December Rewind: Maggy Nyamumbo on Big Coffee and the Coffee Price Crisis
In this December Rewind, the Kahawa 1893 founder breaks down the dynamics of coffee pricing and how multinational corporations influence the market.
Hey friends. For the rest of the year, we’re bringing back old episodes of Boss Barista. Part of the reason we’re doing this is because the community of listeners who are part of Boss Barista is so different than it was just a few years ago. But also, many of these episodes carry lessons and ideas that I still carry with me and are worth revisiting. If you haven’t subscribed to the newsletter yet, here’s a handy link to do so:
Today, we're re-releasing our episode with Maggy Nyamumbo. Maggy is the founder of Kahawa 1893, a social enterprise aimed at connecting farmers directly to consumers in an attempt to get more money back to farmers. Maggy is a trained economist—she graduated from Smith College in 2011, went to the London School of Economics, got her MBA at Harvard, worked for the World Bank and on Wall Street ... and in this episode, she breaks down the economic dynamics of coffee pricing. Coffee is a global commodity that passes through hundreds of hands before getting to your cup, and Maggy illuminates how there's so much money in coffee, but rarely does that money go to farmers and workers.
This is a really dense episode—when we first aired it in November of 2019, someone told me that they took out a pen and paper to write down many of Maggy's arguments. I hope you learn as much as I did from this conversation. Here's Maggy:
Ashley: So if you're in an elevator with somebody, what would be your elevator pitch for what you do?
Maggy: Yeah, so Kahawa 1893 is a farm-to-cup coffee company. The way we define that is, I’m a third-generational coffee farmer. My family has a coffee farm in Western Kenya where we process our coffee together with other neighboring farms in the area in a cooperative. We then import the coffee into San Francisco. We roast the coffee locally here and we distribute it to specialty coffee shops, specialty grocery, offices, direct-to-consumer, Amazon … all of those channels.
I started Kahawa 1893 with a goal of essentially creating a better supply chain for farmers in Kenya to get a living wage for the coffee that they produce. The biggest issue with the coffee industry has been that farmers don't make enough money to live off of because the global coffee prices have been low-cost to production.
Kenya, where I'm from, has one of the highest costs of production, actually, because of the kind of coffee that they produce and how they've decided to produce it. So it's very expensive to produce, and farmers getting really low prices for that means that a lot of farmers are not making money growing coffee. So for me when I saw the specialty coffee movement growing, and Kenya having a really good profile in specialty coffee, I thought that I could help farmers get direct access to markets and hopefully be able to make a living wage out of a coffee.
Ashley: It's interesting [your background] because you grew up in Kenya, you've been on farms, you've picked coffee, but then you didn't grow up wanting to be a coffee farmer. You actually studied finance and economics. Can you talk a little bit about the trajectory that took you to this moment of starting Kahawa 1893?
Maggy: Yeah, so it's funny. Growing up in Kenya and around coffee … so coffee has always been known as a “poverty crop.” It's essentially a catch-22 almost: “Are coffee farmers poor because they grow coffee or do poor people grow coffee?”
Coffee is considered a poverty crop because for a long time it hasn’t really delivered for farmers. Before the ’60s, farmers were actually able to make money growing coffee. Coffee was a crop that middle-class coffee farmers in Kenya could grow and actually educate their children with, and this was because there was a fixed system. Essentially there was an international coffee cartel that controlled the price of coffee and was able to maintain that price in relation to cost of production. After that failed, the prices plunged and now the prices have been low [compared to the] cost of production for most farmers.
Growing up, instead of seeing how coffee farmers struggled, including my family, that was the last thing that I wanted to go back to. [It was] something that you did because you had nothing else to do. It was really the last thing that was available for you to do. When I moved to the U.S., I went to college, got my MBA, I worked at the World Bank, and worked on Wall Street. And when I was thinking about what I wanted to do next, I was funnily enough attracted to go back into coffee because of my background.
When I was working on Wall Street, I was looking at different industries, and I was very surprised to see what was happening in the coffee industry. First I saw that there was a lot of consolidation going on in the coffee industry, but I also saw that there was a lot of growth within [the specialty coffee industry], which means that farmers could differentiate themselves.
I was thinking that there actually could be a way for me to apply my skill set in the industry to be able to differentiate my farmers and also be able to help them get the gains from specialty coffee.
Ashley: So your focus is primarily on Kenya, which makes sense, because that's where you're from. I was wondering if you could provide some context about the specialty coffee market in Kenya in particular, because it is very unique both because of quality, but because of its history as well.
Maggy: Yeah, so a little bit on the history of coffee. As you know, coffee was first grown in East Africa, the original place [was] in present-day Ethiopia, but back then there were no borders. So where we are in Kenya, it's in that region of the world where coffee grows sort of naturally on its own.
