God Save the Bean!

Climate change is threatening coffee crops to the point that enjoying a cup of coffee could become a luxury in few years. Will major coffee producer Illy be able to save the bean?

A brewing storm

As coffee increasingly becomes an irreplaceable part of our lives and global demand is at its record high, coffee production is stagnating.[1] The reason? Climate change.

Climate change is projected to halve the land suitable for coffee production by 2050, and to cause the extinction of wild coffee by 2080.[2] Temperature will be too high for coffee plants to grow, drought will kill them, and excessive rainfall will facilitate the proliferation of the fungus responsible for the number one coffee disease worldwide, the so called “coffee rust.”[3] These effects will be especially challenging to mitigate as approximately 70 percent of all cultivated coffee around the world consists of only one variety, the most sensitive to climate change and diseases: Arabica[2].

The impact on the entire coffee supply chain will be consistent: customers will face supply shortages and price increase, while many coffee producers will be pushed out of the market. Most importantly, climate change is expected to highly impact over 120 million people spread around more than 70 countries who today rely on the coffee value chain for their livelihoods.[2]

In this scenario, Illy, a major Italian coffee producer overseeing the entire supply chain from the fields through to the finished product, has recognized the problem and is willing to act on it. “We predict that we will need twice as much as coffee at least – more probably three times as much – by the end of the century, with less than 50 percent of the land available”, said Andrea Illy, the company CEO, at the 2016 World Economic Forum.[4]

 

An Italian approach to tackling climate change in the coffee industry

Illy is reducing its footprint from the plantations through to our cup of coffee as part of “Planet20”, its carbon footprint project.[5] Illy’s goal is to develop a system that can be shared by all coffee producers to neutralize the climate impact of the industry. It is based on four key pillars:

  • Responsible supply chain processes: Illy monitors not only its suppliers, but also its suppliers’ suppliers and requires them to comply with strict standards, concerning soil utilization, water usage, and waste management.[6]
  • Environmentally sound cultivation practices: Illy works with local farmers to implement best practices to reduce environmental impact, e.g. minimizing water usage.[5]
  • Ultra-low emission facilities: the electricity used in the Italian HQ and roasting facility comes entirely from renewable sources, the heat produced during roasting is used to warm the facility, and a purification chamber is used to minimize the amount of coffee dust released into the atmosphere.[5]
  • Reduced packaging carbon footprint: Illy has launched a new capsules packaging and a new ground coffee soft refill-pack, both using less material than the traditional packages. [5]

When it comes to adaptation strategies, Illy’s initiatives focus on:

  • New resistant cultivars: Illy has partnered with Lavazza, its main Italian competitor, and some Italian Universities to sequence for the first time the Arabica genome.[6] This is the first step towards developing new cultivars that are more resistant to the effects of climate change.
  • Alert system to detect and prevent the diffusion of the “coffee rust”: Illy is partnering with CIRAD, a public research institution specializing in agricultural research, to tackle the disease in Central America.[6]
  • Migrate production areas: Illy is aware of the necessity to relocate part of the production to escape increasingly warm climates.
  • Global Arabica Plan”: Illy’s top management envisions for the future of the coffee industry a public-private partnership for fund raising, knowledge transfer and coordination, and has presented this project at the International Coffee Organization.[7]

 

Opportunities and challenges lying ahead

Going forward, Illy could raise consumers’ awareness on the topic and give higher visibility of its sustainability strategy to the final customer through ad hoc campaigns. For example, Illy could incentivize consumers on using refills and actively collect used packages for recycling purposes.

Another possible initiative would be to increase the use of the Robusta coffee variety, which is more resilient than Arabica towards changing weather conditions and would therefore guarantee a higher coffee supply at least in the short term, while Illy research efforts focus on developing a more resistant variety of Arabica.

So far, Illy has been playing a leading role in introducing sustainable innovations in the coffee industry and in being an advocate for a collaborative approach in tackling climate change. But some crucial issues remain unsolved.

