Juan, the girl and the beetle: How humanity may run out of coffee

Many people, including myself, would not be able to start the day without a cup of coffee. Well, there may be some bad news for us,

 

Many people, including myself, would not be able to start the day without a cup of coffee. Well, there may be some bad news for us. Unfortunately, world’s supply of coffee may not be able to satisfy its demand in the future. The reasons behind it: industry structure and climate change. Using the Colombian Coffee sector – one of the worldwide most recognized coffee industries – as an example, I will illustrate the industry composition, describe the impact of climate change on the sector, and explore potential solutions to the problem.

As I said that industry structure is a part of the problem, let’s start with some industry basics. Simplifying its chain [1], there are six important actors in Colombia’s coffee sector:

  1. Juan, the coffee grower*. One of the 500.000 small producers, owns less than 6 acres [2].  Juan’s main challenges are coping with plagues, unpredictable weather, lack of infrastructure and very low individual negotiation power.
  2. Distributors: Consolidates production of every Juan, test quality and send for processing. There are also input distributors selling seeds and other inputs to Juan.
  3. Processors (thresh, grind, toast): Only Juan’s good quality coffee is processed
  4. Government: Ensures proper conditions for Juan to go to the market (e.g., infrastructure) and regulates quality and safety of Juan’s product.
  5. Research organizations: Invest in creating new kinds of seeds and processes to improve Juan’s productivity. Colombia has strong research centers in coffee and agriculture (CIAT and Cenicafé).
  6. Coffee growers’ association: Defends Juan’s interests, supports his commercial efforts and shares best practices [3]. The Colombian Coffee Growers Federation (FNC) is one of the most important organizations in Colombia.

One of the main challenges of the industry is to implement at scale. Recently, the industry had to deal with a decrease in production due to the excess in precipitation, producing 32% less coffee in 2009 than in 2008, a downturn that continued until 2013 [4]. The FNC knew the root cause of the problem: ~80% of the cultivated land had not fungus resistant trees to respond to extreme rainy seasons (called “La Niña” – “The Girl”). Easy: change the trees, change the seeds, right? Well, it took ~5 years to do it, and the reason was that every Juan had no scale nor financial resources to invest in technology, nor training on the new seeds. Significant government and industry aid was required. The challenge is coordination between every Juan in Colombia, “you have to make them work like an orchestra”, said Luis Samper, former CMO of FNC [5].

Climate change imposes a big risk for Juan in this context. By 2050, Colombia’s temperature will increase 2.5 °C and weather variability will increase substantially (between 3-5% in 64% of the coffee cultivated lands) [6], having more extreme episodes of “La Niña”. This poses a challenging scenario for Juan, as he will need to deal with:

  1. The beetle: With increasing temperature levels, there is a risk of having a devastating plague of a Beetle called Coffee Berry Borer in Colombia. [7]
  2. The girl: Have more and more extreme La Niña seasons. Excess of humidity and less sunshine will contribute to more fungus crisis in the future. [8]
  3. Changes in land: Deal with variations in the lands that are cultivable due to increasing in temperature and lack of access to water. It is estimated that an increase in 1°C will require to move the plantations by 167 meters to maintain levels of productivity and quality. [9]

A lot of thought has been put into how to adapt to climate change in agriculture, both in Colombia and internationally. These are four of the most accepted adaptation measures suggested:

  1. Change part of the process using “Climate-Smart Agriculture”: Many suggestions in this front, one of the most common being implementing a Coffee – Banana Intercropping to make both crops more resilient. [9]
  2. Invest in plague resistant varieties of coffee: Just as Colombia did it in 2009-2013, continue developing plague resistant varieties that could deal with fungus and beetles. The challenge will be to adapt very quickly to new mutating plagues. [6]
  3. Invest in heat resistant varieties of coffee: Let’s face it, an orchestra of Juans will not be able to move plantations every time temperature increases. The only remaining option is to find coffee varieties that are heat resistant. [6]
  4. Have an insurance policy at scale for Juan: Create a financial infrastructure to support Juan survive to extreme weather seasons. [6]

The problem is that climate change issues, combined with an increase in demand (population expected to reach 9.7 bn by 2050) [11] and incentives to use agriculture for biofuel-production, may require Juan to apply these solutions, and more, simultaneously. Will the orchestra be able to adapt together? Sounds like a challenging symphony to play.

Word Count: 799

[1] Garcia Caceres, et al. “Caracterización de las cadenas de valor y abastecimiento del sector agroindustrial del café (2006). Cuad. Adm. Bogotá, Colombia.

