Jeffrey D Sachs proposes global coffee fund to finance sector sustainability

coffee sector sustainability

Professor Jeffrey D Sachs of Columbia University has proposed the creation of a global coffee fund to co-finance the sustainability of coffee growers at the Second World Coffee Producers Forum (WCPF) in Brazil on 10 July.

This fund, which would be US$10 billion (about $14.3 billion) per year, would be initially fed with US$2.5 billion (about $3.6 billion) in resources from the industry. This would be added to public and private contributions for direct investments in farm for another US$2.5 billion, as well as budget disbursements for the and contributions from donors for the same amount.

Jeffrey says otherwise, it is difficult for many producers to subsist in the absence of support to reinvest in technology and productivity, which would lead to the desertion of more and more farms.

Presenting the results of his study, Economic and policy analysis for improve the income of small coffee producers, which was carried out over a 15 month period, Sachs explained that Brazil and Vietnam, as producers of 50 per cent of coffee in the world with large investments in mechanisation and productivity, have a great weight in determining the international price. Since 1995, Jeffrey says the two countries represent 83 per cent of the increase in world production.

Therefore, if the Brazilian real appreciates, the international price of the grain increases, whereas, if the real devaluates, the price of coffee goes down. At current levels, Jeffrey says prices are only viable for mechanised producers, not for the traditional ones.

Other producing countries, such as those producing soft-washed mountains grown coffees, face limitations including lack of investment in science and technology. This puts them at a disadvantage in the industry.

Jeffrey adds that increasing temperatures due to climate change may lead to lower yields in countries and regions such as Colombia, India, Malaysia, and Central America, which would accentuate the risks of deforestation, poverty and inequality, and co-dependency of the global supply of Vietnam and Brazil.

He concludes that joint action is necessary from all main actors within the coffee industry, in coordination with governments, to invest in the sustainability of the coffee sector.

A total of 25 million families are engaged in coffee cultivation around the world. More than 1500 producer were in attendance at Jeffrey’s WCPF keynote speech.

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