And then, it was brought over to the Middle East in Yemen, and then it went to Europe and then Europeans brought it to Latin America, and Brazil was the largest coffee-growing country. During the slave trade, Brazil received, I think, five times the number of slaves that came to America, and that was because of coffee.
Coffee is an industry that is very labor-intensive and requires a lot of free labor. And so, for Brazil, coffee was such a big crop for them, and even when the New World abolished slave labor, Brazil would not let go because they really needed slave labor for the coffee industry. And that's why Brazil was the last country to abolish slave labor in 1888.
And so the reason we're actually named 1893 is because I like to go back to the history of where coffee started in Kenya, and kind of rethink how I could have built that system better if I’d existed. And so what happened is, in 1888, when the slave trade was actually abolished in Brazil, the European trading companies needed a new source of labor.
So then they came to Africa in, you know, starting in 1890. By 1893, they had set up plantations in Kenya, so Kenya was colonized by the British. The British came in and pushed the locals away from very fertile land, they set up estates and plantations there, and then employed the local people—well, not employed, but obviously used them as free labor.
And so we see that Kenya as a country is founded on producing coffee. It was coffee that Britain wanted out of Kenya—still wants out of Kenya, because Kenya still supplies a lot of its coffee to British companies. That's actually part of our independence deal that we made with Britain.
One thing that people don't realize is when African countries got their independence, it wasn't a freedom out of the blue. We made deals with our colonial countries, so Kenya made a deal with Britain. It's like, we're going to have the white settlers give up their power locally, but they need you to provide, to keep providing the free labor. They need all the people that have been working on the farms to keep providing free labor. And that's kind of the system that we see still right now that continues on the continent—in Kenya, especially.
And I'll touch on this a little bit, on a big question I get about Kenyan coffee, which, as you know, is the most expensive origin in the market in general. It's going for about $5 a pound versus the $1 market rate. But the average farmer out of that gets about 20 cents. A cooperative that's doing really well would get 80 cents a pound.
And why is that? A lot of that money is being captured by the colonial companies that are still in Kenya. That's something that's been going on since colonialism, and that's something that's continuing because Kenya is a neo-colonial state. So we have full freedom, but we're still canonically colonized by Europe.
Ashley: I think it's really important to talk about the pervasiveness of colonialism, because I think when you talk about the end of slavery in certain countries at different years, it seems like, ‘Oh, that's so far away,’ but at the same time, we're still seeing these effects really concretely. And it essentially translates into a different form of labor that's undervalued or free. Which I think is really, really important to remember.
Maggy: Yeah, and it's one thing that's sort of key to Kenya in particular because of how we produce our coffee. We produce our coffee in cooperatives, and we have to do it a certain way, and this way is codified in the law. It's like institutionalized racism in the law of things that we can and cannot do to make sure that we're getting British coffee companies the coffee that they need.
And so when I speak to the coffee industry people about, you know, “Why are we still not getting money to Kenyan families?” And then they're like, “Oh, Kenyan farmers are not productive enough.” And then I'm like, “Okay, so why are they not productive?” It’s because they have to produce coffee a certain way. It's the law of how they have to produce.
And it's one of those things where “Big Coffee” has put different countries into different buckets of what they should produce. They have Brazil producing a certain type of coffee. They have Vietnam producing a certain type of coffee. And they have different countries helping them develop their menu, but they want to pay a Kenyan farmer that's producing coffee manually the same price they're paying someone producing mechanical coffee in Brazil.
So that's part of the issue of where we have Kenyan farmers producing coffee in a way that essentially is producing a really high-quality cup of coffee. But they're still not getting compensated for that labor that goes into that. But then they actually can’t change it even if they want it because there's a law. So if you're a [multinational corporation] and you have a small country that you want to do something, you can just tell them that.
Farmers are not allowed to even stop growing coffee without a permit. So you need a permit to stop growing coffee. You'll be fined if you actually cut down your trees. There are a lot of ways that [multinational corporations], like Starbucks and Nestle, can force small countries to do things that serve them better than what small holders really need.
And the example where we see that really done well is in Kenya. Kenya is the exact opposite of Brazil. They’re really two opposite [countries]. Brazil [produces] high-volume, mechanized [coffee], and Kenya [produces] low-volume, really manual, higher-quality coffees. But Big Coffee wants to pay the same price for those two coffees.
So the farmer in Kenya with a small farm doesn't have the productivity of Brazil. And the way that we've been able to maintain this comes to how we legitimize it. Kenya has an auction system that legitimizes that kind of system. So it says that, “Okay, so we have an auction, which means this is fair.” But it's really not fair. When you go into the process of how the auction works, you realize that the auction makes that process of oppression legitimized.
