Crisis Brewing:

Climate Change and the Coffee Sector

Ripening Coffee cherries

The Goldilocks Plant

Coffee is in crisis.

Anthropogenic climate change is shrinking the areas suitable for coffee cultivation, reducing crop yields and quality, increasing the prevalence of drought and violent storms, and exacerbating pest problems. These hazards pose an existential threat to coffee production with potentially dire repercussions for the 125 million people in more than sixty countries whose livelihoods depend on the cash crop (“Mission,” n.d.). Coffee is a globally crucial commodity, the second most widely traded after oil, representing a $100 billion industry (Goldschein, 2011).

The U.S. is the world’s largest coffee importer, purchasing nearly 25 million bags[1] in the 2012–2013 growing season (“Imports,” n.d.). Americans drink an estimated 400 million cups of coffee per day, equaling about 20% of global consumption (Short, 2013). Coffee production, a process that occurs entirely outside our borders, is of great importance to the U.S. economy and well being of most Americans. How will climate change impact coffee production and those who rely on its agriculture? What can the International Coffee Organization (ICO) — the main intergovernmental body representing the interests of coffee producing and consuming nations — do to ensure the crop’s abundance? How should coffee farmers adapt their practices in a warming world? And what can industry players and consumers do to help build climate resiliency in the coffee sector?

[1] All references to “bags” refer to 60-kg bags, still the industry’s standard unit of measure.

Native to tropical Africa, the two main coffee cultivars Coffea arabica and Coffea canephora are climate sensitive species. Researchers have dubbed coffee the “Goldilocks plant” because of its environmental sensitivity (Carpenter, 2010). Arabica, which comprises more than 75% of global plantings, thrives between elevations of 1,000–2,000 meters and the less popular canephora, or Robusta, grows between sea level and 700 meters. Arabica trees require year-round temperatures between 15 to 24 degrees centigrade while Robusta prefer hotter climates between 24 and 30 degrees C. The plants do not tolerate temperature fluctuations much beyond these ranges.

Thriving in the cooler highlands, Arabica’s optimal rainfall requirement ranges between 1,500 and 2,000 mm per year, while Robusta needs more water in the hotter lowlands, requiring 2,000 to 3,000 mm of annual rainfall. Coffee is naturally an understory plant; it evolved in the tropical forest’s deep shade and never developed a biological mechanism to reduce water transpiration in times of stress. Exposure to high winds and violent storms is also foreign to the plant’s DNA (Clifford and Willson, 1985). Most modern coffee farmers irrigate their crops to maximize output and improvise windbreaks in the absence of shade trees.

Arabica and Robusta occupy separate ecological niches, giving them distinct qualities, which define their respective roles within the coffee industry. Arabica seeds — commonly referred to as beans — produce an aromatic and acidic drink when processed, roasted, ground, and brewed with hot water. This cup of coffee is what connoisseurs seek and what most consumers drink. Arabica plants have 44 chromosomes — twice as many as Robusta — and deep root systems. Evolving in warmer, damper regions than its highlands cousin, Robusta plants have shallow root systems and their beans contain as much as four times the caffeine content of Arabica’s. Robusta beans produce a bitter brew, unpalatable to human taste buds. Caffeine is a natural pesticide and its heightened concentration makes Robusta plants resistant to pests, including the two most pernicious: Coffee Leaf Rust (Hemileia vastatrix) and the Coffee Berry Borer (Hypothenemus hampei) (“Botanical Aspects,” n.d.).

Robusta is relatively cheap to grow and its coffee sells for around two-thirds the price of Arabica beans (“ICO Daily Indicator Prices,” 2013). Its low cost and high yields make Robusta valuable as a filler for coffee blends and highly-processed, sweetened coffee products. The plant’s resistance to pests and overall vigor has made Robusta a crucial source of genetic material, as Arabica/Robusta hybridization has become a popular adaptation measure for coffee farmers coping with rapid environmental change (“Botanical Aspects,” n.d.).

Coffee cultivation occupies 30 million acres between the Tropics of Cancer and Capricorn throughout the world (“Rainforest Alliance Certified Coffee,” 2013). Brazil has held a dominant lead in production for nearly two centuries, accounting for 28% of global coffee exports in the 2012–2013 season. Vietnam is second on the list followed by Indonesia. Coffee farmers in those nations and in India — the fifth largest producer — grow mostly Robusta, which they sell to large multinational corporate buyers like Nestle and Kraft.

