103. Biosphere Coffee in Ethiopia Helps Protect the Planet

Since we typically hear about how devastating the effects of climate change are on coffee farms and on coffee farmers, it was exciting to learn about the opposite case - a coffee farm that is helping to reduce carbon emissions, while adapting to on-going changes in the environment. In an area called a "biosphere" in Ethiopia, several coffee farms, including those owned by Diamond Enterprises, are located in the core and buffer zones of the Kaffa Forest UNESCO biosphere.

What is a Biosphere and why are they so cool? Biosphere reserves are like special national parks. In some ways they are international parks because they are created/certified by the United Nations Educational Scientific and Cultural Organization (UNESCO). They are designed to be 'learning places for sustainable development.' They are sites for testing interdisciplinary approaches to understanding and managing changes and interactions between social and ecological systems, including climate change and management of biodiversity. 

Map of the Kaffa Forest Biosphere in Ethiopia

Dehab Mesfin Bitewlign has been the managing director of Diamond since 2014, exporting her natural and washed fine Ethiopian coffee first to Germany, then elsewhere in Europe, and now, for the first time, her fantastic naturals (Gr. 1 and 2) will be entering the USA via Artisan Coffee Imports. Artisan was excited, like every buyer, first by the taste in the cup. It scored 87.5, offering classic Kaffa Forest natural fruit-forward, blueberry, sugar, almond flavors and a clean, crisp finish. Click here to go to Artisan's website and get more info on the coffee. 

Dehab Bitewlign (right) at the IWCA Cupping, Expo 2019 in Boston.

The story of the farm's special location became clearer as conversations on the coffee's details continued. Turns out her coffee has an environmental triple benefit! We know from other research that coffee, as a tree crop, brings environmental advantages that other crops can't offer. Dehab's farm, like many farms in Ethiopia, magnifies coffee's carbon-reduction benefits because it is grown under a canopy of large trees. Dehab confirmed with government offices that her farms are within the Kaffa Forest protected area, which means her carefully regulated environmental practices create a third benefit of supporting the biosphere!

Entering a forest coffee plantation in Ethiopia

The triple environmental benefit of Dehab's Diamond coffee:

1. Environmental benefits of coffee as a tree crop 
2. Ecological advantages of forest coffee in Ethiopia
3. Climate change and biodiversity benefits of operating within a biosphere

To learn more about the Kaffa Forest biosphere, click here.

To learn more about the 714 biosphere reserves in 129 countries - all of which belong to the World Network of Biosphere Reserves, click here.

102. Rainforest Alliance' Living Wage Benchmarks Report

 Feb. 22, 2021

"Read the fine print and you might find a gold mine!"

Those were my thoughts last week after receiving a seemingly administrative email from Rainforest Alliance to Partners, (my company Artisan Coffee Imports is one of them). The email was sharing updates to the Rainforest/UTZ license agreement. As I skimmed through the long text with fine print, the words "Living Income" caught my eye, then a link to this version 1.1 document, "Annex S10: Living Wage Benchmarks Per Country."  A goldmine!

I checked with some Rainforest contacts, and indeed, this report is the end result of years of collaboration with the Global Living Wage Coalition (GLWC). Rainforest has also worked with the Living Income Community of Practice (LICP), two pre-competitive groups focused on improving living wages for smallholder farmers of commodities, including coffee farmers.

The GLWC and LICP both utilize a seminal 2017 Manual by Richard Anker & Martha Anker on living wage reference values, "Living wages around the world: Manual for measurement." The manual is an open-access document with 20 chapters, and each chapter can be downloaded as a .pdf. To do this for 29 countries is clearly a ton of work, and Rainforest and the GLWC coalition have done this for us - that is the goldmine!

As the image to the left shows, the Rainforest document gives partners a simple table with 52 countries listed alphabetically, (we only show the first 25 lines here). For many of these countries, it only says "applicable wage", which means they don't have the benchmark for this country calculated yet. But for 29 countries on the list, including many of the prominent coffee producing countries, a benchmark monthly gross wage in local currency is given. If such a list exists elsewhere, I haven't seen it.

How can this be used? Now as a coffee buyer, I can ask my supplier what is the price the farmer is paid in local currency for his/her coffee product (parchment or cherry), and I will understand a lot more about how much coffee is really helping this individual and their family achieve a sustainable livelihood. Or I can ask how much the workers at the washing station, or the pickers on the estate are paid, and again, understand whether they have a shot at living off of those wages. For example, the living wage benchmark for Rwanda in the table is RWF 147,111 p. month. I know that in some areas rural workers are paid RWF 1,000 or 1,500 per day. Clearly, even working 30 days a month is not going to get this rural worker even close to a living wage. Something has got to change.

