Ethical Coffee Sourcing
13/12/21

ETHICALLY SOURCED COFFEE - WHAT IS IT?

‘Ethical coffee’. It’s just another buzz phrase, right? A phrase designed by specialty roasters to create a premium product in an already saturated market. However, the issue of ethical coffee sourcing is prevalent, and it’s not going anywhere. Ethical coffee sourcing simply put, is a way to help guarantee the farmers who grow the coffee will get paid fairly for their product.

Coffee Market

The first thing to understand about the industry is that coffee is a commodity. It’s traded on international markets and the price is in a constant state of flux. The price is volatile, and is often traded on the futures market, meaning farmers have the price already dictated to them before they have harvested their crop for the season. This means they can’t quantify their yields or quality, making it virtually impossible to forecast profits. The commodity price or ‘C price’ has been trending up over the last 3 years after bottoming out in mid 2019.

Fairtrade

The Fairtrade certification is the most popular way for coffee companies to demonstrate to the consumer a level of accountability in how they source their coffee. However, many consumers don’t understand Fairtrade pricing. The Fairtrade minimum price for coffee sits at $1.35 USD per pound for Arabica natural coffee (Fairtrade International, 2021). Whilst this ensures a base minimum pay it does not guarantee ‘fair pay’. When coffee prices (C Price) rise above the minimum Fairtrade price, farmers automatically earn the higher price. At the time of writing, the current C price is sitting at $2.11 USD per pound (Fairtrade International, 2021). While that seems like an increase in pay for the farmers, Fairtrade pricing has not accounted for a declining global supply and an increasing demand, meaning the price of production has risen and yields have dropped. Ultimately whilst Fairtrade pricing is better than nothing, it certainly does not guarantee an equal distribution of wealth across all stakeholders.

Direct Trade

Direct trade on the other hand has become an increasingly popular sourcing method over the past decade. This method of ethical coffee sourcing involves importing green coffee direct from a specific farm and cutting out any intermediaries. This is the most transparent method of ethical coffee sourcing and one in which many highly regarded roasters have employed to ensure not only the very best product, but the fairest pay for the farmer. Through having a direct line of communication to the farm and a transparent relationship, both stakeholders can work together to ensure a high quality of coffee and fair working conditions for the farmers. Many roasters using direct trade to import green coffee usually pay upwards of 3 times the commodity price, eclipsing the Fairtrade minimum.

Arabica vs Robusta Coffee

So, can you really know if the coffee you are buying has been ethically sourced? How do you know the farmer got paid fairly? The answer is you don’t know, and you likely never will. The best way for the average coffee consumer to buy ethically sourced coffee is to shop for quality. Arabica coffee beans are the highest quality bean variety. With their high sweetness and acidic tones, Arabica beans are globally used as the go to coffee bean for fresh ‘barista’ made coffee. Arabica is inherently more expensive than its bitter cousin, the Robusta bean, due to production costs and demand. Arabica beans are grown at high altitudes in remote regions across the ‘Coffee Belt’ (20-30 degrees either side of the equator). The coffee must be hand-picked due to the steep terrain in which the crops are grown on. Furthermore, with the temperamental nature of the crop and the sensitivity to changing weather conditions, yields can often be unpredictable. The other popular variety of coffee bean is the Robusta bean. Predominantly grown in Asia, Robusta is a bitter coffee that lacks floral notes and general smoothness. However, with its hardiness and resilience, Robusta beans are becoming more and more popular amongst coffee producers. With global production growing and low buying prices, Robusta beans have become extremely unethical to produce. The majority of Robusta beans end up in lower grade coffee, in particular instant coffee. In summary, the only way to know if the coffee that is hitting your lips has been ethically sourced is to buy for quality. Farmers producing high end Arabica coffee will be much more likely to be producing the coffee ethically due to the higher prices they demand for the coffee and the willingness of speciality coffee roasters to pay a premium for the coffee.

How does this affect you?

So, will you have to pay more for your daily coffee? Yes. With global demand expected to double by 2050 due to an increase in popularity across Asia, coffee prices are projected to take a significant jump (Worland, 2021). The other major threat to the industry is climate change. With global temperatures increasing, the specialty coffee growing regions across the world are reducing. Some experts have predicted due to climate change the global supply of coffee will be halved by 2050 (Worland, 2021). Farmers are being forced to grow their crop at different times of the year resulting in a high-risk approach that relies heavily on the weather, which is becoming increasingly unstable outside of the traditional growing seasons. An increasing number of farmers are deciding to remove their coffee crops all together, opting for a more profitable and stable crop to farm. Melbourne coffee innovator and 7 seeds founder Mark Dundon thinks people should wake up and smell the roses. “People think a $4 latte is a God-given right but that's not the true cost of coffee… Coffee is going to become really expensive - maybe $7 a cup" (Valent, 2019).

However, it’s not all doom and gloom. The increasing popularity in consumer interest towards ethically sourced coffee has made specialty roasters turn their attention to sourcing highly traceable beans. With demand for ethically sourced coffee growing, roasters can now justify paying a premium for good quality coffee beans. Ultimately by having a better understanding of where our coffee comes from and the extreme difficulty it takes to produce good quality coffee, we can take important steps to ensuring a more sustainable coffee future.

Statement of Transparency

At Lay Day Coffee we acknowledge that we are not perfect. In fact we are contributing to the problem. In an industry as unsustainable as the coffee industry is it’s hard to justify that you’re doing the right thing. Climate change, unethical sourcing and consumer demand for cheap coffee means that coffee has become one of the most unsustainable commodities being farmed today. We know we are part of an industry that needs to change. And change fast. However, we started this to be provide a “better” alternative compared to what is currently on the shelves. We are 100% committed to be as transparent as we can. We hope we can be part of a movement towards a healthier and more sustainable coffee future. While we sure as hell are not there yet, we are committed to this, and plan to continue to innovate and be a positive force of change for many years to come.

Reference:

Fairtrade International. 2021. Pricing Table. [online] Available at: <https://www.fairtrade.net/standard/minimum-price-info> [Accessed 12 November 2021].

Valent, D., 2019. 'The industry's at risk': the high price of cheap coffees. [online] Smh.com.au. Available at: <https://www.smh.com.au/national/the-industry-s-at-risk-the-high-price-of-cheap-coffees-20190528-p51rti.html> [Accessed 12 November 2021].