How to preserve volume production and at the same time safeguard the well-being of the local communities? With the increasing pressure of migrating production away from current lands, it is uncertain how small coffee farmers will be preserved. And finally, will this expansion towards more favorable lands come at the expense of tropical forests, hence accelerating global warming?

(Words: 783)

References:

[1] United States Department of Agriculture, Foreign Agricultural Service. “Coffee: World Markets and Trade.” June 2017. https://apps.fas.usda.gov/psdonline/circulars/coffee.pdf

[2] The climate Institute. “A Brewing Storm: The climate change risks to coffee.” September 2016. http://fairtrade.com.au/~/media/fairtrade%20australasia/files/resources%20for%20pages%20-%20reports%20standards%20and%20policies/tci_a_brewing_storm_final_24082016_web.pdf

[3] The American Phytopathological Society. “Plant Disease Lessons”. https://www.apsnet.org/edcenter/intropp/lessons/fungi/basidiomycetes/pages/coffeerust.aspx, accessed November 2017.

[4] Andrea Illy, interviewed by Anmar Frangoul (CNBC) at the 2016 World Economic Forum in Davos. “Climate change grinding down coffee: Illy CEO.” January 22, 2016. https://www.cnbc.com/2016/01/22/climate-change-affecting-coffee-illy-ceo.html

[5] Illy. “Planet20.” http://www.illy.com/wps/wcm/connect/en/landing_pages/planet20/planet20, accessed November 2017.

[6] Illy. “Illy Value Report.” 2016. http://valuereport.illy.com/pdf/BILANCIO_illy_ECONOMICO.pdf

[7] International Coffee Organization. “Documents.” 2016. http://www.ico.org/documents/cy2016-17/Presentations/pscb-global-arabica-plan-illy.pdf

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7 thoughts on “God Save the Bean!

  1. I truly enjoyed reading your article!
    I loved the fact that you brought a wide perspective and thought about the consequences along the entire supply chain – both consumer and people who rely on coffee for their livelihoods. I also loved your personal Italian point of view 🙂
    This topic remained me a lot our IKEA case. I do agree that Illy must raise consumers’ awareness on the topic and give higher visibility of its sustainability strategy. I think that doing so might bring individuals and other players in the private sector to seek for solutions.
    Two questions that I wondered about were how will eventually technology play a part in the solution, and will we see a new and surprising substitutes for coffee?

  2. Great post Erica!

    I wonder how we reconcile Illy’s response to climate change with the facts on the ground, as presented in your well-researched article. For instance, these two statements make me concerned for Illy:
    -Climate change is projected to halve the land suitable for coffee production by 2050, and to cause the extinction of wild coffee by 2080.
    -“We predict that we will need twice as much as coffee at least – more probably three times as much – by the end of the century, with less than 50 percent of the land available”, said Andrea Illy, the company CEO, at the 2016 World Economic Forum

    As I interpret it, we need coffee yields to go up 4x to 6x, but in fact coffee yields are likely to go down to zero. I’m not sure how Illy plans to reconcile this.

    Also – I wonder, again regarding the article warning of the extinction of the coffee plant, why can’t coffee production be moved to latitudes further from the equator as the world warms? E.g. coffee is currently grown between the latitudes of 25N and 30S (the “bean belt”) [1]. As the world warms, shouldn’t less equatorial latitudes that were formerly too cold for coffee production come into the sweet spot? E.g. shouldn’t we expect the bean belt to bifurcate, rather than disappear? Not sure there’s a good answer, but I’d love to hear your perspective.

    [1] http://www.ncausa.org/About-Coffee/Coffee-Around-the-World

  3. Erica,

    You do a great job connecting the larger problems that climate change will bring to the coffee industry: incentivized, continued deforestation; the degradation of farmers’ livelihoods as coffee-arable locations shift. I find myself reflecting on whether the rush to continue coffee production will really result in deforestation. After all, the coffee bean / tree demands shade – in fact, rain forest filled with biodiversity. Nevertheless, you make the case strongly and convincingly that the risk of disrupted coffee production on account of climate change will have much greater ramifications than just on our palettes or wallets.

