As global weather patterns shift and temperatures rise, the world’s most ubiquitous drink for over a thousand years is under threat.
In coffee’s “bean belt” – countries including Colombia, Mexico, Brazil, Ethiopia and Vietnam – farmers are struggling to grow coffee plants in areas where a delicate balance of temperature, precipitation, and soil characteristics are critical to ensure the plants will thrive.
These pests have withered and destroyed coffee farms across the bean belt, slashing production and exports and threatening the future of the global coffee supply. Combined with increased deforestation, which accounts for around a quarter of greenhouse gas emissions from agriculture, these effects have rippled out across local economies, affecting many of the 120 million people who rely on the coffee value chain for their livelihoods.
The spread of the coronavirus (COVID-19) presents a significant further challenge to the global coffee sector, which in recent years has seen a prolonged period of low producer prices. Even before the pandemic slowed its global supply chain, the coffee industry was on alert. At the Swiss Coffee Trade Association’s 10th annual meeting in Basel in October 2019, over 700 coffee traders, merchants, and coffee company CEOs ranked sustainability ahead of profit as the key issue facing the $70 billion a year industry. For two days, under the theme, “The Future Looks Different,” traders discussed – among other topics – solutions to help smallholder farmers cope with climate impacts and build resilience to future changes.
Industry executives are right to be paying closer attention to the source of the global coffee supply.But the Arabica plant is especially vulnerable to the effects of climate change and, as temperatures rise, it will be increasingly difficult to grow and expensive to buy.
Instead, industry experts and big producers are looking to innovation, to new technologies, and to building a more sustainable supply chain as a way out of the problem. Around the world, experts are helping smallholder farmers cope with climate impacts by introducing climate smart agriculture technologies and practices such as shading, cover crops, composting, mulching, and integrated pest management. They are also planting more resilient bean varieties for local conditions, which experts hope will prove more immune to disease and pests.
Scientists, supported by major coffee producers, are also looking to protect the 124 available varieties of wild coffee – known for their hardiness to drought, disease, and pets – which studies say are at risk of extinction. Conserving these wild plants and storing their seeds in gene and seed banks may aid the future diversification of the global supply chain and the millions of farmers who make their living from coffee. Other solutions include coating coffee beans in a non-toxic treatment that creates a physical barrier between an insect and the plant surface, which is designed to withstand the rigors of harsh environments.
At the International Finance Corporation (IFC), we look to bolster the global coffee supply chain by providing financing solutions and technical support to help coffee farmers improve their productivity, reduce post-harvest losses, and adapt to changing local conditions.
In Ethiopia, the birthplace of coffee, as well as Kenya, we financed – alongside our partner Nespresso and the World Bank’s BioCarbon Fund ISFL – a farmer program to provide technical and financial support to increase sustainable practices and plant more shade trees on coffee farmland. Improving the productivity and quality of harvests in this way was a triple win for both Nespresso and IFC – it benefitted Nespresso’s customers, improved the environment, and paved the way to higher incomes for the farmers.
In 2019, IFC provided $40 million to help finance a groundbreaking credit facility for the Netherlands-based green coffee supplier, Mercon. The $450 million two-year facility led by Rabobank is aligned with Mercon’s long-term strategy to build a better coffee world. It will allow the supplier to improve productivity and reduce post-harvest crop losses through more efficient collection, transport and warehousing of coffee. The credit facility – which is IFC’s first-ever “green loan” – is the only coffee-specific sustainability facility in the world to date.
IFC’s relationship with leading industry players, including Nespresso and ECOM, is a good example of how industry and development institutions can work together to support the sustainable development of coffee farming. We have the financing and the know-how to help companies improve their sustainability practices.
Embracing the innovation already underway, and partnering with coffee producers to help farmers become more resilient, will create a more sustainable coffee supply chain. It will also help keep our morning cup of coffee, one of life’s greatest pleasures, intact.