April 16, 2015
It's been a joy to work with Danielle Giovannucci of the Committee On Sustainability Assessment (COSA) based in Philadelphia, Mark Lundy of the the International Center of Tropical Agriculture (CIAT) in Cali, Colombia and Ben Carlson of Long Miles Coffee Project in Burundi. Together we prepared the lecture, "Cost to Produce vs. Price: Producers Narrow Margins" for the SCAA lecture series. Our Saturday morning lecture hall at the Washington State Convention Center in Seattle was well-attended with at least 200 participants.
In future posts I will share more of the insights presented during our panel discussion, but today's post is a reflection on an aspect to "cost-to-produce" that was too much of a side conversation to include in the lecture proper -- POLICY. Yesterday (April 15) this topic was highlighted by the insightful blog-writer I follow with fierce dedication -- Michael Sheridan's CRS Coffeelands blog (http://coffeelands.crs.org/2015/04/the-p-word/)
Michigan State University's Dan Clay has worked out the following framework to describe how policy is a critical force in effort to create an enabling environment for high quality coffee in Burundi. This framework is also relevant to Rwanda, for sure, and possibly other coffee-growing nations where the government and other bodies have power that mightily influences market forces when it comes to farm-gate prices for farmers.
In the framework below I note the following:
POLICY ENVIRONMENT: is at the very front end of everything -- right along with AGRO-ECOLOGICAL VARIABLES. These are the "givens" the farmer must "manage around" because she cannot change them. In Mark Lundy's presentation, he gives a formula:
G (for genetics) x E (for environment, including weather) x M (management). This formula illustrates that the G and E are "givens" and the farmer can only manage or change the "M". It seems Mark may have left off the "P" for simplification for our presentation, too.
If I may suggest Mark's revised formula: P x G x E x M = Cost to Produce
FARMER COFFEE MANAGEMENT: is the section that lists the items farmers can control -- probably the detail of the "M" in Mark Lundy's formula.
Before we get to the market forces in the framework below, we see COFFEE PRODUCTIVITY/CYCLICITY and ANTESTIA DAMAGE/PTD. These are the big "enemies" to coffee quality and therefore "enemies" of the livelihoods of coffee farmers today in Rwanda and Burundi.
SPECIALTY COFFEE MARKET SALES and PRICES are at the far right in the diagram, representing the desired growth market for Burundi and Rwanda coffee. Mark Lundy also was compelled to include these forces in his "formula" -- he notes that the "M" of management is heavily influenced by the % coffee contributes to a farmer's income and the market channel to which a farmer has been selling.
It's important to note that the "P" factor, policy, and its influence is not a phenomena unique to coffee-producing countries. The U.S. and probably every country with significant agricultural production has policies that "distort" market forces and these policies are always hotly debated. Getting policy right is important business requiring great care, since it impacts the livelihoods of so many.