs will concentrate not only on ensuring quality, but also on sustainability indicators. Our climate change adaptation programs will focus on ensuring coffee growing is a viable business in most Colombian coffee regions. Our market access initiatives will continue to provide growers with the ability to establish direct trade relationships with clients, big and small around the world. We believe institutions are also key to providing transparent and relevant information to satisfy consumers who are exceptionally conscious of the products they purchase.
Colombia is already working on strategies to sell coffee “with content.” The FNC aims to provide the information consumers want, and that information will be rich and distinct depending on the coffee origin, the number of certifications, traceability and more.
As we move into the future, we envision a more profitable grower producing a high quality product and generating a responsive approach to consumer demand for incorporating sustainability information into our origins. Colombia’s experience in facing the multiple challenges within the coffee industry in the past can serve as a reference for other coffee producing countries, and for the industry as a whole. We are not afraid of challenges. We will face them with determination, keeping the farmer at the center of our action.