SCA Price Crisis Response findings

SCA Price Crisis Response initiative shares its findings

The Specialty Coffee Association (SCA) has published a summary of work by its Price Crisis Response (PCR) Initiative, first commissioned in December 2018.

Aimed at understanding and addressing the price crisis affecting coffee farmers and threatening the supply chain, the project focused on identifying interventions with the most potential for long-term, systemic change, rather than a short-term fix.

Following the price crisis in 2002, the SCA says the coffee industry turned to solutions focused on delivering greater value to consumers or introducing new market segments, but in hindsight, these have had a negligible impact on addressing the problem of stagnant producer income, and that only a tiny proportion of the increased value filters down to growers in the current model.

Identifying unequal value distribution as a key root cause, the PCR summary of work outlines opportunities to work towards a more equitable specialty coffee industry and issued five recommendations focused on shifting the balance of ownership, finance, risk distribution, information access, and governance.

Two main outputs for this initiative are a systems map and specific recommendations to guide the industry towards the initiative’s vision: a specialty coffee sector that distributes value equitably, fosters resilient coffee farming communities that are economically prosperous, and values diverse producers of differentiated coffees.

Systems Map
The specialty coffee sector faces many complex interrelated challenges, and it is clear many of the fundamental systems are entrenching inequity and unsustainable practices.

The work of the PCR Initiative has been informed by systems change thinking and methodologies. A systems approach shifts the focus from individual parts of a system to how the parts are organised, recognising that interactions of the parts are not static, but dynamic and fluid. This approach also acknowledges that change is non-linear and happens at multiple levels — from the niche to landscape level changes — over multiple time scales.

Recommendations
Following the desk research, stakeholder interviews, four industry convenings, learnings from its peer review process, and countless hours of discussion among the group, the PCR summary of work has identified a series of recommendations, selected for their strong potential to foment long-term change in the coffee sector.

Each recommendation encompasses years of work ahead, across multiple projects, organizations, and platforms.

  1. Create more equitable and distributive models of governance (decision-making power) by pursuing new models of governance, resisting the hegemony of buyers, reimagining antitrust policies to protect smallholders, and strengthening producer institutions.
  2. Enable equitable information sharing (access) by promoting and supporting new models and tools for trading practices, improving producers’ access to market information and bargaining power, and developing two-way transparency to support producer-consumer trust.
  3. Pursue equitable risk distribution by redistributing the burden/risk of climate shocks across the value chain, supporting the development of price risk management tools and training directed at growers, and supporting the diversification of options for farmers in non-viable coffee-producing communities.
  4. Produce a collective mindset shift within the specialty sector by interpreting the coffee system as a complex value network rather than a linear supply chain, by defining “specialty coffee” to include sustainability in addition to taste/quality, and supporting education on the creation and sharing of value.
  5. Support equitable distribution of finance and ownership by establishing new pricing norms based on dignified incomes, promoting “share of value” obtained by producers as a key differentiator and selling point, recognizing farmers’ value creation through irreplaceable service of cultivating the material upon which the whole sector depends, and encouraging business models where producers maintain ownership rights to the coffee at all stages of the value chain to ensure producers receive rewards commensurate to the rewards of brand owners.

The report goes in-depth about ways of implementing each recommendation, as well as identifying specific goals, barriers to these goals, and strategies to overcome the barriers.

The SCA says addressing the creation and equitable distribution of value will require challenging the status quo, changing business practices, and reconsidering assumptions – something the SCA as a neutral organisation is willing and able to do credibly – and socialising its conclusions and recommendations.

Read the full report HERE.

For more information, visit sca.coffee/pricecrisis