East Africa produces some of the world’s most valuable specialty coffees, yet farmers in the region pocket only a minuscule share of the profits. Farmers could grab a bigger piece of the pie by participating in higher-value activities that add value to their crop, says a new report by the International Trade Centre (ITC).
More than 90% of coffee is exported as a raw or ‘green’ beans, and developing countries handle most of the transformation that adds value, according to More from the cup: Better returns for East African coffee farmers.
The report, launched at the African Fine Coffees Conference and Exhibition in Mombasa, Kenya, is a springboard to discuss how farmers can get better prices for raw beans, learn about branding and consumer marketing, and develop business partnerships in foreign markets.
‘Looking at the international value chain that delivers the “$5 cup of coffee,” less than 1% of the price remains in the hands of the men and women who cultivated the crop,’ writes ITC Acting Executive Director Dorothy Tembo in the report. ‘Almost all value is created after the farm gate. Even allowing for the expected returns of the retailer, enough value should be generated to allow farmers a greater share of the global earnings.’
Farmers in East Africa, already struggling with poverty and numerous other challenges, were hit particularly hard when coffee prices dropped to a 12-year low in 2019. The international benchmark price for coffee languished at less than $1 a pound for most of the year – 30% under the 10-year average and, for most coffee-growing countries, below production costs.
‘While consumption is booming, many origin countries that rely on coffee for foreign exchange earnings are facing a crisis in prices, as well as a longer-term challenge of sustainability,’ the report says. ‘Without mitigating solutions, climate change threatens to destroy large growing areas. Other problems include high production costs, low yields, urbanization, aging farming populations and lack of access to finance.’
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