Of course, there are limitations to these numbers, and in the document Rainforest directs one to details on the methodology, (click here) and how to use the Reference Values (click here). The biggest cautions I note to myself are:

• these are national averages. Even small countries like Rwanda, can have vast differences between what is a living wage in one area vs. another, especially rural vs. urban wages span a wide spectrum. In large countries, like Kenya or Ethiopia, even rural wages will have a broad range.

• these are not commodity specific. Groups like LICP are working on commodity specific living income estimates, so that eventually we can understand what is relevant for a coffee farmer vs. a cocoa or rice farmer.

Regarding the use of these benchmarks within the Rainforest standard, there are important things to note also:

• To uphold the standard, a buyer must assess wages against the living wage and make improvements towards the living wage, but it doesn’t require that you pay the living wage. 

• The Rainforest standard, as it is today, applies to workers on individual estates, workers on large farms within a group, and workers in group management facilities (the office secretary and maybe the workers at a group-operated wet mill), but not the smallholders themselves nor the workers that they hire. 

101. ICO's Coffee Development Report 2020: The Value of Coffee

Feb. 2, 2021

The International Coffee Organization’s new 2020 development report, “The Value of Coffee,” is now available to download as a .pdf from ICO’s website! 

Second in a series, it focuses on the international trade of coffee. The first report, "Growing for Prosperity", was published in November 2019. With that edition, the ICO launched this flagship economic publication to provide an analytical underpinning to the on-going Structured Sector-Wide Dialogue, a process initiated by the ICO as part of the implementation of Resolution 465. The 2019 document presents an in-depth analysis of the root causes and impact of the coffee price levels and volatility. A paper co-authored by Ruth Ann Church is one of the citations in this report, drawing on research conducted by Michigan State University and local partners in Rwanda in 2015.

Highlights of the 2020 Coffee Development Report:

• A smart mix of public-private dialogue and timely information is needed to maximize economic benefits for farmers.
• Social and environmental sustainability are all addressed — as they must be, since all three: economic, social and environmental — are inexorably intertwined.
• Empirical analysis of the coffee Global Value Chain (GVC) shows that:
• the value of annual coffee exports has more than quadrupled from US$8.4 billion in 1991 to US$35.6 billion in 2018, with non-producing countries having played a significant role.
• higher-income regions such as Europe and North America accounted for 96% of roasted coffee exports and 53% of soluble coffee exports in 2018
• contributions of the coffee GVCs to the UN Sustainable Development Goals are discussed
• resilience (a favorite topic on this blog!) of the coffee GVC to stressors such as climate change and the current global pandemic are also addressed.

The full report was officially launched on 28 January 2021. It will be followed by a roadshow that will include presentations of the key messages in Member countries, at development institutions and in political forums with the aim of mobilizing resources and support for the implementation of the main recommendations.

100. New Sustainability Reports - Specialty and Total Market

100th post - woo hoo!                                                             15. January 2021

Over 80 data donors to the Transaction Guide

As a fitting 100th post on this blog, we are excited to share about the 2020 Specialty Coffee Transaction Guide , which was released two days ago, 13 January, 2021. You can click here to download the report. Artisan Coffee Imports is proud to be a data contributor this year. 

Download the Transaction Guide: www.transactionguide.coffee.  

Another useful coffee industry report, covering both specialty and commodity, is being released today: the 2020 Coffee Barometer. Download this report here: https://coffeebarometer.org/

"The coffee supply chain is closely tied to the top ten multinational roasters that represent over 35 percent of global trade in green coffee and engages millions of smallholders and workers." ~ 2020 Coffee Barometer

The two reports are synergistic, because the Coffee Barometer strongly urges more pre-competitive collaboration between importers and roasters on behalf of farmers. The "Transaction Guide" is a good example of what that kind of collaboration looks like. Indeed, on page 38, the Barometer discusses the value of Transaction Guide and its transparent price sharing as an alternative to pricing based on the C market. 

For the most part, the Specialty Coffee Transaction Guide, as it's name implies, focuses on the low-volume, but high dollars-per-pound part of the coffee world -- the high-quality specialty coffee market. Meanwhile the Barometer will teach you more about the largest roasters and importer multinationals and the high-volume, low-quality, low price-per-pound commercial grade coffee trade.

It was interesting to join a promotional webinar for the Coffee Barometer today. It was hosted by a media group in Amsterdam named CIRCL. Below are some highlights and a summary of a few of the comments from their high-powered panel of guests.

Moderator: Bahram Sadeghi, journalist

Speakers:

Sjoerd Panhuysen, Director of Research at Ethos Agriculture and editor of the Coffee Barometer. 

Kaitlin Cordes, Researcher at Columbia Center on Sustainability in New York City. She discussed the recommendations of the Jeffery Sachs report to the World Producers' Forum.

