eProd and the Coffee Paradox?
Each day nearly 2.5 billion cups of coffee are consumed. It is one of the most widely traded commodities in the world and millions of people depend directly or indirectly on the production and sale of coffee for their livelihoods. The global market for coffee is characterized by volatile prices and experts on the world coffee market often make reference to the “coffee paradox“. In summary:
- A coffee crisis in producing countries with a trend towards lower prices, declining incomes and profits affecting millions of people in the world’s poorest countries.
- A coffee ‘boom’ in consuming countries with rising sales and profits for coffee retailers and roasters
- A widening gap between producer and consumer prices only partly offset by the influence of producer certification in the coffee industry.
Besides premium prices for certified coffee (e.g Fair Trade, Organic, UTZ), there is another important way for farmers to increase their prices. “Coffee trade is all about predicting yields. The party that is best at this, whether it is the coffee trader, farmer cooperative or hedge fund, will make the best deals. Models have become better at yield forecasting but the information is typically too general for use at farmer cooperative level. An essential step will be to develop accurate and affordable localized crop monitoring and yield forecasting at the coffee farmer cooperative or local coffee trader level. If used in a smart way this can assist to build trust between producers and buyers”, says Lutz Bayerkoehler, former MD ECOM Tanzania.READ MORE