December 6, 2022

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International Coffee Day: New Global Market Report on Sustainability and Prices

As International Coffee Day approaches on October 1, new research looking at global market trends for sustainable coffee provides insights on how sustainability certification can improve environmental and social realities in the sector and influence coffee prices and income received by farmers.

“The global coffee footprint is huge, with more than 12.5 million coffee farms across the globe, so moving the sector towards sustainability could have significant impact,” said report author Vivek Voora, a Senior Associate with the International Institute for Sustainable Development (IISD).

Of the 10.7 billion tonnes of coffee produced in 2019, at least 21% was produced in compliance with voluntary sustainability standards. The report ranks 4Cs as the top standard by volume, followed by UTZ Certified, Fairtrade International, Rainforest Alliance, and Organic.*

“About 60% of certified coffee in 2019 came from Latin America and the Caribbean, led by Brazil, Colombia, and Peru,” Voora said. “Vietnam led the world in certified production from a single nation.”

Prices are a crucial factor for coffee producers, as price volatility and depressions can be especially disruptive for farmers. IISD’s report shows that VSS compliance can yield minimum prices and premiums that protect farmers when international market prices drop.

“But we found that increased farm-gate prices derived from adopting VSSs are not enough to meaningfully raise farmers’ crop income, largely due to recurring dynamics in the international coffee market, as well as lack of demand for VSS-compliant coffee and rising production costs”, points out author and IISD Policy Analyst Steffany Bermudez.

The report notes that raising farmers’ income requires strategies to reward farmers for managing risks, using good social and environmental practices that yield positive results, adding value, and diversifying production systems.

“Increasing price transparency, so farmers and other value chain actors can see comparable transaction prices in the market, is key to help producers. Too often farmers have no choice but to negotiate in the dark and this hits their bottom line.” said Bermudez. “Price transparency also helps buyers to verify whether the premiums they pay are reaching the farmers.”

The report includes detailed analysis and recommendations for actors up and down the value chain about how to increase farmers’ prices and income, while providing more value for their sustainably grown coffee.

* Since the Rainforest Alliance and UTZ Certified merger in 2018, the UTZ standard and correspondent label are gradually being replaced by the Rainforest Alliance Certification Program and labelled with the new Rainforest Alliance seal from 2020.

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