MILAN – Despite the passage of anti-deforestation laws by the EU, the clearing of forests is set to continue apace with coffee companies not prepared to comply with the regulation, reveals the 2023 Coffee Barometer, an in-depth report on the state of sustainability in the coffee sector. Roughly 130.000 hectares of forest have been lost annually over the last 20 years due to land being cleared for coffee cultivation as farmers attempt to make ends meet.
At the same time coffee income remains at or below the poverty line in eight of the ten largest coffee producing countries. This reality threatens the entire sector and has dangerous environmental implications.
The Barometer, produced by Ethos Agriculture with the support of Conservation International and Solidaridad, also supports the prediction that rising temperatures due to climate change could drastically reduce the amount of land suitable for growing coffee by 2050.
“Growing demand for coffee combined with low incomes and increasingly unproductive land may incentivize farmers to expand their farms into higher elevations and into previously untouched forest.” says Sjoerd Panhuysen of Ethos Agriculture. “The coffee industry must take proactive steps and invest significantly in promoting sustainable coffee production, trade and consumption.”
While consumers are paying more for a pack of coffee, costs for farmers are rising even faster. Climate change adaptation requires major investments in coffee production. The era of cheap high-quality coffee is over.
Coffee Barometer ‘s Coffee Brew Index reveals a lack of meaningful commitments from companies
This Barometer also marks the launch of the Coffee Brew Index, which assesses the sustainability and social commitments of the world’s 11 major coffee roasting companies. This ranking reveals that while there are leaders and laggards, all companies fall short on addressing critical issues in their coffee supply chains. Just two roasters, Nestlé and Starbucks, showcase developed strategies as regards their social and sustainability goals.
Most companies in the Index have ambitious sustainability commitments that outline their thematic targets, but these often lack measurable, and time-bound goals and objectives. Five of the major roasters continue to rely on ad hoc and one-off projects and investments that are not necessarily connected to a larger strategy across social, environmental, and economic pillars, and focus primarily on improving efficiency and coffee quality.
“Any strategy lacking time bound and measurable goals is not a strategy. Commitments with no metric to measure success won’t incentivize the necessary engagement in the supply chain to make meaningful progress,” says Andrea Olivar, Strategy and Quality Director of Solidaridad in Latin America. Most roasting companies burnish their sustainability credentials by participating in voluntary multi-stakeholder initiatives (MSIs) meant to foment collaboration and shared goals, but a review of MSIs in the Barometer reveals that most are failing to show progress. They provide a platform for companies to assert that they are working towards positive goals, like a living income, but frequently MSIs lack the binding commitments necessary to make this a reality.
Companies unprepared for the EU’s deforestation regulation
The Barometer also questions the readiness of the industry to comply with the EU’s Deforestation Regulation (EUDR) and calls on companies to commit to avoiding a cut-and-run effect in at-risk sourcing areas.
Set to come into effect in 2025, the EUDR is a groundbreaking effort to ensure that major companies trading global commodities are not contributing to global deforestation. The EUDR puts the onus on companies to prove that their suppliers are not contributing to deforestation. In order to comply, companies may seek to avoid so-called ‘risky’ contexts, where compliance with the regulation will be more burdensome.
This means they may shift sourcing to more developed regions, such as Brazil, where farmers have more resources to prepare and thrive under the EUDR.
Farming livelihoods at risk in vulnerable regions
In risky contexts, like a majority of African coffee producing regions, farmers are small-scale and fragmented, and lacking the government support necessary to prove compliance and adapt.
They also happen to often be on the frontiers of potential deforestation. If such farmers lose access to the European market and vital income, they may be forced to seek to expand their farms into forested areas to increase output, and to sell on markets with less stringent rules on deforestation and working conditions.
Addressing this problem is particularly difficult in the coffee chain, where the local context in different regions varies widely. Coffee is produced by an estimated 12.5 million farmers in roughly 70 countries, but just 5 of them (Brazil, Vietnam, Colombia, Indonesia and Honduras) contribute 85 percent of the world’s coffee supply. The remaining 15 percent of the global supply is produced by 9.6 million coffee producers. These farmers face grave economic precarity, and lack the resources necessary to meet sustainability standards or find alternative income streams.
The needs of these farmers are distinct from others and require tailored solutions that address the often radically different economic and legal realities they face.
To combat deforestation and poverty companies need to invest in vulnerable regions
If major coffee roasters are serious about tackling poverty and deforestation, then supply chain exclusion should be avoided at all times as an approach to mitigate risks. Given their access to resources, coffee companies need to double down and invest in these vulnerable regions, working with local actors, including government, civil society and producer groups, to address issues in their coffee supply chains with tailor made solutions. This means listening to the priorities and perspectives of producers and making meaningful investments.
The EU and the world’s major coffee companies must work to ensure that the costs of preventing deforestation do not fall on the shoulders of those already living in poverty. “Investing in farming communities in vulnerable landscapes may seem like the risky option, however these investments are essential to mitigating risks and tackling the root causes of global deforestation, while avoiding excluding vulnerable smallholder farmers from global markets.” says Niels Haak, Director Sustainable Coffee Partnerships at Conservation International.
The Barometer authors urge the EU to support the EUDR’s implementation with a range of accompanying measures that can minimize the impact on small farmers and support producing countries in their sustainable transition.