The fourth largest coffee growing nation is Colombia, producing about 8% of the global coffee supply last year. With six of the top ten producing nations, the Americas cultivate two-thirds of the world’s coffee and an even larger share of Arabica plants. Some African nations produce significant quantities of coffee and the commodity represents a monumental proportion of export revenue for these impoverished countries. For example, 59% of Burundi’s export earnings come from coffee. The figure is 33% for Ethiopia — a country of more than 90 million people — 27% for Rwanda, and 18% for Uganda (“World Coffee Trade,” n.d.). For the purposes of this paper, I will focus on coffee producing nations in the Americas and Arabica-growing African countries. My conclusions and recommendations, however, are applicable for coffee producers the world over.

Climate Change and its Impacts

The Intergovernmental Panel on Climate Change (IPCC) concludes in Working Group I’s (WGI) contribution to the Fifth Assessment Report that the global mean surface air temperature will “likely”[2] increase between 0.3 and 0.7 degrees C in the near term — over the next twenty years. The report finds it “more likely than not” that the global mean surface air temperature will increase more than 1 degree C above the 1850–1900 average in the same period. And it is “very likely” that we will see more rapid and intense warming over land than over water. Precipitation will “very likely” increase in some areas of the mid latitudes and decrease in others. Extreme weather will “likely” increase, with more and hotter warm days and nights. Violent storms and heavy precipitation events are both expected to surge in frequency and intensity (“Working Group I,” 2013).

[2] In IPCC parlance “likely” means greater than 66% chance, “more likely than not” means greater than 50% chance, and “very likely” means a greater than 90% chance.

For those of us keeping pace with climate research, the IPCC’s predictions are not shocking and may indeed seem overly conservative. What conclusion’s can we draw from the recent report about climate change in coffee producing regions? First, it will get hotter. Second, precipitation patterns will change, with more heavy downpours and more frequent, intense periods of drought. These are inauspicious prospects for the “Goldilocks” plant. But when will these changes occur? Have they already begun?

Figure 1 shows the projected Time of Emergence (ToE) for significant warming across the globe, derived from 37 Coupled Model Intercomparison Project Phase 5 (CMIP5) climate models under the RCP4.5 scenario. The models indicate that most tropical areas are already experiencing significant local warming. Regions 1 and 3 include the Ethiopian highlands and equatorial South America, respectively — two prominent coffee-growing areas. Most of the climate model iterations find that these regions are already seeing or will experience significant warming this decade (“Working Group I,” 2013).

Figure 1. “Time of Emergence (ToE) of significant local warming derived from 37 CMIP5 models under the RCP4.5 scenario. Warming is quantified as the half-year mean temperature anomaly relative to 1986–2005, and the noise as the standard deviation of half-year mean temperature derived from a control simulation of the relevant model. Central panels show the median time at which the signal-to-noise ratio exceeds a threshold value of 1 for (left) the October to March half year and (right) the April to September half year, using a spatial resolution of 2.5° × 2.5°. Histograms show the distribution of ToE for area averages over the regions indicated obtained from the different CMIP5 models. Full details of the methodology may be found in Hawkins and Sutton (2012).” (“Working Group I,” 2013, pg. 104).
Figure 2. “CMIP5 multi-model annual mean projected changes for the period 2016–2035 relative to 1986–2005 under RCP4.5 for: (a) evaporation (%), (b) evaporation minus precipitation (E-P, mm day–1), (c) total runoff (%), (d) soil moisture in the top 10 cm (%), (e) relative change in specific humidity (%), and (f) absolute change in relative humidity (%). The number of CMIP5 models used is indicated in the upper-right corner of each panel.” (“Working Group I,” 2013, pg. 107).

Figure 2 illustrates projected changes in the freshwater cycle over the next two decades. Climate change is expected to decrease soil moisture in many coffee-producing regions, with some of the most profound water losses occurring in Central and South America (“Working Group I,” 2013). The soil moisture deficit would be disastrous for water-sensitive coffee plants, compounding risks for coffee farmers and the communities who rely on agriculture for their livelihoods.

