Coffee Costs More Now Than Ever, So Why Aren't Farmers Paid More?

How can it be that 2 billion cups of coffee are consumed every day, but many coffee farmers don’t make enough money to cover their production costs?

Coffee’s cost rarely aligns with the labor used to produce it, or its societal importance. How can it be that 2 billion cups of coffee are consumed around the globe every day, but many coffee farmers don’t make a sustainable or thriving wage—or even enough money to cover their production costs?

It’s a perplexing question, especially when we consider that coffee is sold for higher prices now than ever before.

In this week’s podcast conversation with Ted Fischer—an anthropology professor, and the author of “Making Better Coffee,” a book that forever changed my thoughts on the industry—we discuss a chart in his book that breaks down the value distribution of coffee in its first, second, and third waves. (Here’s a primer on coffee’s waves if you need a refresher.) As the chart shows, each successive wave brings in more money than the one before.

That must be a good thing for farmers, right? However, the chart also shows that as we move through coffee’s waves, the percentage of profit that goes to producing countries grows smaller and smaller, while the percentage of profit that is exported to consuming countries steadily climbs. Even while both farmers and roasters are making more money for their coffee now than ever before, the share of that value has only become more unequally allocated.

The dynamics and economics of coffee buying confused me for a long time. Coffee does not seeming adhere to the basic principles of supply and demand. I knew that colonialism shaped how coffee is grown and sold to benefit traditional consuming countries and extract value from producing countries.

That’s an idea I break down with Ted, and he had some interesting insights: 

Ted: ...I think it’s no coincidence that specialty coffee and third-wave coffee took off when it did in the ‘90s and the 2000s, because I think that was also a cultural moment where we’re hungry to have products that aren’t alienated—to use a term that the Marxists use a lot—to have products that we know the history of.

Ashley: It’s interesting that you mentioned this kind of Marxist alienation language because from what I remember from the idea of Marxism and how the means of labor and production are controlled—it’s that having the means of production, controlling the means of production, means that you control the value, that you control how things are marketed, and you really have the power.¹

...But we’re in this late-stage capitalism where that’s been transformed, where the value is not necessarily about controlling the means of production, but controlling the way those means of production are translated to consumers.

Ted: Exactly right ... Marx was writing in the 19th century in the Industrial Revolution, and they were putting small, household-based weavers out of business with these big water-powered and steam-powered mills. They lost control over their means of production and had to sell their labor to a big factory.

So that’s exactly right. That was the heart of power in that industrial system. And now we are in this new phase where it’s not just about control: It’s about controlling the narrative. And I would add the means of distribution. So I mean, who has more power? Some small factory in China making a trinket or Amazon, which has the power to reach into people’s homes and laptops and market that?

We really are in a different economic phase.

“Power and profit come not from control over the material means of production,” Ted writes, “but through differential access to the symbolic means of production and cultural capital.” Using his Amazon example, the power lies not with the small factory making a product but with Amazon’s ability to market, sell, and gain access to the consumers who will purchase the product. In coffee, that ramps up a notch: It’s not just about access to customers, or knowing how to engage with them, but being able to determine and define what consumers want. 

Quality in coffee is often talked about in two ways. We use quality to justify higher prices (a coffee with a score of 90 is likely to cost more than one with a score of 82), and we talk about quality as an inherent trait in coffee, rather than a subjective value that is mapped onto it. “The irony is that in looking for quality, these same coffee professionals and enthusiasts are also defining what constitutes quality,” Ted writes. He later goes on: “In this system, the real power derives from the ability to define what quality is—and not everyone has access to this power.” 

I wanted to share these excerpts because reading Ted’s book—and talking to him on the podcast—felt like putting together the pieces of a puzzle I was sure didn’t go together. I had heard people talk about coffee’s economics and value in a way that didn’t seem to fit the realities of how we consume and purchase coffee. It turns out I was looking in the wrong place: Value is created not in the bean itself, but by those with the social capital to translate the value of goods across the supply stream. Going back to Ted’s chart, as long as that continues to happen in consuming countries (rather than producing countries), their value share will continue to increase. 

There are moments in my conversation with Ted where I express doubt that this dynamic can ever be corrected—I even ponder if we took a step backwards when we shifted from the second to the third wave. I’m not sure if that’s true, but it is a question that’s stayed with me ever since I finished Ted’s book. He readily admits he has no “silver bullet” solution, but is inspired by the care and enthusiasm of the coffee professionals he spoke to for the book. Many expressed a sincere desire to do good work in coffee. 

As someone inclined towards cynicism, my instinct was to spin that: Sure, we can desire to do good all we want, but many of the problems in coffee remain despite our ability to pinpoint them. For years, we’ve been talking about the coffee price crisis (the idea that farmers are often paid less for their coffee than what it costs to grow and harvest it). We haven’t fixed anything—and I’d argue we can’t fix these problems within the current confines of how we buy and sell coffee. 

But Ted’s words reminded me of something I used to tell myself when I was a teacher: Every student wants to succeed. Every student wants to learn and understand and thrive, regardless of the obstacles in front of them. Ted’s words reminded me that we can be critical of the systems around us, question the power dynamics that left us in a situation that might be worse than what came before, and still feel optimistic about the future. 

These thoughts invigorate me when I get down about the progress of the Starbucks union movement—CEO Howard Schultz has refused to testify about the brand’s alleged union-busting in front of the Senate—but even when a blow is delivered, I remember that more people than ever support unions. The numbers are there, the sentiment is there, and the people are there. When it comes to a better future for coffee, it’s important to remember that we have the first ingredients necessary to make a big shift. Now, the real work begins.

Photo by Kristina Delp

1. My characterization of farmers owning the means of production is a bit simplistic and doesn’t quite apply in a one-to-one way, which a reader pointed out, but I want to focus in this instance on how power shifts to cause further and further stratification and inequity.