External Impacts on the Global Coffee Industry
Coffee is one of the most widely-consumed beverages in the world today. Every minute, more than 2 million cups of coffee are enjoyed worldwide. And yet, it’s the 25 million smallholder farmers that account for over 80% of global coffee production, who operate on up to 2 to 5 hectares of land in regions along the equator.
Farming in rural locations with limited access to socioeconomic trends, coffee growers often receive about 2% of the revenue from every cup of coffee sold. According to a study by the World Economic Forum, for every standard $3.00 cup of coffee purchased, original farmers receive only $0.07. Nearly 75% of the cost goes to the retailer, with the remaining cost going back to the roasters, distributors, and exporters.
There are many social, economic, and environmental challenges coffee farmers face today, despite the world’s love for this caffeinated beverage. Read on to learn what the future of coffee farming looks like.
Economics of Coffee Farming
No matter where you live, your favorite cup of coffee wouldn’t be possible without the farmer — or the international coffee supply trade. Fortunately, smallholder farms have some opportunities to make more profit.
First, increasing the yield of coffee cherries will sell more on the market. Next, switching to higher-quality coffee varieties ensures a better profit margin, as there are five quality grades, and those ranking 0–1 can be sold at premium rates. Lastly, getting a coffee certification, such as organic or fair trade, as higher-paying buyers seek these out.
Many coffee farmers worldwide don’t have access to the resources to make these upgrades, and certification processes can vary from country to country.
Social Impacts Affect the Supply Chain
Unstable prices of coffee and a lack of access to basic technology puts farmers at risk of losing money. Farmers are affected by social issues such as poverty, crime, food insecurity, health complications, theft, and unfavorable working conditions. These are issues that directly impact the coffee supply chain, of which farmers are the least integrated aspect.
Some farmers benefit from local cooperatives: organized groups that share resources, training, and sales opportunities among collective farmers in the area. Co-ops help coffee growers access the necessary tools, technology, buyers, and education. These cooperatives also help coffee farmers with their distribution, financing, and crop planning.
Environmental Concerns of Global Coffee Demand
Coffee farming takes a toll on the environment, especially as farmers adapt growing and harvesting methods to suit volatile demands. Farming processes become unsustainable and continue to lend part to deforestation. For example, the use of pesticides and synthetic fertilizers threatens the local water supply due to contaminated runoff.
While coffee farming is a contributing factor to environmental impact, it also suffers from pressing issues such as climate change. When there are dry months during the expected wet season, coffee plantations suffer from delayed production and significant stress rushes farmers to outsource solutions.
Comprehensive Agtech: Empowering Coffee Farmers Worldwide
Smallholder coffee farmers are masters of cultivating coffee cherries year after year — many of them revered among generational family legacy. But overcoming the complexities of climate change, adjusting to unexpected market shifts, and optimizing their place in an inadequate supply chain is not an easy option for many coffee growers.
To give farmers the logistical support they need, one agricultural technology (Agtech) company developed affordable systems to help coffee farmers.
With Dimitra’s Connected Coffee Platform, coffee farmers from anywhere in the world can:
- Manage plantations and seedlings
- Digitally manage quality control of their soil, crops, harvest, and storage
- Access a broader network of buyers and sellers, empowering informed trade decisions
- Keep records of orders and transactions
- Manage sales reports and analytics
The Connected Coffee Platform enables coffee growers, processors, and traders to meet quality and reporting requirements while collecting critical data to improve their farming and processing operations. Farmers can seamlessly access all data essential to their operations with real-time traceability. This puts the power of choice and trust in the farmer’s hands, equipping them to increase production, mitigate risk, and reap greater profits.
To learn more about the Dimitra Connected Coffee Platform and other technology programs helping small-scale farmers thrive, visit www.dimitra.io.