A Venture to Build Forward for Colombian Coffee Farmers
In the Wake of the Pandemic, Eradicating Poverty Requires Addressing Structural Inequalities
The ongoing pandemic has effectively inhibited progress towards the goal of eradicating extreme poverty by 2030. To suppress the spread of the virus and protect national health services governments across the world implemented full lockdowns which restricted economic activity in a way never seen before.
The pandemic has also highlighted how sustainable development is often inhibited by unfair systems which fail to serve those who are less financially stable. This has been noted on the global and local levels. For example, many informal workers who rely on a daily income had to contend with instantaneous job loss due to lockdowns. In countries that were unable to implement welfare support, lockdowns directly pushed many into poverty. It is currently estimated that between 88- 155 million people live under the poverty line as a direct result of the pandemic and the inability of national systems to buffer financial shocks. Furthermore, the existing 1.3 billion people already living in poverty saw their circumstances aggravated further by the ongoing crises (Work Bank 2021).
This year’s UN International Day for the Eradication of Poverty, therefore, places special focus on asking what type of efforts are required to provide development to those who need it most. Essentially asking what does it mean to “Build Forward?” (UN, 2021). Rather than implementing the same style of investments as in previous decades, many now forward that sustainable development hinges on tackling unfair systems. Building Forward, therefore, necessitates moving away from any development that reinstates rather than addresses structural inequalities.
Coffee Matters – How Market Dictated Pricing Pushes Coffee Farmers into Poverty
80% of the world’s poor live in rural areas with 65% of these working directly in agriculture. Despite decades of investment, the structures perpetuating rural poverty persist. One key example of this is coffee production. As arguably the most popular drink worldwide it is not surprising that coffee is a lucrative multi-billion dollar industry. It is also a growing industry that is predicted to reach a revenue of 155.64 billion by 2026 (Businesswire, 2020). However, the opportunities that usually come with expanding and growing markets do not extend down the supply chain. Currently, only 2 cents will reach the coffee producer out of every $5 Latte (Devex, 2021).
Such low returns are forcing many small-holder coffee farmers into poverty even when development programs exist in the local area. However, at the same time, consumer demand for ethical coffee has increased, with farmers being paid a fair wage stated as one of the main factors dictating purchases (Devex, 2021). The gap between the consumer’s intentions and the coffee producer’s reality could not be wider.
There are many factors that make coffee production a poverty-inducing industry for farmers. Firstly, farmers bear the responsibility to ensure their coffee beans meet ethical standards which means taking on additional tasks. However, profits rarely match the increased workload and farmers still end up being underpaid for the work they do. Secondly, it is common for small-holder farmers to supplement their income with other ventures. Most of these ventures are informal businesses that were severely curtailed by Covid-19 restrictions over the last 2 years. This has led to many coffee farmers being forced to cut costs, which has a detrimental impact on their farming. This is because abandoning sections of a farm for even as little as a few months results in low yields and therefore little profit to invest in future farming.
Fairtrade’s Living Income Reference Prices for Colombian Coffee
The key aspect here is the fact that farmers have little control over pricing. Instead, market forces and other factors outside their control dictate how much their labour is worth. Fair Trade has initiated one venture this year which aims to address this by prioritising a living income for coffee producers. The Living Income Reference Prices for Colombian coffee is a newly released guide based on what Colombian farmers need to afford a decent standard of living. It works by raising awareness and by informing the price-setting mechanisms of Fair Trade and other companies committed to sustainable trade. This venture is a small step towards addressing structural inequality and implementing development that can truly Building Forward.
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UN,. (2020) Estimates of the impact of COVID-19 on global poverty, https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2020-43.pdf
Ferrari, P,. (5th July 2021) Opinion: How to end poverty in smallholder farming communities, https://www.devex.com/news/sponsored/opinion-how-to-end-poverty-in-smallholder-farming-communities-100288
Business Wire,. (6th October 2020), Global Coffee Market (2020 to 2026) – Industry Perspective, Comprehensive Analysis and Forecast, https://www.businesswire.com/news/home/20201006005799/en/Global-Coffee-Market-2020-to-2026—Industry-Perspective-Comprehensive-Analysis-and-Forecast—ResearchAndMarkets.com
Unionroasted,. (2021) COVID-19 and coffee; Impact on farmers and farm workers, https://unionroasted.com/blogs/latest/covid-19-and-coffee-impact-on-farmers
Fairtrade,. (22nd July 2021) Fairtrade Launches Its First Living Income Reference Prices for Colombian Coffee, Fairtrade-Living-Income-Reference-Prices-for-Coffee-from-Colombia-2021_EN.pdf
World Bank,. (2021) Overview, https://www.worldbank.org/en/topic/poverty/overview#1