Vanusia Nogueira, Director, the Brazil Specialty Coffee Association (BSCA).

Mario Cerutti, Chief Sustainability Officer, Lavazza

Juan Antonio Rivas, Senior Vice President, Olam International.

I found Cordes' summary of the three recommendations of the Jeffrey Sachs report useful. They are:

1. Support each producing country to create a National Coffee Sustainability Plans, 

2. Create an international Coffee Fund of about 10 billion USD to support producer prices when they fall below a certain level.

3. Increase Domestic Consumption of coffee.

Key comments:

Less than $.005 additional price paid by consumers, for every cup of coffee sold, would make the 10 billion coffee fund possible. The criticism of this is that it is charity instead of fundamental structural change. The counter to that criticism is to think of it as the "user" side of the industry as shouldering some of the risk that currently is borne by farmers alone -- especially price and climate change risk.

A minimum farm size is needed in most countries. Diversification of income is a only a hedge and productivity improvement is only one step among many. 

According to Mario Cerutti, the "coffee crisis" is more than a crisis. It's not going away after a short time. He also commented that paying 10% of coffee exports per year into a coffee fund is not realistic. He says it will put roasters like Lavazza out of business.

99. Babies and Research on Better Informed Husbands

 Jan. 13, 2021         Excerpt from a World Bank Blog               

At Artisan Coffee Imports, we are regular readers of the World Bank Blog, "Development Impact." We especially appreciate posts by Markus Goldstein, and this week's post was no exception. He starts with the intriguing title, "Is an informed husband a better husband?"

The paper Goldstein reviews deserves attention because it shows that we must take issues like intra-household gender dynamics seriously if we want to tackle issues like fertility. In this study, a relatively simple intervention is observed as making meaningful progress in not only reducing the chance of pregnancy, but also shifting preferences, improving communication, and making folks happier in their marriage. 

I give you the setting of the paper here -- you will need to click and read the above link to learn the details of the intervention and results.

The setting is Lusaka, Zambia. National fertility rates are on the high side, with 5.3 children per woman aged 15-49. In this context, as in many others, men would prefer, on average, to have more children than women (in Ashraf and co’s sample, men would like 4.43, women 4.19). Maternal mortality is high: 1 in 59 Zambian women die giving birth. And men are less aware of the factors that contribute to maternal mortality than women. For example, 84.6 percent of women identify advanced maternal age as a risk factor, but only 74.3 percent of men do.

So, this adds up to a situation where men are less informed about a risk they want their wife to take. And she can’t effectively communicate this risk to him. 

(Quoted from Markus Goldstein, Development Impact Blog)

As Ashraf and co-authors argue, we still have some ways to go to understand these things better, but for now the results of this study help us get a handle on how asymmetric information and differing preferences at an intra-household level is impacting decisions about child-bearing.

98. New Year 2021: Inspiration from Nobel Prize Laureates

 Jan. 5, 2021    

Happy New Year! Yesterday the American Economic Association hosted a wonderful, international webinar allowing fans of the 2020 Nobel Prize in Economics laureates to get to know the people and their work a little better.

Click here to view the recording on youtube: https://www.youtube.com/watch?v=jvnojrkrRDU

The beauty of Zoom recordings allows you to feel as if you are in the room with Abhijit Banerjee, Esther Duflo and Michael Kremer, the Nobel Laureates, and people who have worked with them closely. All of the individuals speak candidly and  share the highlights of why their work has been so impactful in the world of development economics.

For any reader who has not been in the coffee industry very long, please note that at Artisan Coffee Imports we consider ourselves as participants in field of development economics, albeit at a very applied and microscopic level. 

97. 'Cooperative Advantage' article in Roast Magazine

Cooperatives like TUK in Rwanda offer farmers many benefits
(Photo credit: Clay Enos and Sustainable Growers)

"Cooperative Advantage: What Do Cooperatives Mean for Farmers, Roasters and Consumers?" appears in the new July/August issue of Roast Magazine.

In this blogpost we'll share the highlights, but we hope you'll consider hopping over to Roast's website to purchase the issue - either digital or hard-copy. $7 for the single issue or $35 for 1 year subscription.

Co-authors Ruth Ann Church and Dr. David L. Ortega review the growing interest in coffee produced by cooperatives, including two papers published in peer-reviewed journals by Michigan State University research teams. The first paper offers quantitative results on farmer productivity and household welfare from a study from Rwanda and the Feed the Future Africa Great Lakes Coffee support program. The second paper shares results from a coffee shop field experiment with consumers of pour-over coffee. It captures willingness-to-pay for coffee based on the organization of the producers, namely coffee that is labeled 'grown by farmers belonging to a cooperative'.