Recent years have borne out these climatic predictions. In fact, we have seen more dramatic changes sooner than the IPCC’s upper limits forecast. Brazil has experienced intense drought and increased heavy rainfall in the last decade, damaging its coffee crops and reducing yields. “Drought is,” according to DaMatta (2004), “the major environmental stress affecting coffee production.” Coffee yields in areas that lack irrigation may decrease by as much as 80% in dry years (DaMatta & Ramalho, 2006).

Excessive rains also drastically reduce yields, as too much moisture disrupts the coffee plant’s growth regulators, promoting vegetative increase but little flowering (Peasely & Rolfe, 2003). Brazil’s Robusta output dropped 11% in 2013 compared with the previous year, due to drought, while erratic rains damaged the quality of the nation’s Arabica crop (Iqbal, 2013).

Hotter temperatures and intense, irregular rains resulted in a 25% drop in Colombia’s coffee production between 2006 and 2010. Mean temperatures in the mountainous country’s coffee-growing regions have risen nearly 1 degree C in the last 30 years, and ambient temperatures in some higher elevation areas have increased twice as fast. Hotter climes damage coffee quality — the fruit ripen too quickly if the plants fruit at all.

Colombia is the world’s largest producer of high-grade Arabica beans and its crop’s apparent sensitivity to climatic stressors has coffee connoisseurs worried. “It is not too far-fetched,” the Specialty Coffee Association of America (SCAA) cautioned in 2011, “to begin questioning the very existence of specialty coffee” (Rosenthal, 2011). Specialty coffee, in America, signifies coffee receiving at least 80 points out of 100 from SCAA graders, and its popularity has exploded in the last 20 years, now representing half of the U.S. market in terms of value (“Specialty Coffee Facts,” 2012). Coffee growers whose crops are damaged or destroyed lose more than their morning fix. Climate change is forcing farmers to manage additional risk in an already risky enterprise, to take on debt, go hungry, or abandon their way of life for good.

Reports from east Africa are even more troubling. The Royal Botanic Gardens, Kew sponsored Davis et al. (2012) to study climate change’s impacts on indigenous Arabica coffee in Ethiopia — the species’ birthplace and largest African coffee producer. The researchers employed the Hadley Centre Coupled Model, version 3 (HadCM3), to forecast bioclimatic changes in 349 unique localities in Ethiopia’s coffee-growing region. Using three distinct climate scenarios, the study concluded that environmental change would reduce land area suitable for indigenous Arabica by 65% to 99% by the year 2080 (Figure 3).

Davis et al. (2012) warns of the cataclysmic loss of genetic diversity that wild Arabica’s extinction would entail. The scientists conclude that climate change will also greatly reduce cultivated Arabica in Ethiopia, where impoverished farmers do not have the means to irrigate their crops or otherwise adapt to a warming world (Davis, Gole, Baena, & Moat, 2012).

Southwest of Ethiopia in Uganda, high temperatures and unpredictable rains have begun to wreak similar havoc on coffee agriculture and those who depend upon it. Climate change mapping shows that land suitable for Arabica cultivation will diminish drastically, resulting in annual production losses in the tens of millions of US dollars. Ugandan coffee farmers are already reporting longer droughts, erratic rainfall, and the proliferation of pests.

“Without adaptation,” conclude Jassogne, Läderach, & van Asten (2013), “the financial impacts on Uganda’s economy as temperatures rise will mount up; and…large numbers of…poor smallholder farmers…will suffer disproportionate impacts and risk falling further into poverty.” Coffee output has decreased, along with prices, in recent years with negative consequences for the more than two million Ugandans whom the coffee industry directly or indirectly employs (“Saving Ugandan coffee,” 2013). Studies from Rwanda and Burundi report much the same (Hedges, 2012)(Baramburiye, Kyotalimye, Thomas, & Waithaka, 2012).

Figure 3. “Locality analysis overview I. Predicted climate change outcomes for indigenous Arabica localities for the year interval 2000, 2020, 2050 and 2080. Stacked bar-charts based on Table 1. Green=optimal [bioclimatic] localities (68%); yellow=intermediate (suboptimal) [bioclimatic] localities (95%); red = marginal (extreme) [bioclimatic] localities (100%); grey = unsuitable bioclimatic localities.” (Davis, Gole, Baena, & Moat, 2012).

