Economic Sustainability--Price, Cost, and Value
Among the most pressing threats to the global coffee trade are a widening gap between supply and demand, an exodus of young farmers, and the impact of climate change. If these and other factors, including economic volatility, are simply ignored, the industry faces a challenging future. This chapter uses the price, cost, and value of coffee as distinct but connected lenses to engender a deeper understanding of the economic challenges facing the sector. Taking this holistic view helps to emphasize how an obsession with price (at all levels of the value chain) is inhibiting improvement by relegating coffee to the status of a mere commodity. Although there is no panacea for the many challenges, we offer solutions built on data and models of economic theory. We aim to provoke both thought and action, advocating multilevel assistance to level the playing field for farmers trapped by systems that are failing, whereas trusting in the power of strong value propositions to foster innovation at the producer level. This chapter argues that solutions that truly work are likely to come from a shared belief in the creation of shared value. This chapter includes analyses from Fairtrade senior managers, global sustainability experts, and the son of a Colombian coffee farmer. To survive, the coffee industry must draw on its greatest asset—the creativity, entrepreneurship, and drive that exist from the bottom to the top of its unique and remarkable value chain.
|Commodity trading, Sustainable coffee program, Aspirational consumerism|
|Organisation||Incae Business School|
Pérez, J., Kilian, B, Pratt, L, Ardilia, J., Lamb, H., Byers, L., & Sanders,D. (2017). Economic Sustainability--Price, Cost, and Value. In Folmer, B. (Ed.), The Craft and Science of Coffee. Academic Press. doi:10.1016/B978-0-12-803520-7.00006-2