[2] Leonardo Pinzon, “Global Agricultural Information Network: Colombia”. (June, 2010). USDA Foreign Agricultural Service. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Coffee%20Annual_Bogota_Colombia_6-10-2010.pdf. Accessed November 2016

[3] Colombian Coffee Growers Federation (FNC) Web Page. About us. https://www.federaciondecafeteros.org/particulares/es/quienes_somos. Accessed November 2016

[4] BMI Research. A Fitch Group Company. “Colombia Agribusiness Report Q1 2016” (November,2015).

[5] TedX Talks. “La Orquesta Cafetera: Luis Fernando Samper at TEDx Guatavita”. (February, 2013). http://tedxtalks.ted.com/video/La-Orquesta-Cafetera-Luis-Fer-3. Accessed November 2016

[6] Charlotte Lau et al. “Agricultura Colombiana: Adaptación al Cambio Climático”. (February, 2013). CIAT: International Center for Tropical Agriculture.

[7] Jaramillo J, Chabi-Olaye A, Kamonjo C, Jaramillo A, Vega FE, et al. (2009) Thermal Tolerance of the Coffee Berry Borer Hypothenemus hampei: Predictions of Climate Change Impact on a Tropical Insect Pest. PLoS ONE 4(8): e6487. doi:10.1371/journal.pone.0006487

[8] Colombian Coffee Growers Federation (FNC). “Sostenibilidad en Accion 2013”.

[9] Jaramillo A (2005) “Andean climate and coffee in Colombia”. Colombian National Federation of Coffee Growers. Centro Nacional de Investigaciones de Cafe´ – Cenicafe´. Colombia: Chinchina´, 192p. (in Spanish).]

[10] Pieten van asten et al. “Coffee-Banana Intercropping: Implementation guidance for policymakers and investors”. Global Alliance for Climate-Smart Agriculture – FAO. https://cgspace.cgiar.org/bitstream/handle/10568/69017/CCAFSpbCoffee-Banana.pdf Accessed, November, 2016

[11] United Nations. Department of Economic and Social Affairs. “World population projected to reach 9.7 billion by 2050”. http://www.un.org/en/development/desa/news/population/2015-report.html Accessed November 2016

*Calling the small grower Juan in honor of “Juan Valdez” the symbol of the FNC and the coffee growers and one of Colombia’s most recognized brands.

**Sad Cup of Coffee picture taken from blog post posted on September   22, 2015 by lizzyyarwood. https://orfailingthatfood.wordpress.com/2015/09/22/the-coffee-shop-crisis/, Accessed November 2016

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Student comments on Juan, the girl and the beetle: How humanity may run out of coffee

  1. I thought this was a very interesting article on the impacts of climate change. After reading, I’m left with a few questions regarding the topic:
    -Is “Juan”/the Colombian Coffee Sector a significant portion of the overall coffee supply, globally?
    -In the third challenging scenario Juan has to deal with, what does it mean to move the plantations 167 meters?

    I find your potential solutions very interesting. The second and third option remind me of genetically modified organism (GMO) options that are typically used in harsher climates to enable crop growth. Both heat and insect resistance are being built into the genetic makeup of plants to allow for them to thrive. However, this raises the question of whether artificially changing the genetic makeup of plants or animals has significant, potentially unknown, side effects. Have you considered the legality in Colombia of the usage of GMOs? For more information on GMOs, I’ve provided a link: https://factsaboutgmos.org/.

    The idea of an “insurance policy” for Juan is also an interesting concept. In the US, farmers are able to buy weather derivatives to insure against the risk of an extremely dry or wet season. A derivative is defined as: a derivative is a contract between two parties where the value of the contract is linked to the price of another financial instrument or by a specified event or condition. In this case, it is linked to the weather. The farmer can invest some amount, call it $8. If the farmer can’t plant due to rain (for example), then the contract will pay out an amount based on the initial risk. If there was a low risk the farmer couldn’t plant due to rain, the contract will pay out more, much like gambling. Should the farmer be able to plant, then the contract does not pay the farmer and the opposite party collects the initial investment ($8). This helps to insulate the farmer against losses. For more info, I’ve also provided a link: http://farmweeknow.com/story-weather-derivatives-can-help-farmers-reduce-risk-0-36845

    Overall, is there a way for Juan to begin to protect himself from weather impacts today rather than waiting for a crisis to happen? I agree that changes will need to happen but I believe that steps can be taken today to begin that process rather than your argument for a simultaneous strategy. GMO crops and weather derivatives can be implemented today.

  2. S,

    Talk about a wake up call! If we want our coffee in the morning we had better start paying attention to climate change.