Ashley: Right, and it goes back to the ideas that you were talking about, institutionalized racism and racism essentially being written into the laws and the way that coffee farmers can even interact with the things that they produce.
Maggy: Yes, they're forced to do things a certain way that don't serve them necessarily, but they serve the needs of Big Coffee. So when you think about it, right—and we'll talk about this a little bit more—which comes to the crux of the crisis, right? So especially when we think about the current coffee prices, the only two countries that can really survive at the current price point are Brazil and Vietnam. Those are the only two countries that can produce coffee.
So can you imagine what would happen to the specialty coffee industry, which is really the higher-value part of the industry? If all the other countries suddenly stopped producing coffee, what would happen to the specialty coffee industry, and what would happen to the value of coffee? So I think that's one of the questions that goes through my mind is, “How do we think about pricing the coffee in Brazil and Kenya in the same way, when they're really two very different products that we use?” Like, imagine a Blue Bottle or a Stumptown, just with Brazil and Vietnam coffee. How does that look?
Ashley: Right. Something that I think that you do really well is that you're able to break down these problems in a very succinct and understandable manner. I wonder, with the limitations in the Kenyan coffee market that you outlined, how does someone like you as an entrepreneur start to think, “Oh, these are ways we can start to solve these problems?”
Maggy: In the Kenya case, and in the discussion that you had with Vava [Angwenyi], she explained how, because of the way the system is set up, it's really institutionalized in a way that only European companies can export that coffee. And even to go an extra mile, in the law for a long time, you were not allowed to roast coffee independently. And that's why Kenyans didn’t drink coffee up until recently.
That was one way to make sure that Kenya was only for extracting green coffee. You could not roast it. And right now in Europe, they have prohibitive import taxes, which means that even if Kenyan farmers—they need to be like Hawaii, where they have their own brands. And that's what we're trying to do with Kahawa, is being able to roast [under] their own brands. That way they can capture the end value, which is where most of the value right now sits.
That to me is how I see farmers in Kenya who have really great coffee, delicious coffee that should still exist in the market, but the current pricing dynamics make it almost impossible for anyone to make a living out of coffee. But if there was a way for them to do direct-to-consumer, and be able to cut to that last mile—which is where most of the profits are—then we can actually start to think of a business model that fits. And so for us, my goal when I started Kahawa was, “How do we get money in their hands?”
So you know, how do we get money? We can’t change the system on Day 1, as, you know, it's institutionalized for a reason, so you can’t change it on Day 1. So what can you do? For me, [since I am in America], I actually have access to that end market, right? What if I could cut to that value of the end market and share it with the farmers?
So that's what Kahawa was. And specifically for me in Kenya, there's this statistic that you really should know about: Over 90% of the labor comes from women. The labor on the farm, the labor in processing … all of that labor-intensive work is done by women. And there's a reason for that, right? Because it's unpaid work.
The logic here is, think of a male person in Kenya. They're too proud to do work for free, men. Men of any color are too proud to do work for free. And so they're like, “Okay, I can get a dollar at the market. My coffee is worth $5, but the market is willing to pay [only] a dollar for it. I'm not willing to work for a dollar. But you know what I can do? I can push my wife, who I control, and my children, who I control ... I can put them to work and then get a dollar. So their work is worth $5. So I'm deploying $5 worth of work to get a dollar back.”
And that's really what's happening. We're seeing the direction of race and gender, where we're seeing sort of marginalized groups along the racial lines, and then marginalized gender is being pushed by society to provide free labor.
In the U.S. we think of free labor as sort of the work that we women are doing for free at home, right? The cooking, the childcare that we're doing for free, and [we’re] not rewarded. But in coffee, the system has figured out how to actually mobilize that free labor at the farm level.
And also in Bangladesh, they also have done that in the sweatshops. It's a similar dynamic, but now at the farm level. So you're able to, without saying it, you're pushing men to put up the women to work for free or a pittance, for like a discount, obviously a 20% discount.
Ashley: That's such a powerful metaphor to use, especially when you equate it to the ways that we understand unpaid labor in the United States. We understand that as the cooking and the cleaning, but then you just spread it outward and that's exactly what's happening. And in a lot of coffee-producing countries, like Kenya.
Maggy: You hear the question a lot of, “Okay, the market will correct. The market will correct.” Because if farmers can’t sustain these prices, why do they keep producing? Right. That's the question you hear, right? That’s what the main defense from Big Coffee has been. “We're trying to correct the market, because if these prices aren't sustainable, then why are people producing?” But what they’re not understanding is that more and more marginalized people are being pushed to provide free labor. So the children, the women are being pushed to provide free labor.
