Last week’s post on how coffee companies invest at origin prompted comments by some folks who know a thing or two about the issue. Their comments, together with some of my discussions last week with coffee companies committed to social change, have helped to crystallize in my mind what is perhaps the critical divide in the discussion around coffee and development — the gap between coffee chain issues (productivity, quality, etc.) and issues that arise from beyond the coffee chain. The issue that bridges the gap? The price companies pay for their coffee.
- Coffee chain issues.
These are all the issues that affect the ability of roasters or importers to source large volumes of great smallholder coffee consistently: productivity, harvest and post-harvest practices, quality in the cup, the capacity of farmer organizations to manage core business functions, etc. Consequently, these are the issues around which the industry feels most comfortable reinvesting at origin. Industry funding flows free to coffee mills and cupping labs because the industry knows these issues, and because impact in these areas improves the bottom line of the company making the investment.
- Non-coffee issues.
These are all the other issues that affect the ability of smallholder farming families to deliver large volumes of great coffee to their commercial partners. They include — but are not limited to — climate change, natural disaster, soil degradation, access to water, debt, rising food prices, preventable illness in the family, etc. Not surprisingly, these issues attract less industry investment. This is due in part to the fact that the connection between these issues and the sale of coffee may seem remote to buyers, whose engagement tends to focus on the volume, quality and price of coffee for the reasons cited above. In the end, the impact of a more resilient coffee-farming community on a company’s bottom line may be difficult to discern. The business case for investment in non-coffee issues, in sum, has not yet been made in a way that is sufficiently compelling for companies to consider them business investments.
- Minding the gap.
This thematic division can lead to organizational divisions with the industry — and within companies — between coffee people working on coffee issues and development-oriented people working on non-coffee issues, even when they are working with the same producers. From an efficiency standpoint, it is logical, since it fosters specialization in narrowly focused areas of expertise. From a business standpoint, it is understandable, since it separates the activities that directly impact the bottom line from those whose connection may seem a bit more tenuous. In large companies, the organizational manifestation of this thematic split may be the division bewteen one unit that buys coffee and another focused on Corporate Social Responsibility. In smaller companies, it is more likely to be the latent developmental impulse among the folks who spend the most time at origin working to source great coffee and begin connect the dots. I know of very few examples of a holistic integration of these functions (which, of course, is the elusive ideal).
- Bridging the gap.
Yet there are some strategic connections between coffee issues and non-coffee issues at origin that could be explored further to good effect. Foremost among them is the price buyers pay for their coffee. At the market end of the chain, price defines the margin for importers and roasters. At origin, price drives the income of farmers and helps determine the possibilities for reinvestment in coffee on the farm. Yet our experience also suggests that it is the single biggest determinant of the non-coffee possibilities for smallholder farmers — how much food they can buy, the extent to which they can pay down their debts, what they can invest in the education and health care for their children, etc. I am almost reluctant to give such prominence here to the issue of price, since even dramatic increases in price on their own are not likely to resolve the non-coffee issues above. But being more systematic about indexing return on investments in non-coffee issues against price — and bringing together the teams of people working on coffee issues and non-coffee issues to discuss their interactions — could go a long way into making the business case for greater investment in social development in the coffeelands.