    From reading your post it really seems that there are only two options if we want to continue enjoying a hot cup o’ Joe in the mornings
    1) Create better coffee plants (GMO, pest resistant, etc.)
    2) Grow coffee in new regions as allowed by climate change

    Do you think option 2 is feasible at all? Do you think that there is previous land that wasn’t able to grow coffee that will be able to now that the earth is heating up? One problem with this is that Juan will still need to grow something to support himself. Perhaps there are other crops that he could grow in the warmer climate?

    Thanks for this well thought out post. A future without coffee isn’t one I want to wake up to.

    -JP

  3. S,

    I too would not be able to start the day without a cup of coffee, so like JP above, I thought this post was a great wake up call to start paying attention to climate change!

    I appreciated reading the four options that you lay out in terms of adaptation measures. On a broader level – especially with such large-scale players in the coffee industry (i.e., Starbucks, Dunkin Donuts, etc.) – it seems as though there is a significant amount of capital with a very large interest in making sure a world without coffee never becomes a reality.

    How does this interest align these companies/the industry as a whole with even greater goals of curbing climate change through global emissions reduction and other initiatives? Do you think that these types of initiatives could make a dent on climate change and significantly impact each stage of the coffee grower supply chain all the way through Juan?

  4. Bad news for us indeed, as I am one of those who would not be able to start a day without a cup of coffee!

    Many seems the hurdles that Juan, as the other 500.000 small coffee producers, will have to cope with: unpredictable and increasingly hostile weather conditions, increased risk of suffering from a devastating plague, lack of infrastructure and very low individual negotiation power.
    Definitely too big for Juan are the investments needed to face those hurdles, for example as you suggested investments in plague or heat resistant varieties of coffee.
    Yes, Juan could subscribe an insurance policy and survive a few more years, but will this action allow me to still have my cup of coffee in the morning? Will an insurance policy keep the Colombian coffee business alive?

    I agree with your conclusion that Juan himself will not be able to face these challenges and the only way for the “Juans” to survive is to operate as an orchestra and play a symphony together. Harder to do it than to say it, though.
    How can the Colombian Coffee Growers Federation (FNC) help them to achieve this result? Which rules and infrastructures need to be put in place to allow them to operate as an orchestra? Is there any large player in the industry which can consolidate Juan businesses and help them with the initial R&D investments required to maintain the Colombian coffee business alive?

    It would be great to have more thoughts from you on the topic, thanks for starting such an interesting discussion!

  5. S, whilst bad news, this almost sounds like the solution to all our problems! You see, if the world has less coffee, people don’t get out of bed nor do things as quickly, so people stop consuming things and destroying our planet, leading to reduced climate change – maybe??
    Or maybe not, given all the artificial caffeine in the market that people end up drinking when there is no coffee (sadly).

    Instead of GM, I also potentially see more farmers swapping from Arabica to Robusta, which has higher yields and is less susceptible to pests. Unfortunately, Robusta doesn’t taste as good as Arabica, and hence, people may need to make some sacrifices there.

    Also, given the obvious economies of scale, I wonder why there hasn’t been market consolidation – or is that happening now and will become a new trend?

  6. Super interesting post! I’m curious to understand more about the structure of this industry, and how it might mimic other agricultural sectors. It seems there is a significant coordination problem – the fact that small scale farmers (e.g., the “Juans”) took 5 years to adapt their crops to a more resistant strand of coffee. Haven’t the wheat and corn industries dealt with this problem? By creating more industrialized farms, and by producing at scale, they can afford to introduce more efficient farming practices, and also invest in GMO seeds that can resist fluctuations in weather (or insects, or other issues). While such commercialization would come at the expense of the small-scale farmer, the consolidation of agriculture in the US has led to increased productivity, and allowed many would-be farmers to move on to other industries.

    (we can have a separate debate about the practices of large scale farmers, and the use of GMO crops)

  7. Really interesting post! What stands out to me most from reading your analysis is that yes, climate change poses a significant challenge to Colombian coffee farmers. However, this challenge is exacerbated by the fact that much of the coffee is produced by smallholder farmers. It would have been helpful to know how much of the country’s production is coming from smallholder farmers. The main challenge here is that any response to the problems created by climate change will be extremely decentralized and possibly ineffective because each farmer will attempt to respond individually. As you point out, one of the keys to remaining a viable coffee producer for Colombia will lie in its ability to organize and educate the smallholder population on how best to respond to these threats. The issue of how best to increase efficiency and responses among smallholder farmers is a big question facing other areas of the world as well. It would be interesting to see if countries in other regions of the world have implemented successful strategies among smallholder farmers which can be exported and implemented in Colombia.

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