Ashley: That's such a powerful point, and I wonder, as an economist, how do you take that perspective of using the market to both solve this problem, but also to really explain how the market is failing? Because what you just said about how marginalized people will often have to take up the brunt of the work that others don't or aren’t willing to do is super powerful. I've heard that before too, that, “The market will correct,” and, “Why would this happen if the market wasn't going to correct for it?” So how do you rectify that?
Maggy: Yeah, that's the [moral of the story]. If you push a Big Coffee person to the wall, that's kind of their moral standing of, “I'm paying market prices because that's what's good for us; because that's how the market will correct.” But they know that the market will not correct. It's going to be in oversupply for a long time. And so that's a really good question.
When I think about the current coffee crisis, which I think about all the time, and going back to [me being a] Black woman in coffee, [I am someone who embodies] the two things that the industry exploits for profitability: racial inequality and gender inequality. Those are the two kinds of elements that are holding coffee profitability intact. If we were suddenly to attain racial equality and gender equality, and we actually had to pay what it costs to produce coffee, do you think we would need a new business model for coffee or not?
Ashley: Absolutely, we would!
Maggy: So that’s really something for a lot of people to think about. As much as we're pushing equality, racial and gender equality, if we were to pay minimum wage for production to produce coffee, coffee would not be served the way that it's served today. So that's something for people to really think about.
But back to your question of what are the issues that are really affecting price—so there's three things, and I'm going to “bucket” them into three areas. The first one is that we hear a lot that there's an oversupply, so there's too much coffee being produced relative to demand. You've heard that one, right? And then the second one is, there is too much speculation on Wall Street. Wall Street is where the coffee prices are determined. [The theory is that] there are traders that are speculating on what the future prices are going to be and that's getting out of hand. It's becoming disconnected from the realities of the cost of production.
And to pause there a little bit, it makes sense because, remember, when the coffee business model was designed, labor was a non-issue because labor was considered to be free. So labor was either something that was going to be free from slaves—when you paid for your slaves at the slave market, you had already paid for your labor going forward, right? It's like buying a house—or in Africa, the labor was going to be free because you just forced the natives to work for free.
So the only two things that you were thinking about were diseases and climate change. And our market still behaves that way because that's the business model. Labor is still assumed to be free. So unless we change that idea that we need to specifically start paying for labor and change the business model, that's something that speculation will always be trading, like in the 1800s.
And the third point is that it's a fact that Big Coffee is unwilling to pay for Black and Brown labor. So those are the three elements. Do you agree with them? Are those three points you've heard people talk about?
Ashley: I don't think anyone has ever used the term “Big Coffee” before, which I find really fascinating because you use it a lot. And I think it is really helpful to think about how powerful actors, like the ones that you mentioned earlier, can influence the politics of an entire country.
Maggy: Yeah, I call them Big Coffee. And later on, I’ll tell you how Big Coffee behaves a lot like Big Tobacco and Big Pharma. And we have to start thinking about them that way.
But anyways, so three things: One is there's an oversupply, the second one is speculation is messing up the prices, and the third is that Big Coffee is unwilling to pay for Black and Brown labor under any circumstances, regardless of what else is going on. And so for me, when I think about those three things, they're all true. Those three things are all actually interacting. What we have again is Big Coffee being unwilling to pay for Black and Brown labor, which is essentially using the Wall Street market to legitimize, similar to how we use the auction in Kenya to legitimize that market.
You can think of Wall Street as a place where you legitimize. You don't want to pay for labor. So think of it: If there was no Wall Street and Nestle had to pay for coffee and they decided to pay a dollar now, people would complain. We'd be like, “Nestle, you cannot pay that. You need to pay the market price.” But now Nestle can pay a dollar and say, “The market has approved that I should pay that price.” And so I think the best way to think about it is that Big Coffee is now using the market to hide behind not wanting to pay for Black labor.
And then the third aspect, which is essentially what we're witnessing, is oversupply, and that oversupply is because we have false signals. We have people acting differently. The average person or the average family is looking at the market and trying to study it and saying, “Okay, this is how the market is, and I'm going to behave a certain way.”
But the reality is, however the market moves, the biggest thing that we can change is the willingness to pay. For me, I get back to what we're seeing in the market [which] is a consequence of three things interacting together. And we're going to be in oversupply for a long time, because as you know, in Brazil, because of the technology that they have, we can produce all the coffee that we need.
Jeffrey Sachs just released a report actually this month, and he said the same thing: Brazil and Vietnam can produce all the coffee that we need. All the other countries can stop producing. And those two countries can produce all the coffee that we need. So Brazil can respond to coffee shortages overnight. We're never going to be in a shortage. So we’re permanently in oversupply. Does that mean that we're going to constantly be at this $1 price point? This is the new $1 price point. So how do we think about that going forward?