Rust and Pestilence

Southern Mexico and Central America, which produce about 14% of the world’s coffee, face climate scenarios similar to their South American neighbors. These nations will experience significant warming this century, and it is likely that temperature increases are already in effect. Annual precipitation is likely to decrease in most Central American countries, rainfall will become erratic, and violent storms will increase in frequency and severity (Solomon et al., 2007). These environmental changes present a host of problems for farmers in this region. If you speak with any coffee farmer in Central America, however, he will not talk of rising temperatures or unpredictable rains. He will have one problem on his mind: La Roya. Coffee Leaf Rust — La Roya in Spanish — is a fungal disease devastating coffee farms from Mexico to Peru.

Rust’s outbreak has reached epidemic proportions, with the worst incidences in Mexico, Guatemala, Honduras, El Salvador, and Nicaragua. Roya has blighted 25% of Mexico’s 700,000 acres of coffee plants; 70% of Guatemala’s nearly 700,000 acres; 74% of El Salvador’s 375,000 acres; 25% of Honduras’s 700,000 acres; and 37% of Nicaragua’s 300,000 acres. The region’s coffee exports in 2012–2013 have diminished 16% (figure 4) (Josephs, 2013). The contagion has caused $500 million in damages and resulted in the loss of 400,000 jobs. The ICO expects Rust’s economic impact to be more severe next year, with potentially destabilizing effects on the most coffee-dependent nations (“Report on the Ourbreak,” 2013).

Coffee Leaf Rust was first reported in 1869 in Ceylon and by 1890 it had entirely wiped out the island’s coffee industry (Waller, Bigger, & Hillocks, 2007). The disease, which afflicts coffee’s leaves, starving the plants and their fruit, reached Africa not long after its discovery in Ceylon but did not appear in the Americas until 1976. The current outbreak is by far Roya’s worst occurrence in the region and the epidemic’s causes are familiar: excessive heat, high winds, and heavy rains (“Report on the Ourbreak,” 2013). Farmer’s treat their crops with fungicides in an attempt to combat Rust, but once a plant is infected little can be done to save it. Aida Batlle, a world-renowned coffee grower and activist from El Salvador, sprayed her farms with fungicides several times this year but the pest resisted, destroying most of her crops. “It was just so aggressive,” Batlle said, describing La Roya (Josephs, 2013).

Figure 4. Coffee output in Central American nations. (Josephs, 2013).

The recent devastation caused by La Roya’s outbreak may overshadow an even more most destructive pest: the Coffee Berry Borer. The Berry Borer is an insect that spends most of its life inside the coffee fruit, making it very difficult to manage. Adult females bore holes into coffee berries and deposit their eggs. The larvae have a rare ability to detoxify caffeine and feed on the fruit and seeds, destroying the coffee beans (Vega, Infante, Castillo, & Jaramillo, 2009). The insect pest is a native of central Africa and spread only recently, beginning in the 1980s, to every coffee-producing region in the world. The Berry Borer now causes $500 million in damages every year (Jaramillo, Chapman, Vega, & Harwood, 2010).

Like all insects, the Borer’s development is largely dependent on temperature. The average minimum temperature the pest requires to reproduce is 20 degrees C. The Ethiopian highlands hit this minimum for the first time in modern times in 1984 (Jaramillo, et al., 2011). The Borer appeared in Colombia four years later and has proliferated into a costly burden for that nation’s coffee industry (Westly, 2010). From 20 degrees through 30 degrees C, increased temperatures spur the insect’s growth rate at every stage of its lifecycle, stimulating a surge of feeding and reproduction. Climate change will only exacerbate this pestilence, allowing the Berry Borer to infiltrate higher altitudes, chasing Arabica plants uphill with the rising mercury (Jaramillo et al., 2009).

Agroforestry Adaptation Strategies

Climate Change plagues coffee agriculture and, indeed, all agriculture with a diverse set of critical problems — environmental, social, and economic challenges that reinforce one other — making solutions difficult to imagine. The answers are often costly and create problems of their own. Adapting coffee cultivation to a warming world — one with diminished bioclimatic suitability, rampant pests, erratic rainfall, longer droughts, decreased soil moisture, and hotter days and nights — requires information, organization, and capital. There are known strategies for building resiliency in coffee farms and some best practices will alleviate a host of environmental stressors. Implementing these adaptation measures and doing it at a scale commensurate with the millions of fragmented coffee growers will be the most difficult challenge to overcome.