    Reading the article, I remain unconvinced that coffee bean yield will halve. As climate changes, coffee bean production will shift to new lands – and slowly. This will be expensive for existing companies, as they will need to secure new assets. But the shift will replace, not reduce, the lands with new lands on which coffee is produced. Illy is mitigating immediate climate change risk admirably: working with suppliers and working to engineer new strains of coffee beans. For long-term, moonshot type stuff, I wonder what role they see for vertical farming or lab engineering to meet increasing demand of the coffee bean.

  4. Erica – coffee is a huge part of my life, and fundamental to Aussie culture, as we consider ourselves coffee snobs. Your post was enlightening as I genuinely didn’t realize that climate change was contributing to diseases which also reduced the supply of coffee. Similar to the impact of climate change on the wine industry, however, I do wonder if other parts of the world will acclimatize to growing coffee beans and help somewhat mitigate the supply impact – it would be interesting to see if Illy dedicates any resources to this exploration. In the meantime, I think Illy’s long term initiatives are interesting, but I wonder what the cost associated with a genetically modified bean will be, and how these new methods, coupled with decreasing supply, will impact prices.

  5. Erica, thank you for the buzz-worthy article! As a coffee drinker myself, this article pushed me to think about the impact my coffee drinking habit has on the climate and visa versa. It is great that Illy is focused on changing the coffee industry through responsible supply chain processes, environmentally friendly cultivation, low emissions facilities and packaging. I agree with you that marketing should drive more attention to these practices and that the company can use more temperature-resistant beans to address rising temperatures.

    The two big questions I have for leading coffee companies are:

    1) Given the advent of pod technology in coffee consumption (e.g. Nespresso, Keurig), can we change consumer habit away from using these wasteful products? Can Illy market better ways to consume coffee that have less packaging?

    2) Given that coffee is often produced in locations (e.g. South America) that it is not consumed, how can we bring production closer to the consumer so we spend less money and reduce environmental impact of shipping coffee?

    While reading your article, I wonder if Illy could take a more prominent role in leading those two issues and set a new status quo for the coffee industry as a whole.

  6. Fascinating post! As a coffee drinker, this hits close to home. I find it interesting that Illy is partnering with its competitor Lavazza along with Italian universities to sequence the Arabica genome – it illustrates how fundamental this issue is to the whole industry. I agree with the long term approach of developing new cultivars that combine the hardiness of Robusta with the taste of Arabica. It seems like this approach may have the added benefit of introducing greater genetic diversity from wild species into commercialized crops, which suffer from being “in-bred.”[1] Justin Moat, head of spatial analysis at the UK’s Royal Botanic Gardens, Kew, said that: “Wild species have much greater genetic diversity – anything happening the wild populations is usually amplified in commercial varieties where the genetic diversity is so much less.”[2] As a result, the plants can be highly susceptible to disease.[3] Thus, this research and preservation of genetic diversity should help tackle a number of issues raised by climate change, from disease resistance to the resilience of the plant to varying environmental conditions.

    [1] Julian Siddle and Vibeke Venema, “Saving Coffee from Extinction,” BBC, May 24, 2015, http://www.bbc.com/news/magazine-32736366, accessed December 2017.
    [2] Ibid.
    [3] Ibid.

  7. I’m struck by your account of Illy’s efforts to address head-on what is fundamentally an industry-wide issue. While there are aspects of Illy’s “Planet20” plan that represent valiant efforts by a single firm to mitigate climate change, its the company’s “adaptation strategies” that I find both most compelling (from a potential impact standpoint) and most problematic (from the individual firm’s perspective). For example, investments in genetic alternatives to the Arabica bean have potentially immense positive externalities. If such projects are successful, the industry as a whole stands to benefit. While Illy invests alone today, I would imagine that as more coffee firms start to recognize the enormous threats that climate change poses (and the enormous costs evolved in successfully adapting), there will be more joint-efforts around adaptation efforts. While this will be a positive development, I worry about the financial sustainability (and feasibility) of a single firm taking on such enormous industry-wide priorities without dedicated and well-resourced allies that share similar incentives.

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