Ashley: I don't know! But it is absolutely illuminating hearing you talk about the coffee supply crisis, because it seems like if you go into—
Maggy: It's not new. This is like, it's a new normal that we need to face that this is the price that a mechanized farmer can survive at. So what should we do?
Ashley: Right, exactly. So I wonder how you see yourself in that system. One of the things that you mentioned is that you cut out the middleman and you go directly from producer to consumer. Is that scalable at all? I wonder, is that a solution on a small scale or a large scale? Do you look at large-scale problems? How do you think about that?
Maggy: I think we need an industry reaction, obviously. Right? So ideally we need something that's scalable. And I think what Jeffrey Sachs proposed was [about] a $10 billion fund to support farmers over the next 10 years. He said that this is the new price. Going forward, we're not going to move away from a dollar.
And when I think about that, and I know that if it's a dollar, my farmers are getting—what, 10 cents or less? You can't even buy fertilizer with that, right? Essentially, how do we think about alternative markets? For us, how can we participate in this specialty market where we can [get] farmers a better price? But even more so, we invite consumers to basically send their tips directly.
We're thinking of this really as the way we think about waitresses. Their wages are below minimum wage. So when we pay for our bills, we add a 20% tip to make sure that they're getting the minimum wage. We understand the dynamics of the restaurant industry, and so as a consumer, we've chosen to support that.
So for us, Kahawa, we introduced a tipping mechanism where we have a code on the back of the bag. You can scan it and you can send a tip directly to the farmer. And we think that that's an almost 21st-century Fair Trade system.
With Fair Trade, their deal was you paid an extra dollar or more, and then some of that made it to the farmer. It's unclear how much of it made it to the farmer within a dollar. I think once everyone took out their share along the value chain, I think they said for each dollar, 5 cents is getting to the farmer. So we're saying, what if, instead of paying a dollar extra for your coffee, which you should be (people think it's expensive, but the prices are still on the lower side), you can send a tip directly to the farmer.
We see that as one way where consumers can be actively engaged with where their coffee is coming from and choose to support [the farmers] directly. So that's one approach.
The other approach is an industry-wide approach where as an industry, we actually start to think about what moves the needle. And so far the discussions that I've seen around how to solve them have just been really kneeling at the edges. And they've really been about supporting this oppressive system, like, “How do we hold this oppressive system in place so that we can also benefit?”
I can go a little bit into detail, but I don't know if you have any other questions around that.
Ashley: I mean, I have so many questions, but just touching back a little bit on the idea of value and who creates value: Before we got on this call, we were talking a little bit about some of the things that you wanted to talk about, and relating back to the idea of a dollar being the “new normal.” And then also thinking politically about the moment that we're in, and how both responsive coffee prices seem to be to the political climate, but also at the same time, when you say that a dollar is like the new normal, that also feels like, incredibly unresponsive. I wonder if you could talk a little bit about that dichotomy, about what is actually influencing coffee prices and where can we expect to see prices fluctuate, or where do we actually expect to see change happen, as the politics around us change and interact with us.
Maggy: Yeah, that's actually a really good question. As you know, coffee is a political crop. I mentioned earlier that we used to have a cartel, which was an international coffee system that used to control the coffee prices. It acts a lot like our oil, which has a cartel. That's how they keep the prices sort of stabilized a little bit.
So coffee used to have something similar, and the way that that was kept in place was an agreement between the producing countries and the consuming countries; for example, the U.S. and Brazil. The U.S. is the major consuming country. So the U.S. really is the biggest driver of what happens in the world around coffee. The U.S. likes that system, likes to stabilize coffee prices because when coffee prices destabilize, they cause a lot of harm in the world.
So right now a lot of the immigration we're seeing on the border: That's coffee. [There are a] lot of people coming from Guatemala and Honduras that have been displaced. When we had the last coffee crisis is what produced the Rwanda genocide. That was the coffee crisis.
A lot of really bad things happen when coffee prices crash. Ethiopia had a green famine, and that was because of coffee. So you have these political things that can be put in place by looking at how to stabilize coffee.
Anyway, back during the Cold War, the U.S. was incentivized to stabilize economies so that they didn’t turn to Communism. The U.S. kind of led the movement of making sure that coffee-producing countries had stable pricing and a stable economy so that they didn't turn “red.”
But after we saw the fall of the Berlin Wall in 1989, since then, the U.S. has never been incentivized to stabilize those countries, because there's no Cold War going on yet. That's one area where it’s kind of coming down to, “How does that affect us?”
So currently Trump just essentially upheld that the U.S. doesn't want to stabilize the coffee prices. That just happened recently. Depending on the administration—if we have, let's say, Democrats in power—depending on their politics, they might be incentivized to look toward stabilizing the coffee economy. Maybe they will want to stem the immigration that's coming to the border. They might be incentivized to actually force Big Coffee to negotiate better prices. So that's how politics comes in.
