This spring the Global Coffee Platform and TechnoServe launched a quick scan study of the coffee sector in 11 countries around the world. The quick scan’s objective was to benchmark and identify opportunities for potential benefits to coffee farmers from improved farm profitability and increased supply chain efficiency.
Yields differ hugely
The scan report revealed that yields could be increased by 10-100% over the next five years by improving agronomy practices, farm rehabilitation and input optimization. For Arabica coffee, the average coffee yield in Brazil is 1.6 MT green / ha, compared to just 0.3 MT / ha in Kenya. Likewise, for Robusta coffee yields range from 2.6 MT green / ha in Vietnam to 0.6 MT green / ha in Uganda.
Highly productive countries have much higher cost structures
According to the report, current farmer coffee production costs (in hundreds of US$ / ha) vary widely, from 31.7 in Brazil, 31.5 in Vietnam and 22.0 in Colombia to less than 2.0 in Ethiopia, Tanzania and Uganda. The origin whose farmers primarily rely on family labour and use fewer inputs naturally have much lower cost structures, but they also face lower comparative yields.
Given that production costs have been increasing, the report suggests that improving yields can amortize fixed costs.
Supply chain efficiency varies widely
The report reveals that supply chain costs vary widely across coffee origins, which offers significant opportunities for sector-wide changes. For example, supply chain costs (as a % of FOB price) vary from 5% in Vietnam and 13% in Colombia to 45% in Tanzania and 51% in Nicaragua.
In general, countries with liberal policy environments, competitive markets and farmer organizations tends to rank more highly in supply chain efficiency, which suggests these areas are key to further increasing efficiency.
The draft global report was published at the World Coffee Producers Forum in Colombia this month, with extremely valuable insights into the current situation and various opportunities regarding topics like yields, supply chain efficiency and input costs across the 11 countries. There are separate summaries for each of the 11 countries of interest, as well as a report on the global level results.
This report forms a part of the Economic Viability of Farming Collective Action Network, which helps the sector to prioritize actions with the potential to have an impact on increasing farm profitability. There will be a series of webinars exploring the topic in more depth, and the final version of the report will be published later this summer. If you’d like to be involved or give any feedback, you can sign up to join the Collective Action Network online.
The economic viability of farming is also the key theme of our Global Coffee Sustainability Conference and GCP Membership Assembly 2017. The conference will take place on 4-5 October in Geneva, and will bring together experts and stakeholders to build on the outcomes of the World Producers Forum and agree on concrete, practical next steps to help make farming coffee economically viable. Sign up to join the conference now.