The primary strategy for adapting coffee farms to the impacts of climate change is shade. Coffee is naturally an understory plant and before the 1960s, when modern hybridization techniques produced sun-tolerant, high-yield varieties, all coffee farmers cultivated their crop under a mixed tropical canopy (Ingebretsen, 2008). Since the advent of sun-tolerant coffee, growers have converted about half of Latin America’s acreage to full-sun fields. Today, over 50% of the world’s coffee is produced without shade (Albertin & Nair, 2004). Climate change is a multi-vector problem and agroforestry — the practice of growing trees alongside crops — is a multi-vector solution, [capable of?] addressing every environmental risk associated with growing coffee.

Shade trees moderate heat, keeping temperatures in optimal ranges for growing coffee (Lin, 2007). De Souza et al. (2012) found that monthly average maximum temperatures in full-sun coffee operations can be 6 degrees C higher than in agroforestry systems (de Souzaa et al., 2012). Keeping coffee cool has the obvious benefit of reducing thermal stress on the plants and there are many ancillary advantages. Cooler temperatures allow understory plants and soil to retain moisture.

Lin (2010) found that employing 60–80% shade cover reduced soil evaporation rates by more than 40% compared to a site with 10–30% shade. Utilizing 30% cover diminished coffee plants’ evaporative transpiration demand by 32% (Figure 5) (Lin, 2010). Enhanced moisture retention spells great benefits for such a water-sensitive plant. Conserving water would bolster ecological resiliency for coffee trees while building economic hardiness for coffee growers who could invest less in irrigation and worry less about their water vulnerability as rains become unpredictable (Lin, 2007).

Figure 5. “Average potential water loss due to soil evaporation (a), transpiration demand (b), and combined water loss through both sources (c): soil evaporation rates were recalculated to match he units of transpiration demand. The two medium shade sites were combined for analysis. Error bars represent one standard error (a, b, and c groups are significantly different at p = 0.05 level).” (Lin, 2010).

Agroforestry is a proven method for reducing soil erosion and nutrient runoff. Ataroff & Monasterio (1997) found soil erosion on a full-sun coffee farm is four times greater than it is on a shaded plantation in the first year of conversion, after the shade trees have been removed (Ataroff & Monasterio, 1997). Shade trees also add nutrients to agroforestry systems through the decomposition of organic litter. This input can be quite large, with trees introducing up to 13,000 kg of litter, equaling 40 kg of Nitrogen, per hectare per year (Bornemisza, 1982).

Agroforestry’s soil protection and amendments help grow hardier coffee plants than full-sun mono-crops, reducing vulnerability to pests. Farmers gain economic benefits from shade tree nutrient inputs, which help growers mitigate their reliance on fertilizers — one of the largest costs associated with coffee cultivation.

Growing coffee underneath a mixed canopy of shade trees has many well-documented environmental benefits, but what are agroforestry’s economic and social implications? Assessing adaptation solutions for coffee agriculture systems can be difficult because every coffee farm has distinct ecological qualities and every farmer a different story. The vast majority of coffee growers are poor, small-scale farmers, cultivating less than five hectares of land. Food security is an important consideration for these planters and access to capital is the primary restriction in implementing environmental adaptation measures (Gay, Estrada, Conde, Eakin, & Villers, 2006).

Coffee is not a nutrient rich food. Crop diversification through agroforestry can strengthen food security and pay economic dividends along many pathways.

Van Asten et al. (2011) demonstrate that coffee-banana intercropping can lead to healthier, more productive farms, while providing additional sources of food and revenue for farmers. Ugandan Arabica operations experienced a 911% increase in their marginal rate of returns, compared to mono-cropped farms, by planting bananas alongside coffee (van Asten, 2011). Farmers who plant a mix of trees with their crops can sell woody debris and timber, adding revenue streams to their operations. Rice (2008) surveyed coffee growers in Peru and Guatemala finding that agroforestry systems’ wood products generate one-fifth to one-third of the farmers’ total revenue (Rice, 2008).

Shade, particularly traditional poly-culture systems (see Figure 6), diminishes pests. Planting coffee in a diverse mix of native vegetative species reduces the incidence and growth rates of the Coffee Berry Borer and Leaf Rust. Coffee plants grown in these structurally complex systems are generally more robust and resilient than plants grown in full-sun or shaded monocultures (Soto-Pinto, Perfecto, & Caballero-Nieto, 2002).