For me personally, I've been actually following this current political climate very closely. And one of the most interesting solutions that I've seen put forward is, Andrew Yang, one of the candidates, has something called UBI, which is Universal Basic Income, and what I really like about that is he's acknowledging that technology is essentially making it harder for labor to catch up, or labor to be compensated accordingly.
And so, because a lot of the benefits of technology go to very few people, very few winners take all the benefits. So he's saying, how can we distribute those benefits to everyone? And we're seeing that with Big Coffee, they are taking all of the benefits of technology. So as Brazil gets better and more and more productive, Big Coffee’s able to take all those benefits, but it means a lot of the labor gets marginalized even more.
So I think for me, the reason I was thinking, “We need to figure out a way to get money directly in the hands of farmers,” is because that's where they need it the most. They need money in their hands directly. And if there was a way for me, a dream solution would be a place where as an industry, we agree that we need a stable market. We need diversity of regions, and the current speculative market is not a good vehicle for that.
We agree that we can provide a basic minimum wage for all the coffee producers in these countries, because we can. And then have them keep producing the coffee. And that's how we can keep deforestation low. We can reduce all of the problems that come with plantation coffee in Brazil. We can have farmers in Ethiopia still grow their coffee in the original place, but actually get some money growing it and be encouraged.
Because of climate change, we're going to lose a lot of varieties to climate change. If we only concentrate our risk in two areas, it means that in 10 years, if there's some kind of event, there won't be any coffee left. So as a sort of coffee collective, we have to think of ourselves as a country, and think of our producers as citizens, and think about, “How can we give each one of them a basic income for them to keep participating in the diversity of coffee?”
Which is what adds value to the coffee. When we think about coming back to value, when we think about how we market coffee, a lot of the marketing is attached to the production. It's attached to how carefully it was produced, the varieties, the farmer toil, all of that. And if we were suddenly to just have mechanized coffee, the narrative breaks down and suddenly no one spends $10 for mechanized coffee, right?
And in case of an outbreak of disease or a warming in Brazil, then coffee is going to be a luxury. And so I'm thinking that the industry would come together and figure out, “How do we get a basic income for all coffee producers to keep them growing coffee for the future?”
Ashley: That's really fascinating to think about the narrative that we create in coffee, where we talk about handpicked coffee and this process that's almost romanticized. And yet as technology moves forward, that's not going to be the narrative that we have. So we almost shoot ourselves in the foot a little bit, relying on this narrative for the addition of value. It’s also misleading because, as you mentioned earlier, although we almost co-opt the value that is created by producers, almost all the value, monetarily speaking, ends up in the hands of importers, roasters, the people who touch the end [of the process], which is a really interesting dichotomy.
Maggy: It is. And I think, Ashley, this is going to be so important, because as you know, fake coffee is coming, lab-grown coffee is coming. We already have lab-grown meat. We already have lab-grown diamonds. So as more and more people realize the cost to our environment of growing coffee, they're going to be convinced to buy coffee that's made in a lab.
And so how are we going to convince people? I guess it comes back to, is it worth it for a lot of people being put through a lot of pain in these developing countries to produce coffee that we can't pay them to produce when we can produce it in a lab? Ten years from now, you have a choice of coffee that is slave-free, grown in a lab, versus coffee that you don't know where it came from. How many children died to bring it to you? Like, what will you choose?
Ashley: I'm even thinking of the example of diamonds. When you talk about getting an engagement ring, for example, you want a cruelty-free diamond. In 10 years, are we going to end up in that same situation with coffee where traceability is going to be so important that we want to know that it was grown in a lab, or did it come from almost synthetic means because we can at least trace that really concretely? Which is wild. I have never thought of that.
Maggy: Now that I think about it, I think we're going to start to see more—and this is just the political side of me—there's been a lot of backlash now towards billionaires and towards the plutocracy. And we've seen that backlash. Have you seen that? A lot of articles coming out?
Ashley: Oh yeah! I mean, remember when Kylie Jenner was called the first self-made billionaire or first self-made female—or youngest [billionaire], and people were like, “Uhh, that's not correct.”
Maggy: Yeah. I know! So we’re starting to see a backlash in the billionaire class. To me, in a way, it's almost like we cherrypick which industries to backlash at any one time. It's fashionable to backlash. So when I think about the damage that Big Coffee is doing in terms of … so I think of earlier I said [there is a link between] Big Coffee, Big Tobacco, and Big Pharma. These are three kinds of companies that produce addictive substances. Coffee is addictive.
