By Devika Singh
Coffee has been fuelling our energy levels, productivity and the global economy for over 500 years now. Since the 16th century, coffee has been one of the most valuable agricultural commodities traded internationally, with tropical and developing countries being the largest producers and suppliers to consumers in temperate countries. While the coffee industry is growing at a high compound annual growth rate of 5.5%, the economy of the industry is volatile and highly sensitive to weather in the producing countries.
How do you value your cup of Joe?
The global coffee industry is valued at around US$ 42.5 billion, however, the economic impact of the industry is much higher; in the US alone it was valued at US$ 225.2 billion in 2015. As of 2006, the number of people involved in the coffee supply chain from cultivation and management to the final product is around 500 million. Around 25 million small-scale family farmers across the coffee producing countries of Latin America, Africa and Asia contribute 80% of the world’s coffee; Brazil and Vietnam are the two largest coffee-producing countries in the world, followed by other Latin American and African countries, with India being the 7th largest coffee producer in the world.
The global coffee market is complex and highly interconnected, with coffee supply (imports and exports) and pricing being regulated by the International Coffee Agreements. The Agreements helped promote coffee consumption and demand while strengthening the economy of coffee-producing nations in Latin America and Africa.
However, with a lack of consensus in negotiations by the International Coffee Organisation (ICO), dismantling of pricing regulations, market fluctuations and exploitation by roasters and retailers in the early 1990s, coffee prices fell to their lowest levels by 2001 (reaching less than a third of their 1960 levels). This fall in pricing was also influenced by a 1400% increase in Vietnam’s coffee production in the 1990s, making it the largest Robusta producer in the world. The fall in prices in 2001 impacted over 25 million households across Latin America, Asia and Africa, the majority of whom were small-scale farmers.
A climate-sensitive crop
Globally, as of 2015, for every pound of coffee sold (retail), the farmer received only 0.7 cents, while the distributor received 159 cents. With falling coffee prices, increasing costs of production (including labour wages), changing climatic patterns, and the low profitability for producers, coffee production, especially for the small farmers is becoming increasingly unprofitable. Mr Madhu Bopanna, a coffee plantation consultant in Kodagu, India, has revealed that the dependence on coffee as a source of livelihood is slowly being replaced due to multiple instabilities: reduced prices in the global market for coffee due to an increase in global coffee production; climate variability; an increase in diseases and pests; reduced soil moisture levels and reduced water availability. In Kodagu, which produces more than 50% of India’s coffee, coffee is slowly becoming the secondary source of income, while pepper and timber have taken centre-stage.
A recent study has found that 60% of all wild coffee species are facing extinction, making the plant group one of the most threatened in the world. This is of significance to coffee cultivation as Arabica and Robusta, the two main coffee species forming 100% of the coffee market, have very low levels of domestication, i.e., their variance from the wild species is minimal. Impacts based on climate change projections, especially drought and changing rainfall patterns, combined with other anthropogenic factors causing environmental degradation, contribute to the high level of extinction risk, threatening agricultural production.
Wild coffee species are largely forest-dwelling and have narrow climatic envelopes (climatic envelope refers to the climate within which the species currently lives, i.e., the specific rainfall and temperature patterns). They have low adaptive capacity to changing environmental factors.
With the majority of coffee plantations belonging to smallholders, the sensitivity of ecological balance, plantation management, wealth distribution and the maintenance of rural lifestyles becomes increasingly difficult. Variations in temperatures up to ±5°C result in changes in humidity, dry periods, variations in rainfall, wind shears, advection, wind stress, and cloud cover all leading to the depression of coffee yield and loss of quality. The frequency of droughts in coffee-growing areas has increased globally and is considered to be one of the highest environmental stressors in coffee production. Marginal areas without irrigation may experience reductions in yield of up to 80% during dry years.
A history of coffee production in India
Coffee has been produced in India for over 3 centuries, traditionally in the states of Tamil Nadu, Kerala and Karnataka, with Karnataka accounting for more than 70% of the country’s coffee production. The coffee sector in India has over 300,000 holdings (2016-17) with around 659,865 people forming the labour pool (based on the average number of casual and permanent labour employed). Within Karnataka, the Kodagu district (Coorg) is the largest coffee-producing district, with more than a 50% share of total coffee produced.
The ecology of the coffee agroforestry systems of Coorg has traditionally provided climate resilience to the hill communities, economic sustenance (making it one of the wealthiest districts of India), as well as water flow to the Cauvery river. The fluctuating rainfall patterns with their high impact on coffee production have resulted in a move towards irrigation, which has replaced the traditional rain-fed agroforestry ecosystem in order to sustain coffee production and ensure a sustained income to coffee farmers.
Reports from the Coffee Board of India (CBI) indicate a rainfall deficit of 19% between 2015-2016, resulting in production deficits of up to 25%. The length of the rainy season has seen a decrease of 14 days over the last 35 years, along with strong fluctuations in annual rainfall. While this has directly impacted coffee production and its output, it has also caused a 31% deficit in the Krishna Raja Sagara dam reservoir (built across the Cauvery river), downstream of Kodagu. In 2019 again, the district witnessed severe drought in May followed by spells of intense rainfall in July and August leading to destructive flooding. The impacts of the drought and flood on coffee plantations in 2019 are yet to be estimated.
Climate impacts on coffee productivity
According to Christian Bunn’s Modeling the climate change impacts on global coffee production, the total area under coffee production is expected to double from 2000 levels by 2050. At the same time, total production is projected to fall by at least 20% in all GCM scenarios. Between 1977 and 1997, the district of Kodagu lost up to 30% of its forest cover and doubled its area under coffee cultivation. The productivity of coffee in Kodagu fell from 3,596 kg/ha. in 2014-15 (for Arabica and Robusta) to 1,174 kg/ha. in 2016-2017, while the area under coffee production in Kodagu increased from 106,527 ha. in 2015-16 to 107,089 ha. in 2016-17.
The declining productivity has been attributed to climatic variations, an increase in diseases and pests such as the white stem borer which destroys Arabica crops, lower returns on investments (due to current price trends in the global coffee market) and the shift from traditional agroforestry plantations to irrigation systems.
Looking towards adaptation options
Most large planters have started taking definitive steps to reduce their vulnerability to unstable rainfall patterns by establishing irrigation systems and rainwater harvesting, and using technology. For instance, Mr Bopanna has begun the use of Hydrogel, a gel-based humectant that can retain up to 300 times its original size in water. This gel is mixed into the soil base of every individual coffee plant to make up for the loss in soil moisture due to rising temperatures and changing rainfall trends.
While large plantation owners can invest in individual adaptive systems, small planters are unable to afford these technologies and are therefore unable to cope with the impacts of climate variability. They are dependent on the policies and schemes of the Coffee Board. The Coffee Board of India (CBI) has taken numerous steps to address planters’ concerns and climate change challenges. However, a majority of its plans are centred around providing development support, subsidies, insurance and extension services.
Policy actions focused on adaptation are
required to restore the ecological balance of the coffee agroforestry system
and build its resilience to climate change. Investing in local dialogue and
capacity building with planters across the state and aggregating the wealth of
experience and data collected by each planter are necessary first steps towards
developing an adaptation strategy for the sensitive region and its economy.