23. Costs to Produce Coffee - the danger of averages

May 15, 2015

SCAA Seattle - Apr. 11 - "Cost to Produce vs. Price" Panel

A month ago I had the honor of moderating a panel of three experts at the SCAA conference in Seattle.

• Mark Lundy, of CIAT, who presented data from Narino, Colombia
• Ben Carlson, of Long Miles Coffee Project, who presented data from Burundi
• Daniele Giovannucci, the Committee on Sustainability Assessment (COSA), global data

The content of this panel was amazing, if I do say so myself as the organizer. The panel members were so awesome in their willingness and ability to deliver real content -- they shared data and details -- a glimpse of the costs they shared are below. But the conclusion from looking at costs was unanimous from all three panelists -- "it's dangerous to use averages." Averages hide variability. If coffee a buyer limits the price paid to a Nicaraguan farmer based on an understanding of a national or even regional "cost to produce" number, that buyer may think he's paying a huge premium, and in fact be part of putting that Nicaraguan farmer out of business.

Ben Carlson, Long Miles Coffee Project and Mark Lundy, CIAT

Mark shared new to the world data on findings from the CRS Borderlands project in Narino, Colombia. His team first segmented coffee producers first by the importance of coffee to their household. He defines the

1. "Coffee Specialists" (coffee > 50% of income)
2. "Diversified Coffee Farmers" (coffee income = income from other sources)
3. "Off-Farm Income Farmers" (coffee < 50% of income).

This is all shown in a beautiful infographic that shares many other details about each of these three segments. Importantly, the costs to produce for each segment are different.
Narino, Colombia Costs:
1. Specialists = $1.58/lb. parchment coffee
2. Diversified = $1.40/lb. parchment coffee
3. Off-farm income = $2.38/lb. parchment coffee

Ben shared data from a 2014 report he helped produce with Integrity Research from London. The work was contracted by the Trademark East Africa group.  Their research included five coffee-growing provinces which would be the majority of the coffee producing provinces. They sliced the data by farm size and showed the following:
Burundi Costs:
< 300 trees = $0.73/lb. parchment
300 - 500 trees = $0.68/lb. parchment
500 - 800 trees = $0.74/lb. parchment
> 800 trees = $0.65/lb. parchment
(using cherry to parchment ratio of 6:1)

Finally, cost data from COSA gave us a remarkable 7 country span:
Country V = $0.52/lb. parchment
Country I = $0.72/lb. parchment
Country N = $0.92/lb. parchment
Country C = $1.12/lb. parchment
Country G = $1.32/lb. parchment
Country K = $1.52/lb. parchment
Country C = $1.96/lb. parchment
(The exact names of countries are intentionally withheld by the author, COSA, in order to avoid over reactions by groups in those countries and also to avoid getting distracted from the point -- which is the wide variety of costs between and within countries.)
Daniele's slide immediately following the numbers above showed profitability for these same countries:

Profitability
Country V = $0.22/lb. parchment
Country I = $0.73/lb. parchment
Country N = $0.78/lb. parchment
Country C = $0.72/lb. parchment
Country G = $0.45/lb. parchment
Country K = $0.17/lb. parchment
Country C = $0.38/lb. parchment

SPECIAL THANKS: to Mark Lundy for impromptu translations as several Spanish-speaking producers came to the microphone.

SPECIAL THANKS to audience members who suffered through my poor translations from French to English of Ben's slides.

SPECIAL THANKS to Daniele Giovannucci because although he couldn't be there due to a time conflict, he arranged to have his organization represented. With several coaching sessions prior to the event, Daniele brought me up to speed so I could present his slides.
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19. IWCA Event1: Launch of the new IWCA Research Alliance sub-committee

Kick-off meeting of the IWCA Research Alliance at SCAA 2015 - planning a strategy for reducing the gender data gap in coffee

Top: 8 volunteers from around the world meet to discuss IWCA response to Gender Data Gap (not pictured, Mark Inman and Ruth Ann Church).
Bottom (L to R): Daniele Giovannucci (COSA), Mark Inman (Olam and IWCA board member), Marcus Young (Sustainable Harvest/Bloomberg grant program in Rwanda), Adam Wilson (formerly ThriveSupply), Ruth Ann Church (Artisan Coffee Imports), Julenia Maria Lopes da Silva (Brazilian coffee producer), Blanca Castro (ITC consultant/Damos), not pictured, Dr. Norbert Wilson (Auburn University)

April 17, 2015
On April 10 at the SCAA in Seattle, eight volunteers were able to gather to discuss how IWCA might address the Gender Data Gap in coffee -- specifically to decide whether to address the topic: "how many women are there in coffee?"  As co-chair of the IWCA Research and Education Relations Committee, Ruth Ann Church convened the group with the objective to address this "number of women" question for each country where IWCA has a chapter.

Each representative first shared from their own experience what activities they were involved in related to women in coffee. Then, Daniele Giovannucci, as founder of the Committee on Sustainability Assessment (COSA, www.thecosa.org), provided invaluable insights that the committee welcomed. COSA has been managing international data collection that has scientific integrity from coffee producers around the world for over 5 years and Daniele brings a career of experience from the United Nations and other multi-lateral organizations.  And yet, even he admits, his data is inadequate to estimate the number of women in coffee in the countries where COSA has worked. This fact alone tells volumes about how challenging this effort is, why it has not been done yet, and why it will take some time to change this situation.

Outcomes from the meeting can be summarized as follows:
1. Estimates not "exact numbers". The experience around the table confirmed that when discussing numbers of coffee households, numbers of men and women in coffee -- every group today is using estimates, and sometimes quite poor ones. So we should not expect to achieve exact numbers for women. Rather, our objective is to determine "credible estimates."

2. An IWCA program - The 1 hour discussion outlined three plausible, but different, directions the committee might go.
A. Ask In-country Institutions - ask the in-country institutions that already collect coffee-related data, such as agricultural extension agencies, universities, research centers, producer associations (like FNC), etc. Ask them for their best estimates of the number of women in coffee in their country.
B. Write Case Studies -- address the issue through case studies on a country-by-country basis. This would be more of a story-telling approach. By outlining the difficulty in understanding the "number of women" in coffee in a particular country, the broader situation and cultural context of women and their role in coffee would also be described.
C. Partner with an NGO - groups like the gender group at the United Nations or a university center, such as the William Davidson Institute were mentioned.

The committee's leadership will review the options and begin moving forward with one. Look for future updates here and on the IWCA website: www.womenincoffee.org.