Better Coffee, Better Prices: Improving Farmer Livelihoods Through Quality Improvements
What does the taste of your morning coffee have to do with the livelihoods of millions of farmers? In this article, Paul Stewart explains how boosting coffee quality is one of the keys to ensuring that smallholder farmers earn higher incomes and shows how this change can transform entire communities.
Editor’s Note: This blog post originally appeared on Business Fights Poverty.
The hillsides surrounding Besheshe village in western Ethiopia are covered in coffee gardens and wild coffee trees growing under the forest canopy. Generations of farmers there have depended on this coffee to eke out a living.
The varietals near Besheshe are unique, with the potential to produce the kind of flavors that discerning coffee drinkers the world over will pay top dollar to experience. But for farmers like Mustefa Abakeno, that possibility once seemed far off. Like all of the other farmers in the community, he sold his sun-dried coffee to the local traders who plied the region’s muddy dirt roads, purchasing coffee from farmers at rock-bottom prices.
However, Mustefa saw that farmers in nearby towns were able to improve the quality of their coffee, sell it to specialty buyers, and earn a better living. He wanted to see that change in Besheshe, too. As Mustefa came to realize, quality improvements are one of the best ways to improve the livelihoods of coffee farmers. With smart investments, we can help unlock those opportunities.
The Quality Opportunity
Unlike many agricultural commodities, coffee prices vary with quality: while the commodity price of coffee hovered around $1 for most of 2018, some roasters were paying between $1.50 and $4.50 per pound for coffee scoring above 80 on the 100-point SCA quality scale, according to the Specialty Coffee Transaction Guide.
The opportunity is growing, too. As consumers pay more attention to flavor, sustainability, and origins, the market for this specialty coffee has grown significantly, averaging about 8% annual growth, more than twice the rate for the total coffee market.
We didn’t consider our coffee to be an asset. Now we think of it as gold!”
This translates into better prices paid to farmers. While the prices for specialty coffees have declined in recent years, moving in parallel to the overall coffee market, the premium paid above commodity prices can make the difference between breaking even and losing money. And when the coffee market is high, farmers can earn excellent prices for specialty coffee, allowing them to make yield-enhancing investments in their farms or develop other sources of income.
The Recipe for Better Quality
So how can farmers go from producing conventional coffee to the high-quality coffee that the specialty market demands?
It starts with the adoption of good agricultural practices on the farm. As TechnoServe’s farmer trainers sometimes say, “Once it’s harvested, bad coffee can’t be turned into good coffee.” Our training program includes ensuring the plant gets proper nutrition and shade, managing pests, and selectively harvesting only the coffee cherries that are ripe and free of visible defects. In our programs, we’ve seen that farmers are quick to adopt these simple, low-cost or no-cost practices.
Once coffee is harvested, it also needs to be properly processed, as the intrinsic quality of coffee is often lost to poor processing. In Besheshe, for example, farmers traditionally processed their coffee at home, letting it dry on tarps laid on the ground. This process imparted defects that damaged the flavor of the coffee—and for that reason, they were only able to sell their coffee to traders offering low prices.
Correctly implemented, wet processing—in which a pulping machine strips away the skin and pulp from the raw coffee cherry and the resulting parchment coffee is washed clean—ensure the beans are not damaged during processing and helps the natural quality of the coffee shine through. Farmers or wet mill operators need training on how to process the coffee, as well as capital to purchase the necessary equipment.
The Impact of Quality
Those changes made a big difference in Besheshe. When Mustefa and his neighbors heard that TechnoServe was implementing the Bill & Melinda Gates Foundation-funded Coffee Initiative in their area, they approached us with the idea of starting a cooperative and constructing a wet mill. We helped this new cooperative, called Hunda Oli, access credit, construct a wet mill and provided training on how to use the new facility to wet-process their coffee. Soon, the cooperative was producing fantastic quality coffee and selling it to some of the most demanding roasters in the world. Farmers started to earn prices 60 percent higher than those offered by the local traders.
Once it’s harvested, bad coffee can’t be turned into good coffee.”
The sales were so good that the cooperative was able to pay competitive prices to farmers for their coffee cherries, distribute a substantial bonus to members every year, and reinvest in improved facilities. But the cooperative still had money left over, so it decided to fund community projects. The cooperative built wells and pipes to provide 430 households with clean water; constructed two classrooms for the local primary school; and is financing a regional high school alongside other new coffee cooperatives in the region.
Across all the cooperatives that participated in quality training through the Coffee Initiative, export prices increased by $1.53 per kilogram, and the average farmer earned a $0.43/kilogram premium over the standard local price.
This kind of change can happen in other communities. By investing in quality training, and facilitating access to finance, we can help farmers unlock the potential in their coffee, generating greater earnings and enabling greater earnings. As one farmer near Besheshe said, “We didn’t consider our coffee to be an asset. Now we think of it as gold!”