Government actions to support coffee producers - an investigation of possible measures from the European Union

We outline possible actions to be adopted by the European Union to ensure a better share of total coffee revenues to producers in developing countries. The way to this translates, ultimately, in producers receiving a fair price for the commodity they supply, i.e., a market price that results from fair market conditions in the whole coffee producing chain. We plead for proposals to take place in the consuming countries, as market conditions in the consuming-countries side of the coffee producing chain are not fair; market failures and ingenious distortions are responsible for the enormous asymmetry of gains in the two sides. The first of three proposals for consumer government supported actions is to help in the creation of domestic trading companies for achieving higher export volumes. These tradings would be associated to roasters that, depending on the final product envisaged, could perform the roasting in the country and export the roasted – and sometimes ground – coffee, breaking the increasing importers-exporters verticalisation. Another measure would be the systematic provision of basic intelligence on the consuming markets. Statistics of the quantities sold according to mode of consumption, by broad “categories of coffee” and point of sale, could be produced for each country. They should be matched to the exports/imports data and complemented by (aggregate) country statistics on the roasting sector. This would extremely help producing countries design their own market and producing strategies. Finally, a fund, backed by a common EU tax on roasted coffee – created within the single market tax harmonisation programme, is suggested. This European Coffee Fund would have two main projects. Together with the ICO, it would launch an advertising campaign on coffee in general, aimed at counterbalancing the increasing “brandification” of coffee. Basic information on the characteristics of the plant and the drink would be passed, and the effort could be extended to the future Eastern European members of the Union, as a further assurance that EU processors would not have a too privileged access to these new markets. A quality label for every coffee sold in the Union could complement this initiative, helping to create a level playing field for products from outside the EU. A second project would consist in a careful diversification effort, to take place in selected producing countries.

Coffee voluntary standards systems a study of the states of Minas Gerais and São Paulo

In order to adapt to new markets, the coffee supply chain has gone through numerous changes during the last years, which led to the creation of the voluntary standard systems. Adopting a Voluntary Standard System (VSS) consists of becoming a member of a certifier or verifier, in which an independent third party sets specific criteria to ensure a product complies with standards. Yet, the segment is still relatively new and raises some doubts about the economic and financial advantages of investing in sustainability-related certification. This study analyzes the perception of coffee producers about VSS – whether it brings economic benefits. The literature review covers various VSS in the coffee sector, the brief history of the commodity in Brazil, as well as the description of the supply chain. Certified and non-certified producers in the States of Sao Paulo and Minas Gerais, answered questionnaires to indicate the perceived advantages of certification. The results show that, despite some added value that certification can bestow, the quality is what really matter, since it allows producers to sell the product at higher prices and to gain advantage over competitors.