ABN AMRO Bank N : Sustainable coffee – What else?

George Clooney - we all know the famous Ocean's actor, ER doctor and TV commercial star. Clooney was the ambassador of a coffee brand in a series of commercials for many years since 2006, always concluding with his well-known words "What else…?" For him, there was only one choice.

Blog 19 January 2021

Sustainability

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The commercial was a huge success. But in early 2020, it came out that some plantations where the coffee giant bought its beans made use of child labour. Clooney was "surprised and saddened" to learn this, rightly adding that there's clearly still plenty of work to be done in the coffee sector. A year later, the sustainability and economic challenges are still daunting.

Weakened coffee sector

The global coffee market is valued at billions of dollars a year, yet the sector is struggling. Coffee consumption has plummeted due to Covid-19, production in Brazil - the world's largest coffee bean producer - is looking at huge harvests, and inventories continue to grow. The prospects for the coffee market will remain unfavourable for some time, keeping coffee prices relatively low. And low prices are hurting thousands of businesses and millions of farmers, most of which are small-scale operations.

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Low coffee prices are putting pressure on many sustainable initiatives, while the sector has a long way to go in this area. The industry faces a long list of sustainability challenges.

Casper BurgeringSenior econoom Industriële Metalen & Agrarische Grondstoffen bij het Economisch Bureau van ABN AMRO

A more sustainable cup of joe

Low coffee prices are putting pressure on many sustainable initiatives, while the sector has a long way to go in this area. The industry faces a long list of sustainability challenges, including loss of biodiversity, soil erosion, use of agrochemicals and deforestation. Not to mention the ageing population of smallholder farmers, child labour and climate change - and the list goes on. Climate change in particular is a thorny problem, as droughts will hinder production in many coffee-growing regions in the years ahead. This will have a strong negative impact on the livelihood of smallholders and, ultimately, on the survival of the sector.

Coffee Barometer

Transparency and prospects for the sector are needed to address the sustainability problems in the coffee sector. Once every two years, Coffee Barometer reports on the status of sustainability in this industry. The 2020 report, published last week, highlights shortcomings in the current approach and presents recommendations for improving the livelihoods of farmers. The barometer shows that there is no common vision among large coffee firms and no prospects for the sector in the coming years. There are many promising sustainability initiatives, but they lack scale.

Cheap coffee is a blessing for coffee lovers. But the effects of low prices reverberate across the sector and are a breeding ground for a deeper crisis for coffee farmers. Many smallholders are suffering financially and new generations are aware of this, so they're not eager to build a future in this industry. This makes the call for an economically sustainable sector particularly urgent. In this respect, I'm on the same page as George: we only have one choice, and that is to go sustainable.

This article has been published in the 'Telegraaf' on 18-1-2021.