The true brew: Understanding the real cost of coffee

A steaming cup of coffee is a daily ritual for millions around the world. But have you ever considered the real cost behind your brew? The coffee industry is far more complex than it appears, and beneath the surface lies a web of production costs, environmental impacts, and social investments that shape the future of coffee.

In this blog, we’ll discuss the many sides of sustainable coffee and how we’re working to protect its future by pursuing our Gold Standard goals, which are embedded across everything we do.

Production Costs and Farmer Struggles

In the heart of coffee-producing regions, the lives of farmers are intertwined with the beans they cultivate. Yet, the production costs for coffee farmers have sharply escalated since Covid primarily due to rising inflation. From harvesting labour to investing in essential farming equipment, the financial demands add up. As production costs soar, maintaining a sustainable livelihood becomes increasingly challenging. It also makes it even more likely that the price received for coffee is below the cost of production. The consequence? Most coffee growers live in poverty, perpetuating a cycle of economic hardship within these communities.

Cafédirect aims to provide degree of financial stability to coffee cooperatives through our commitment to long-term partnerships. These enduring relationships facilitate farm investments that can mitigate expenses and enhance yields, offering some respite from the escalating production costs. Our sister organisation, Producers Direct, led by farmers themselves, imparts practices that empower farmers to safeguard and increase their income   

Gold Standard goal:

• By 2025, 295,000 small-scale farmers in our supply chain will have increased their income by 50%

Environmental Costs and Sustainable Practices

Preserving the environment is essential for sustainable coffee farming. Excessive use of pesticides and fertilizers contaminates water sources, causing pollution in both the natural environment and local communities. Moreover, the need for additional land to cultivate coffee for additional income can drive deforestation.

All our farmer partners share a common desire to farm sustainably and safeguard their future. However, they require assistance in making these enduring changes. Through Producers Direct, they gain knowledge from fellow farmers who have successfully embraced these practices. For instance, they acquire expertise in cultivating shade-grown coffee, a method that fosters biodiversity, reduces its dependence on harmful chemicals and enhances soil health and its capacity to absorb carbon dioxide from the air. Likewise, they receive training on implementing water-efficient irrigation systems.

Gold Standard goals:

• By 2030, 100% of our agricultural purchases will be sourced according to our Regenerative Agriculture policy.
• By 2025, through annual donations to Producers Direct, 1.5 million small-scale farmers will have access to agricultural training, micro-finance, new markets or data services.

Social Investment and the Fairtrade Movement

A pivotal pillar of sustainable coffee production is ensuring that farmers and workers earn a living income—a threshold required for basic standards of living, encompassing education, food, housing, and medical care.  An estimated 80% of the 12 million coffee producers around the world still live below the poverty line, which is nowhere near a basic standard of living.

To bridge this gap, Producers Direct works with smallholder farmers to find new income streams beyond their farms. Many of our farmer partners have found success in diversifying their income through endeavours such as beekeeping or cultivating additional crops.

To revitalise the coffee industry and empower famers to earn living incomes, it is also crucial to invest in the younger generation and women. Producers Direct create exciting opportunities that attract and retain young talents in coffee farming, whether in technology or marketing. They also champion gender equality, empowering women to assume new roles and significantly contribute to household incomes.

All our coffee is Fairtrade, which ensures that farmers receive a fair price for their beans, empowering them to invest in their communities and enhance farming practices. Moreover, Organic Differentials serve as a mechanism to offer higher prices to organic coffee farmers, acknowledging the lower yields associated with organic farming. This provides a tangible incentive for environmentally friendly agricultural practices.  We source as much organic coffee as possible; in 2022 this was 72% of coffee purchases.

Gold Standard goals:

• By 2030, our ambition is for very small-scale farmer in our network to earn beyond a living income.

By 2025 we will work with Producers Direct to support:

• The next generation of growers by training 5,000 youth leaders and promoter farmers across the network and providing 5,000 young people employment opportunities within the Producers Direct network.
• Women’s access to support services to run their own businesses, increasing representation in the network from 20% to 50%.

Regulatory Compliance: Navigating the Complexity

Coffee farming comes with its fair share of regulatory compliance and certifications, aimed at enhancing sustainability and ethical practices. However, these certifications can also be a double-edged sword for farmers, as they often come with additional costs. For instance, obtaining organic certification demands strict adherence to organic farming standards, which can be both costly and labour-intensive.  This can exacerbate the poverty trap for those farmers unable to afford to comply. 

We know the challenges that farmers face – because they tell us as our partners, our Board Directors and our shareholders.  Over the years we’ve worked directly with cooperatives to support their individual needs, including certification guidance.  Together, we navigate these complexities, ensuring that the path to sustainability remains accessible.

A Shared Journey Towards a Sustainable Future

For truly sustainable coffee, the whole industry needs to invest in its future and consider the whole, true costs of coffee production.   This requires the industry to pay fair prices that account for the extensive production, environmental and social costs associated with sustainable coffee production.  Coffee is more than a beverage; it’s a lifeline, a culture, and a livelihood. We need to savour it responsibly and ensure that its future remains as vibrant as its flavour. #CoffeeForever