54% of adults over the age of 18 in the United States drink coffee every single day.1 Statistically speaking, either you or your best friend are one of those adults. Say you walked into your local Starbucks one blustery Boston morning to find a “sold out” sign. What would you do?
While the scenario above is made up and may suggest the extreme, the strain that coffee producers, retailers, and other partners in the supply chain feel is all too real. The truth is that for the past two seasons, coffee consumption has actually outpaced production.2
Persistent annual increases in average temperature and decreases in average rainfall present challenges in keeping up with demand, as the coffee plant growth and fruiting process is highly sensitive to climate change.3 In addition to lower annual yields, research suggests that the existing lands on which 25 million coffee farmers have built their living are becoming less and less suitable to coffee growth in many regions. Over the next 30 years, climate changes are expected to continually push the “best” regions for coffee into higher altitudes and far east countries.
So what can industry players do to maintain supply for this multi-billion dollar industry? Fight to reduce climate change and protect existing farmlands? Or move to the next viable regions and develop land there? Starbucks, long a leader in both global coffee retail and green supply chain practices, is doing both, aiming to safeguard both itself and coffee players worldwide against changing conditions.
Starbucks has for the past 20 years used its power in the coffee economy to drive toward sustainability. As of 2015, 99% of all Starbucks coffee is verified as “ethically sourced,” measured by social, environmental, and economic standards. Starbucks has established as a co-founder of the Sustainable Coffee Challenge the goal to make coffee the world’s first sustainable agricultural product.
Also in 2015, Starbucks announced its plan to re-purpose a 240 acre Cost Rican farm into a global farming research and development center. In the center, researchers will work to develop additional coffee varietals.4
And in May 2016, Starbucks issued the first ever U.S. “Sustainability Bond.” Starbucks has pledged to use the net proceeds of the $500 million in bonds offered to support its C.A.F.E. (Coffee & Farming Equity) Practice. Through C.A.F.E. and a set of “Farmer Support Centers” worldwide, Starbucks has lent financial and expert support to local farmers in developing and preserving their land and crops.5
While Starbucks is investing heavily in preserving its existing supply base, it has also recognized the need to prepare its future supply (and demand) base: China. For purposes of serving increasing demand alone as coffee popularity grows in line with the growing middle class in China, it made strategic sense for Starbucks to invest in farmland in China’s Yunnan province6. But as temperature increase trends continue and point toward a shrinking of suitable lands in current coffee powerhouses like Brazil, Colombia, Guatamala, Starbucks is wise to start building up suppliers in new regions.
What else can Starbucks, and others, do to reduce the circular degradation that farming and climate change have on each other, and ultimately reduce the risk that the world coffee supply might one day shrink? Developing farmland in regions predicted to become more suitable to coffee growth in the next 30-50 years is sensible, but the capital and time required limit such opportunities to bigger organizations. Mitigation within existing farmers’ cooperatives is, even if short-term, additional step. Development of new farms takes time, so maximizing yield out of challenged farms for as long as they operate is critical.
If external forces impacting climate change don’t slow or reduce soon, mitigation measures may not be enough. Another potential solution to preserve use of current coffee growing regions would be to stabilize the coffee plant further against environmental effects. Can agronomists develop a coffee varietal that grows in warmer temperatures, or requires less rainfall? I don’t know the answer to this question, but I will be watching the coffee industry over the next years and months to see how this story unfolds.
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- Harvard School of Public Health, “Coffee by the Numbers”. https://www.hsph.harvard.edu/news/multimedia-article/facts/, accessed November 2016.
- International Coffee Organization, “Infographics on the Global Coffee Trade”. http://www.ico.org/coffee-trade-statistics-infographics.asp, accessed November 2016.
- Ovalle-Rivera, O., Läderach, P., Bunn, C., Obersteiner, M., & Schroth, G. (2015). Projected shifts in coffea arabica suitability among major global producing regions due to climate change. PLoS One, 10(4).
- Starbucks expands $70 million ethical sourcing program with new global agronomy center. (2013, Mar 19). Business Wire
- Starbucks issues the first U.S. corporate sustainability bond. (2016, May 16). Business Wire
- Starbucks opens first farmer support center in Yunnan, China; strengthening commitment to china farming communities. (2012, Dec 12). Business Wire