They kill. But the only difference is that coffee kills the producer in the long run, because they can’t feed themselves. They drown in the ocean trying to immigrate. So [Big] Coffee, Tobacco, and Pharma (which are essentially opioids), they kill the user.
But coffee is still killing a lot of people, but it's killing producers. The reason we don't have the same outrage level is because it's killing people of color. Justice is not as swift when your victims are people of color. So I'm hoping that in the near future, the same backlash that we're seeing going towards Big Tobacco and Big Pharma, that people will start to see that the victims of the coffee also need justice. That's my hope. When you ask about the future, I think we need to start talking about how much human damage Big Coffee’s irresponsibility is causing in the world.
Ashley: So let's, let's talk just a little bit about Big Coffee, because recently Starbucks announced this initiative where they were going to give back $20 million to coffee producers. To me, that sounds kind of like a Band-Aid, or not even a Band-Aid. A Band-Aid is not even the right word because that implies some sort of healing. It sounds like a—what's the word for it—it's like a red herring almost, or just a distraction.
Maggy: They're covering their tracks. That's their brand. Their brand has always been about, “We're doing good for farmers.” And so there was so much outcry. I mean every day I was reading articles online from industry news. It's almost a one-sided conversation where the farmer and the people that are concerned with the farmer's livelihoods were having their own conversation. They're trying to tell Big Coffee to respond, and Big Coffee was not responding. And, for Starbucks, this was something that they had to respond to, I think, and that was one of their responses.
Ashley: So that, how do you see the role of Big Coffee answering responsibly? Because for better or for worse, Big Coffee is here. We have it. It's part of the market and it's influencing the market. So what, to you, would signal meaningful change?
Maggy: First, I don't know if you read the article on Sprudge about them reaching out to Starbucks to ask for actual pricing? Did you see that article?
Ashley: Yeah, I did.
Maggy: Yeah. So that was one thing where I've always essentially had an issue with Starbucks claiming to be 99% ethically sourced yet won’t give us the figures. So how are we supposed to know? How are we supposed to check?
And then kind of knowing in the industry that they really were not lifting their weight based on the market. There was a disconnect between their marketing to consumers and essentially what we're doing in the back. And I think for me, one article that I thought was super interesting, and it was talking about someone that traced back a bag to Colombia, to meet a farmer that was part of the Starbucks cafe practices. And this farmer actually said they prefer selling their coffee to Nestle because Nestle paid more. I thought that was so funny.
But back to that. So I think that their article is really [interesting]. And I'm glad that the industry is—industry media in general [is starting to cover this topic], hopefully because they have other external sources of funding, as you know. The problem is we're not able to criticize Big Coffee because they fund everything. They fund the research, they fund the media. So there’s no place to criticize Big Coffee, so I was kind of happy that Sprudge is starting to go there. They talked about how 20 million essentially translated into less than 3 cents a pound for farmers.
But I think that for me, when I first saw it, when I saw this thing, I think it was early in the year, last year, my first thought was, “Oh my God, our problem right now in the world is that we have too much coffee. And that our solution is to give farmers more seedlings?” You know what I mean?
It's like, “Oh, we know we have an oversupply, but our contribution to you is, we want to stick you with more coffee.” Right? To me that was the reaction. And that kind of captures a lot of the sustainability programs because they're designed to make sure that we have an oversupply. All the programs that are designed to increase the amount of production, which is not the right thing to do.
That's why I'm very skeptical of sustainability programs because they're designed around, “How do we make sure that oversupply is the new normal so that the power dynamics are always in Big Coffee’s favor? and farmers are always taking the big risk?” Especially now, going into climate change.
The farmers that I work with, last year during the harvest season, our yield was down 40%. Can you imagine? Yield is down 40% when coffee prices are their lowest, and this is because of climate change. The rains were, you know, late, and we're going to see more and more of this. And who's going to take the blunt of this climate change risk? It's farmers, right?
I think for me, the thing that Big Coffee can do is work towards stabilizing prices. And I know there's criticisms around, “Okay, if you put up a high price, we're going to have too much coffee coming out of Brazil, because if you put a $3 price point, then everyone in Brazil is profitable and they're going to produce everything, right?
But I think there's a way that the industry can design a market, that's essentially fair to everyone. They can design a market that produces a minimum wage for Kenya producers, a minimum wage for Colombia, for Vietnam—that way you maintain that diversity, but at the same time, you also think about what's the environmental damage that's happening. How do we make sure we're taking not just price as the only input, but how are we thinking about the holistic humanity? Thinking about humanity and the environment, not just the bottom line.
I think for me, when I think about Big Coffee's role, Big Coffee first has to decide they want to pay for Black labor. That's one thing. I definitely want to understand why Big Coffee is unwilling to pay for Black people's labor. We're tired of giving you free labor. Okay? Like, start to pay us. I really want to see a Big Coffee person come out and say they want to make sure they’re paying for labor.