Shaded poly-culture coffee also promotes biodiversity. Coffee farms with more trees host more species of plants, which in turn attract animals (Lopez-Gomez, Williams-Linera, & Manson, 2008). Recognizing the importance of shade grown coffee to sustaining bird habitat, the Smithsonian Institute’s Migratory Bird Center now certifies “bird friendly” coffee, bringing a price premium to producers who promote biodiversity (Rice, 2010). The Center found that traditional poly-culture coffee and cacao farms support over 180 species of birds, significantly more than any other agricultural lands. Only undisturbed tropical forest exceeds this level of bird species diversity (“Coffee, Conservation, and Commerce,” n.d.).

Figure 6. “Diagram of the different coffee management systems with the approximate ranges in percent shade cover and shade tree species richness.” (Perfecto et al., 2005).

Farmers profit directly from implementing shaded poly-culture systems through new revenue streams, enhanced food security, and mitigation of environmental risks, including climate change’s compounding impacts. Growers also benefit from increased biodiversity through pollination services. Ricketts et al. (2004) found that pollinators provide $60,000 per year for one Costa Rican coffee farm, representing a huge ecosystem service (Ricketts, Daily, Ehrlich, & Michener, 2004). What then are the drawbacks of planting shade trees? What prevents coffee farmers from adopting these solutions?

Shaded coffee is less productive than plants grown in full sun, making poly-culture systems less profitable in the short term than open-air monocultures (Gobbi, 2000). Creating a poly-culture requires capital investments beyond the financial reach of poor coffee farmers. Albertin & Nair (2004) and Borkhatariaa et al. (2012) found that the majority of coffee growers would prefer to grow their crop in traditional, shaded systems but most do not because of financial and labor constraints (Albertin & Nair, 2004) (Borkhatariaa, Collazob, Groomc, & Jordan-Garcia, 2012).

The situation is a classic demonstration of upfront costs preventing long-term improvements. Information and technology are important, but what coffee farmers need most of all is access to credit.

Financing Adaptation

The credit problem has existed since the first coffee plantations and it is a conundrum the coffee industry has never solved (Pendergrast, 2010). How can remote, impoverished agrarians obtain financing? And what institutions are willing to make loans to such risky enterprises? The Coffee Leaf Rust epidemic has brought these financial issues to the fore. The only way for a farmer to recover his Roya-devastated crop is to purchase and plant new pest-resistant hybrids. Like other environmental hazards, coffee pests necessitate insurance and access to credit — financial structures that have only recently reached third world agricultural communities.

Colombia has a nationalized coffee organization, the Colombian Coffee Growers Federation, unique among coffee producing nations. Centralized control has allowed the Federation to enact sweeping changes in the coffee sector. The Federation began spreading the Rust-resistant Castillo variety among its 500,000 coffee farmers in 2005. In 2010, high temperatures and excessive rainfall lead to a Roya epidemic that affected 33% of the nation’s coffee farms. Three years later Rust has nearly been eradicated (“Colombia, Better Prepared,” 2013). Coffee growers must repay the Federation for the hybrid plants, which are in effect loans with favorable terms. The Federation, however, decides under what systems farmers will grow the new coffee. Hoping to make a quick return on its investment, the Federation coerces farmers into creating full sun mono-crops, resulting in soil erosion, heavy fertilizing, biodiversity loss, and increased climate risk. The national organization collects the new beans, sells the product in the global market, and takes a cut of the proceeds, perpetuating a system of brokers and middlemen as old as the industry itself (G. Chait, personal communication, November 22, 2013).

Colombia’s institutionalized top-down organization is effective at coping with short-term crises but is woefully inadequate, and even counter-productive, in building long-term resiliency. A growing number of nongovernmental groups are working to fill the developing world’s agrarian credit void. Oxfam International continues its great work, calling for wealthy nations to invest in poor farmers to promote economic stability, food security, and resiliency to climate shocks (“Investing in Poor Farmers,” 2009). The Bill and Melinda Gates Foundation has created capital, technology, and information flows to farmers in the world’s poorest regions, investing hundreds of millions of dollars in sustainable coffee development (“$306 Million Commitment,” n.d.). The microloan industry grew 18-fold from 1997 to 2010, signaling an awakening in wealthy countries to the credit problem (Banerjee et al., 2013).

