Adventures of a coffee consultant by Raf Mlodzianowski
As the year comes to an end I think about what has happened in 2018 and sustainability of the coffee supply chain is firmly in my mind.
This year has seen the C (coffee stock market price) price drop to less than a $1.
I have also been working with farmers in Kenya, talking to farmers across the globe as well astalking with roasters, cafes and coffee professionals too.
What I see is a need to balance the scales to support farmers and coffee professionals more.
Before everyone jumps on me about this let me explain what I mean. I refer to Kenya. Last year the highest price that one co-operative received for an AA (coffee bean size) grad was $13/kg at the auction. From this the farmer expects to receive around $0.88/kg. This has to cover the cost of production, running a home, eating, health care, schooling and much more. The cost of processing and milling the coffee is deducted before the farmer is paid but how does the farmer who grows everything end up with only around 7% of the sale?
Nearly every farmer I meet in Kenya wants to uproot their coffee trees within the next two years. This is not an isolated problem, this is something I hear from many farmers all over the world - coffee is no longer a profitable crop. Before global warming kills the plants the farmers will already have switched crop unless payment structures change.
Where does the other 93% of the price go? Well that is harder to work out. For sure there are washing station fees, milling fees, agent fees, auction fees, etc... but it is not surprising that farmers feel exploited when they only receive 7% of the sale. As an industry I believe we need to turn our gaze to the farmers and offer them support and stability so that we may return some the profits that the industry has made for so long. It is now up to the farmers if we have a future or not. In reality they are the ones holding all the cards.
If we flip this to the other side of the industry it is also time to start looking at the long-term future of the cafe. With rents, products and minimum wages all going up cafes are struggling to cope. One of the big problems is lack of skilled staff. This is partly due to pay not meeting the true cost of living. If cafes are not being profitable enough this means good staff are out of reach and therefore the cafe will struggle to keep clients. Cafe owners should start to look more at margins and how to be more efficient and cost effective without sacrificing quality. Look for products that might bring in new customers or find a way to differentiate more.
However the big point is again pricing. If all the factors went up in cost then you must raise the product cost. The argument is that customers will complain, and they will, but just like with beer everyone ends up just drinking it anyway. The other factor is how to make the price increase feel good. Perhaps look for small ways to improve customer service at the same time. If more cafes were transparent with their costs, customers would also be able to see why the price rise was needed.
So to summarise about what needs to happen to make coffee more sustainable there is a need to focus our attentions to both ends of the spectrum. Firstly and most importantly making coffee profitable for farmers and secondly finding ways to keep staff and to make cafes more profitable.
- Raf Mlodzianowski has joined European Coffee, Tea & Soft Drinks Expo as a consultant and Coffee Business World columnist
- Raf Makes, his consultancy will be exhibiting on stand A26 at European Coffee, Tea & Soft Drinks Expo on 21-22 May 2019.
- Raf Mlodzianowski is a Certified Arabica Q Grader and an SCA Authorised Trainer (AST) in brewing, barista, sensory, green and roasting skills.
- For more information on European Coffee Expo, contact Sukhvir Hayre on +44 (0) 203 668 9809 or email firstname.lastname@example.org and check out stand and sponsorship options.