Insights from these quantitative studies bring credibility to qualitative work that has been popping up across the specialty coffee industry over the past year. The Specialty Coffee Association's Kim Elena Ionescu interviewed Merling Preza of PRODECOOP at Re:Co 2019 in Boston. The non-profit TWIN published a 2019 report on producer organizations that gleaned insights from 31 producer organizations in nine countries. The common theme is that the farmer cooperative can be a valuable node in coffee value chain, providing benefits to farmers that altruistic consumers, especially millennials, are expecting in their specialty food choices.  

Cooperative members in Rwanda mitigate
soil erosion for their coffee plot.

Quantitative Results

After reviewing the context of today's consumer demand for transparency and a history of problems that come with cooperative leadership, key quantitative results are shared. First, the authors of the Food Security article find that farmers who are cooperative members in Rwanda score significantly higher on an “adoption of best practices” index than coffee farmers who are not co-op members. The farmers belonging to cooperatives also receive more income from their work—approximately 18 percent higher revenue per coffee tree. These elevated metrics, the researchers conclude, begin a virtuous cycle for farmers who belong to a cooperative. They are more likely to have healthy soil and plants, which leads to higher productivity per tree, which then lowers cost of production per kilogram cherry, and in turn improves net income per tree. Indeed, productivity (kilos of cherry per tree) of cooperative members is 20 percent higher than that of non-members, and cost of production (Rwandan Franc/kilo cherry) is 24 percent lower than farmers who are not cooperative members. 

Courtney Gates at Espresso Elevado
in Plymouth, MI prepares a pour-over.
(Photo credit: Teresa Pilarz)

The article focusing on consumer willingness-to-pay (WTP) in Food Research International finds that when personality traits are used to segment consumers, a strong willingness-to-pay for coffee from farmers organized cooperatively can be identified. The results indicate:

• An average WTP of an additional $1.31 per 12-ounce cup of pour-over coffee, in a specialty coffee shop setting, when the cup descriptor is “coffee grown by farmers belonging to a cooperative.”
• Consumers with higher subjective knowledge (consumer’s self-evaluated knowledge of coffee) had lower premiums for cooperative-grown coffee, suggesting that these consumers may base their product valuation on sensory characteristics more than descriptive information of production structure.
• The personality traits of “conscientiousness” and “extraversion” increase WTP and a higher level of the personality trait of “agency” or “outspokenness” decreases WTP (For more on the Big Six personality traits, see Bazzani, 2017, in Food Quality and Preference).
• Age was the only statistically significant sociodemographic determinant of WTP, with older consumers being willing to pay slightly more on average.

Tough Questions Arise
These results bring up complex topics long debated in the specialty coffee industry. For example, how do consumers value basic knowledge of the producer organization type (e.g. cooperative) vs. a voluntary sustainability standard such as Fairtrade? What role does the flavor and taste in the cup play in developing consumer WTP and repeat purchases? If a cup of coffee supplied by a farmer cooperative earns a premium over other coffee at a cafe, for example the $1.31 extra measured in the experiment, what portion of these funds makes it back to the coffee grower? These are all good questions which are recommended for further research.

Lee Harrison with Joe Coffee in
New York City 
(Photo credit: Joe Coffee)

What Should Roasters Do With the Info?

The “personality traits” study raises the question of whether psychometric data on coffee consumers is already in use at roasting companies. One specialty roaster, Joe Coffee in New York City, updated its overall brand strategy a few years ago with market research ensuring employee values and brand values were aligned. The next step in brand development, according to Lee Harrison, Joe Coffee’s senior director of coffee and roasting, is to invest in consumer research to better align the brand with customers. “It’s important to get data about what people want so that we can refine our assumptions and connect with consumers in a relevant way,” he says.

Would research that identifies willingness to pay based on personality traits be of interest at Joe Coffee? Harrison replies affirmatively. “Not just for sales and profitability here in New York, but for relationships at origin, too. If farmers had this information, they could better market themselves, and it would make our job of marketing their coffee more efficient,” he says.

Recognizing that the results of this consumer study are limited by its setting, the findings still have important implications for many stakeholders in specialty coffee. It helps us to consider the diversity of coffee consumers beyond sociodemographic segmentation and instead make marketing and supply decisions with long-lasting intrinsic characteristics in mind. Combining these consumer insights with confirmation from the other studies on cooperatives’ positive impacts can encourage all who work with cooperatives and strive to make coffee better.

Sunset at Kopakama cooperative near Lake Kivu, Rwanda

Leaders of the Ejo Heza women's group appreciate one
of the roaster customers, Victrola Coffee, who pays a premium.

The Feed the Future Africa Great Lakes Coffee support program launched in August 2016 with
a workshop in Kigali, Rwanda. (Photo credit: Michigan State University)