Root Capital, a Cambridge, MA-based “nonprofit social investment fund” finances small and growing agrarian businesses in Latin America and Africa. The NGO gives loans ranging from $50,000 to $2 million to enterprises too large for microloans and too small and remote to open credit lines with traditional banks — the so-called “missing middle” (Ayyagari, Beck, & Demirgüç-Kunt, 2003). More than half of the firm’s $500 million in loans has gone to coffee producers. Greater than a credit institution, Root Capital advises its clients, training coffee farmers to use financial tools and connecting producers with reliable markets. The NGO also has robust environmental standards, requiring its loan recipients to implement best land and water-use practices. For Root Capital this is not an environmental strategy, it is risk management. Its clients could not repay their loans if they do not adapt their farms to a changing climate (“About Us,” 2013).

The growth of third world agrarian financing is a promising development. Farmer cooperatives and other bottom-up associations are also necessary for building climate resiliency in the coffee sector. These groups need intergovernmental organizations to connect coffee growers with financing institutions and consumer markets and to fill in the gaps. The United Nations (UN), World Bank, and ICO must amplify their roles in facilitating these connections. The UN should integrate shaded coffee systems, hybrid plant development, and adaptation financing into its National Adaptation Programmes of Action (NAPA) and Adaptation Learning Mechanism for major coffee producing nations. For instance, Ethiopia’s NAPA from 2007 mentions introducing agroforestry practices to the agricultural sector and crop diversification efforts. The document, however, is scant on details about how the poor nation will enact these adaptation measures (“Climate Change National Adaptation,” 2007).

The UN also needs to find sponsors for the Clean Development Mechanism and get REDD+ off the ground. REDD+ represents a potentially game-changing instrument for financing shade tree planting. Payment for ecosystem services, including carbon storage, is an appealing yet unproven way for coffee farmers to generate revenue. If we pay coffee growers for living shade trees and not only materials the trees produce, one mechanism would solve a host of problems.

The ICO should partner with the World Bank to create an intergovernmental coffee adaptation financing instrument — a pool of money for investing in shade trees, hybrid plants, and coffee processing technologies. The ICO must also establish itself as a central organizer of nongovernmental actors, including Root Capital, Oxfam, and agrarian cooperatives. Connectivity is a crucial aspect of implementing adaptation measures at scale. The ICO must work with coffee producers, brokers, processors, retailers, and consumers to vertically align the coffee industry, linking growers to their market, allowing farmers to capitalize on the price premium that ecologically-sensitive coffee commands. This transformation would be no small feat — but there are signs that it is already happening. Rainforest Alliance, the Smithsonian Institute, Fairtrade International, and a number of alternative coffee business models designed to compensate farmers for their product’s social and ecological benefits have struggled to keep up with surging demand for “ethical” coffee. Rainforest Alliance certified coffee now accounts for 4.5% of the global market and Smithsonian’s “Bird Friendly” certification enjoyed 145% annual growth from 2000 to 2008 (“Certified Sustainable Coffee Grows,” 2013)(Rice, 2010).

A New Valuation Paradigm

Consumers today have more information about the coffee they buy than ever before. Coffee farmers too are more closely connected to end consumers than in years past. Accurate information, which requires research and clear lines of communication, is vital for adapting coffee agriculture to climate impacts. Institutions of all kinds — universities, government departments, NGOs, and intergovernmental organizations — must fund and carry out research on climate change and coffee.

“I think the coffee industry has two options,” Juliana Jaramillo, a Colombian-born biologist and expert on coffee pests said. “Either they start investing in climate research, or they educate the consumers to drink something else” (Westly, 2010).

Climate change is a complex physical problem. It is also a social and economic problem — a human predicament. Solving climate while bringing poor populations out of poverty requires new and innovative valuation schemes. When ethical consumers buy a cup of coffee they pay a premium for the symbolic qualities of the product: the idea that their money is going to a greater social and ecological good (Daviron & Ponte, 2005). Coffee farmers grow mixed stands of shade trees alongside their crops to reduce the risk of ruin from environmental change and also to earn more money from the sale of their product. The economics of this exchange is key. To safeguard coffee in a warming world we must pay for the air we breath, the welfare of trees, birds, and poor farming families thousands of miles away, the qualities inherent in every bean.


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