CoffeeIndonesia

Making coffee more sustainable, from bean to cup

The Trade Hub is investigating how coffee production and trade impacts people and the environment, and how it can be made more sustainable. On International Coffee Day, we celebrate one of the world’s most popular beverages, but more importantly, appreciate the millions of people who work to produce it. This year’s theme aims to highlight the struggle that coffee farmers face to earn a fair wage. 

According to a popular legend, coffee was discovered by a goat farmer who noticed his goats full of energy after eating cherries from a coffee tree. Whether the goats’ role in the discovery is fact or fiction is unknown, but we do know that coffee originates from Kaffa, a region in Ethiopia.

Over time, coffee has transformed into a booming industry worth an estimated $81 billion, with around 2.25 billion cups drunk every day around the world. Most coffee drinkers are probably unaware of the complex supply chain from coffee seed to cup, or of the social and environmental damage it can cause.  

The process of making coffee, from seed to cup

Social impacts

Coffee is one of the most valuable agricultural commodities with global exports in 2018 estimated to be worth US$31.1 billion. Producer countries rely on this income for infrastructure, social services, and employment for 25 million smallholder farmers.

Despite being an extremely profitable industry, the average farmer struggles to earn a reliable living and earns just £1.37 per day. Being a coffee farmer is a long term commitment as coffee trees can live for 20 to 30 years, with seeds only ready to pick five years after planting. The market is prone to ‘boom and bust’ cycles. During boom cycles, farmers often plant more trees but if supply exceeds demand they are left with too much product. During these periods, farmers’ incomes fall below the cost of production and they struggle to afford healthcare, education, housing and food.

Changes in the environment can also make coffee farming unpredictable. Coffee is extremely vulnerable to increased drought, changes in rainfall, heatwaves and pest outbreaks, which impacts yield productivity and increases production costs.

These hardships that coffee farmers endure make it an unappealing future for young people, many of who are opting to leave their family farm to work in cities, potentially threatening future global food security.   

Environmental impacts

Agriculture is a major driver of deforestation around the globe. Coffee production currently occurs on 10.5 million hectares of land, but this could double by 2050 due to increasing coffee demand. Further deforestation could be devastating, as forests are home to 80% of the world’s terrestrial species.

Shade-grown coffee is the traditional method of coffee production and involves planting crops in the shadow of forest canopy. Shaded coffee plantations create a mosaic of connected forest fragments which provide corridors for birds and insects. The presence of trees and the species that live in them provide nature benefits to people. Pest control from birds can save between 23 and 65 pounds of coffee per hectare each year.

Despite these benefits, in the 1970s a hybrid coffee plant was developed which produces more coffee beans but grows best in direct sunlight. Farmers were tempted by the prospect of increased yields and many cut down their trees. Although this method is more profitable, it led to reduced wildlife and greater need for pesticides and fertilisers.

What is the Trade Hub doing?

A key focus of the Trade Hub is on coffee production in Indonesia. Indonesia is a major producer of coffee with around 1.78 million smallholder farmers involved in the sector, yet the majority of exportation is controlled by large trading companies. Smallholders are considered ‘vulnerable’ in the supply chain, and many experience unstable income and limited access to equipment and financial capital.

Our main research sites in Indonesia are in the Aceh Province and southern part of Sumatra, which surrounds Bukit Barisan Selatan National Park. The national park is a UNESCO Tropical Heritage site and home to the Sumatran elephant, rhino, tiger and sun bear. The park is at risk from deforestation, the main driver of which is agricultural expansion to grow coffee.

The Trade Hub is working to ensure that coffee production can contribute to Indonesia’s economy whilst also reducing negative impacts to forests and local communities. To achieve this, we will:

  • Undertake a national assessment of forest intactness to identify priority landscapes at risk of deforestation.
  • Investigate how the coffee supply chain impacts people and the environment, and how it can be made more transparent.
  • Engage with government and businesses to encourage that sustainability is considered in coffee production and trade.
  • Inform financial regulatory authorities on how to make sustainable investment decisions in coffee trade.
  • Provide business advice for sustainable coffee production to smallholder farmers, and identify barriers and opportunities to obtaining sustainability certifications.

 For more information on our work with commodities read our Agricultural Goods page, or for more country level information visit our Indonesia page.


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