Is global coffee glut "sustainable"?

About 15,500,000,000 pounds of coffee are produced worldwide each year. Yet, consumers drink only 12,000,000,000 pounds. "There's a whole lot of misery between those two numbers," indicates Sue Mecklenburg, vice president for corporate social responsibility at Starbucks Coffee Co.

A global coffee glut, exacerbated when Vietnam entered the market during the 1990s, has translated into record low prices that have fallen below the cost of production. Today, it is cheaper for farmers to let their crops rot in the fields than to harvest them.

A sliver of hope in an otherwise dismal picture for coffee growers is the market for sustainable coffee, which pays higher prices for coffee grown in an environmentally friendly manner and is certified as organic, shade-grown, or fair trade. The issue is particularly relevant in Latin America, where 80% of the world's high-quality arabica coffee is grown, almost entirely on various small family farms.

Although supporters say that this growing market offers something tangible for beleaguered farmers, Mecklenburg puts its size into perspective. Of around 2,600,000,000 pounds of coffee consumed annually in North America, specialty coffee comprises merely 430,000,000 pounds. Sustainable coffee makes up 11,000,000 pounds of that figure. "It's easy to come in at the micro level, but if you look at it from a macro picture, you get some idea of what we're working with. It's pretty slim."

Despite its ubiquitous street presence, Starbucks buys just 100,000,000 pounds of coffee a year--less than one percent of the global market. While the company's certified coffee purchases increased from 550,000 pounds in 2000 to about 3,500,000 pounds in 2002, it remains a small figure. "It's a niche market," Mecklenburg explains. "Producers can't supply what we need."

Nevertheless, Kimberly Easson, marketing director for TransFair USA, a nonprofit certification organization, is confident that sustainable coffee can make a difference. Since its establishment in 1999, the group has certified about 13,000,000 pounds of sustainable coffee. By guaranteeing a "floor price" of $1.26 a pound, TransFair pays farmers three to four times as much as they would receive on the commodity market. It offers higher prices by working directly with small farmers in cooperatives, thereby eliminating the middlemen. However, Easson notes that farmers sell only 20 to 40% of their coffee at "fair trade" prices, in part due to lack of quality coffee and consumer awareness. "There's a long way to go in terms of building demand here and elsewhere," she warns. In contrast, fair trade goods have been marketed in Europe since the 1960s. In the United Kingdom, for instance, 90% of supermarkets sell "fair trade" coffee.

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