Trouble Brewing: The Changing Face of Coffee Production

By World Resources Institute - Global Environmental Trends

February 14,2001

For well over a century, coffee has been a major export from Latin America, shaping both the economy and the natural landscape of the region. Yet recent changes in coffee production methods, driven by increased demand, the desire to boost yields, and an international trade agreement based on quotas, threaten to erode many of the benefits of traditional coffee culture on small plantations, with wildlife and small farmers paying the price.

In dollar value, coffee is the most important (legal) traded commodity after oil in the world and is the primary export of many developing countries, accounting for as much as one third of export earnings in several Latin American countries (1). It is also a significant source of employment, with some 20 million to 25 million people - most of them small farmers - dependent on income from the world coffee crop (2). More than two thirds of current world coffee production is exported from Latin America and the Caribbean, with much of the rest coming from African and Asian producers such as Cameroon, Côte d'Ivoire, Indonesia, and Papua New Guinea (3). However, most coffee is consumed in the developed world; the United States and the European Community together import two out of every three bags of coffee produced in the world (4).

Coffee production has grown by nearly 200 percent since 1950 (5), and recent years have seen a surge in consumer demand for specialty coffees such as gourmet blends, flavored coffees, and organically grown coffees. (See Table PC.1.) Indeed, fashionable coffee bars in many developed countries today are not unlike the coffeehouses of 18th-Century Europe, which flourished when the drink was first introduced.

Yet new consumer trends in coffee drinking are not the only change in the global coffee business. In a bid to modernize, the coffee industry has begun to shift from its traditional reliance on small coffee producers growing their plants in fairly low-density, diversified plots to industrial cultivation on larger plantations. Much of this shift has been promoted and subsidized by government and international aid organizations as a way of raising the coffee sector's productivity and promoting rural development. However, as with other agricultural modernization efforts this century, changes in coffee production have had broad environmental and social repercussions.

Traditionally, coffee has been grown as a crop within a mixed-shade cover of fruit trees and other hardwood species, which together form a forestlike agro-ecosystem. Such "shade" coffee plantations - which are more often than not small farms - provide a rich habitat particularly valuable to migratory birds. Biologists in Mexico have found that traditionally managed coffee plantations support at least 180 species of birds, a number exceeded only by undisturbed tropical forest (6). Besides coffee, a typical mixed plantation also provides fruit, firewood, timber, and other products that can be used directly or sold for cash, providing alternative sources of income. This can be especially important to the many small coffee farmers living at or below the poverty level (7).

In the past 20 years, coffee farmers have increasingly converted to more intensive systems, involving high-yielding coffee varieties grown with no shade and high applications of chemical fertilizers and pesticides. About 40 percent of the coffee planted in Colombia, Mexico, Central America, and the Caribbean has been converted to so-called "sun coffee," which is grown in the open (8). While planting sun coffee has increased production, it has involved some significant environmental tradeoffs. For one, it provides a largely monocultural habitat and is associated with higher rates of soil degradation and water pollution.

More significantly, because of the importance of traditional coffee plantations as migratory bird habitats, the conversion to industrial coffee production systems may have devastating consequences for migratory bird populations, as well as for other species. This is especially true in Central America and Colombia, where many migratory routes converge. In many parts of Central America, shade coffee plantations account for a large percentage of the remaining forest, as in El Salvador, where they make up 60 percent of the nation's forest area. In effect, sun coffee conversion is a form of deforestation, with consequent effects on species diversity. Studies in Colombia and Mexico show that sun coffee plantations support 90 percent fewer bird species than do shade coffee plantations (9).

Although some farmers and large producers may benefit, especially when coffee prices are high, many small farmers may suffer as a result of the conversion to sun coffee, since it involves considerable use of pesticides under conditions that may lead to unhealthy exposures for farm workers. Loss of the noncoffee products that shade plantations produce can also be an economic blow, making farmers more dependent on the notoriously volatile coffee market for their sole income.

Opposing this trend toward sun coffee cultivation are small but encouraging signs of growing consumer interest in sustainably grown coffee, produced under conditions that are better both for the environment and for small farmers. Sales of certified organic coffee, which generally comes from coffee plants grown under more traditional shaded conditions, are currently growing faster than any other type of specialty coffee, though they still represent only 1 to 2 percent of the $5 billion specialty coffee market. Certified organic coffee beans sell for 10 to 15 percent more than standard gourmet beans, and so can translate into higher returns for growers, although the costs associated with the certification process itself can be significant (10).

TABLE PC.1 Coffee Production in Northern Latin America, 1950-90

Source: Robert A. Rice and Justin R. Ward, Coffee, Conservation, and Commerce in the Western Hemisphere (Smithsonian Migratory Bird Center and Natural Resources Defense Council, Washington D.C., 1996), Table 2, p. 39.

Notes: a. 1948-52 average. b. 1961-65 average. c. 1969-71 average. d. Production figures for Central America Include Mexico, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. e. Production figures for the Caribbean include Cuba, Dominican Republic, Haiti, Jamaica, Puerto Rico, and Trinidad and Tobago. f. Production figures for northern Latin America include all the countries listed above, plus Colombia.

In addition, the so-called "fair trade" movement has taken root in the world coffee market in the past few years. The movement's goal is to achieve a fair price paid to small growers for their coffee, which is distributed through small, democratically run cooperatives, whose principles of shared profits free of middlemen are used as a commercial selling point. While the fair trade criteria under which these cooperatives operate do not explicitly require the use of shade coffee, they encourage sustainable production methods and organic methods as well. Fair trade coffee has been most successful in Europe, capturing between 2 percent (Germany) and 5 percent (Switzerland) of most markets, and it is moving from niche to mainstream outlets. For example, fair trade coffee is available in 90 percent of supermarkets in the United Kingdom (11).

Farmers producing for such cooperatives receive significantly higher prices for their coffee and more secure markets. In some cases, this stability and extra income are being used to support a conversion to fully organic production. Coocafé, a fair trade organization in Costa Rica, is planning to produce only organic coffee beans by 2002. The decision - which will affect 3 percent of Costa Rica's coffee production - was made as part of a long-term economic and marketing strategy, based on financial, environmental, and health and safety considerations (12).