Considering the cost of coffee labour

Posted by Kim Ionescu, Chief Sustainability Officer, Specialty Coffee Association and Twin Board Member on 25 February 2019

Airport coffee shop

A decade ago it was unusual to encounter a great cup of coffee in an airport, and twenty years ago the concept would have been laughable. These days it’s reasonable for a coffee drinker to expect that not only will it be possible for them to find coffee that tastes good in once-unlikely places (like airports), but that that they will be able to find information about what country their coffee comes from, the name of the farm where it grew, and what kinds of flavours they can expect from it.

Taken together, these data points communicate to a coffee drinker that the coffee they have purchased is special – it possesses attributes that differentiate it from any other – and often they’re woven together to form a story with the coffee farmer as the celebrated protagonist.

Independent, third-party certifications like Fair Trade Certification have driven greater public awareness of the role of farmers in creating delicious coffee, and a new generation of coffee roasters and traders has built a category of business based on building personal connections across the world, from coffee drinkers to coffee producers, through mechanisms of direct trade, relationship-building, and storytelling.

This growth has been exciting and great coffee has never been easier to find, but despite the visible signs of progress, only a small percentage of the world’s millions of coffee farmers have built the kind of demand for their product that results in consistent, substantial premiums over the commodity futures price, which hovers around US$1.00 per pound. In real terms, many farmers have seen their incomes decrease over the past two decades even as their production costs have increased.

While fertiliser, transportation, and food are all more expensive than they were two decades ago, for most producers, labour is the largest single expense – ranging from 60 to 80% of a coffee farm’s total cost of production – and the cost of labour, like fertiliser, is rising. Across entire coffee-growing countries and regions, it is becoming more and more difficult to find workers during the annual coffee harvest. Farm labour is exhausting, and besides the physical challenges of field work like heat, insects, and snakes, the seasonal nature of coffee production makes for unpredictable employment and unstable income.

Some of the factors contributing to labour scarcity are changes that we laud in different contexts – for example, off-farm employment opportunities and urbanisation are often cited as indicators of economic development– but those demographic shifts destabilise coffee-producing communities and put increased pressure on the farmers who remain. These farmers must then choose whether to compete for the workers that remain by paying higher wages, to contract labour brokers to bring in workers from outside the community, to do less with fewer people, or some combination of those four strategies. All those choices are tough and the consequences, which take the guise of higher costs, lower yields, or poor taste quality, are borne by producers.

Counter to free market logic, reducing the supply of available labour doesn’t benefit farm workers any more than it benefits farm owners. The exodus of local workers means that hired labourers are more likely to be members of vulnerable populations – for example undocumented immigrants – without the means to effectively negotiate wages or advocate for better working conditions. It’s a lose-lose situation for coffee farmers and workers, and ultimately, for coffee buyers and coffee drinkers, most of whom are still unaware of how pervasive these problems are.

The scope is enormous and decentralised – millions of farms across more than sixty countries – and that alone is daunting. Plus, it will be hard to tell if and where we’re making progress in these next few years, as labour conditions will simultaneously improve in some places deteriorate and demand attention elsewhere. But we are in a better position to act than we ever have been, with tools we’ve never had: the policy environment is shifting toward greater accountability and technology enables unprecedented supply chain traceability. The future is uncertain, but when I recall the landscape of airport coffee in the 1990s and compare it to what I find today, I believe everything is possible.