And I think when I say “Black labor,” people are confused, because people don't realize Brazilian manual labor is mostly coming from Black slaves and you know, Black people that are slaves in Brazil. One district that is 80% Black provides all of the labor that goes into coffee in Brazil. So when I say Black labor, people are like, “Oh, but most coffee is coming from Latin America.” But [my response is], “Yeah, by slaves that were in Latin America.”
So back to your question. I think for me, I'd love to see Big Coffee really figure out that they actually want to stop dehumanizing Black people and start to pay for Black labor. That's one thing I want.
I think that we will have to think about [the fact that] Big Coffee leaders are profiting from the same way that their predecessors profited, which was “How do you put free Black labor to use?” And I want to see them really come to terms with that and decide that they actually want to pay labor as a priority.
So that's one, and then the second one is, “How do we stabilize prices?” And then we need to stop hiding behind the market because we know Big Coffee controls the market, so that you can't hide behind Wall Street when you control Wall Street.
That brings me to my other point, which is, again, the composition of the market, which is when the biggest coffee company is also a private equity company that also can trade in coffee on Wall Street, then you get a lot of conflict of interest going on. But I'll stop there. I know that's a lot.
Ashley: I mean, it's a lot, but I feel like you need to write a book or something. I need all of these ideas!
Maggy: I've been meaning to write a blog post, but maybe after this discussion I will have my ideas a little bit more fleshed out. Make it more accessible. I might do an article to just kind of capture a lot of what we've spoken about so that more people can [learn about it]. But it's, it's a lot though, you're right.
Ashley: It's such a complex problem, but the way that you describe this problem feels so accessible. So I feel like you've really found a way to communicate the issues that you're seeing on the market in a very tangible manner, but still very much accepting that this is a complex issue with a lot of contextualization needed.
So just to wrap up, I was wondering with all of this information, what can a barista take from this? What can somebody at the very other end of the spectrum leave from this conversation and be like, “This is what I can do tomorrow,” or “This is what I should be able to bring attention to today.”
Maggy: Yeah, and I think that baristas are kind of at the point where the consumer interacts with the beverage, right? They're at the forefront of this war almost. And then we put them there and we don't give them all the information that they need. Sometimes when I go to a cafe, I feel bad, asking all the questions like, “Where is this coffee from? Do you know if it's direct trade?”
So baristas do a wonderful job of sort of articulating that information to consumers who sometimes don't even care as well. So making it interesting enough to care.
And I really liked the series—I don’t know who led it, but I think you were involved— the one, “Ask Me About Cost of Production.”
Ashley: I'm not part of it. I did record an episode for the show, but Caryn and Mike Nelson who own Junior's Roasted Coffee in Portland, Oregon organized that.
Maggy: I really liked that. I felt like [it would be beneficial to] see that at the coffee shop and a consumer that's interested [might] pick that up and ask questions. That's really one way that just having that information [in a way that’s] not overbearing—because I know some customers really just want to get their coffee and they don't want to talk.
So [you could] have that information maybe placed around the coffee shop so people can read and understand. And I think that for baristas, I think that because they're the first line of defense for their brand, they need to learn more about what actually matters. And I know in your previous podcasts, you've talked about some of the shortcomings of specialty coffee, which is a lot of the things that we care about at the cafe level may not be good enough for farmers, right?
Like the micro-lots, right? They may not translate. So just making sure that they are aware of what's going on, they're aware of how farmers can be helped. When they're having conversations with consumers, they can talk about, “Okay, this coffee may not be…” like the example that you use, which is, “This is an 84 point coffee, which is delicious, but we know where it came from. We know what’s happening with the farmers,” versus, “We're pushing 91 in your face because it's the best coffee we've ever had, but we know that the farmer didn't get paid.” Does that make sense?
I think baristas being informed that we can be nerdy about extraction, we can be nerdy about latte art, but also being able to tell consumers that you should care about the quality is not just about, “Okay, this is the best coffee that's ever been on the planet,” but also that we need to support brands that are doing the work that's needed on the ground. Not just talking, but they're “walking the talk.”
And as you know, I have sold green coffee to two companies. So I actually know what companies are saying versus what they're willing to do. So I think that baristas are the ones that can actually push their employers to either walk the talk or educate consumers about what brands they should care about.
Consumers don't always know what to look for in a brand, but [baristas] can tell them like, “This shop pays this amount,” or “This shop does something that's beneficial to the farmer.” But in a way that's genuine and authentic, so not using the things that sound good, but don't make a difference to the farmer, but making consumers care about these things. These are things we may not be putting in your face.
This cafe could be beautiful and look the best, but you need to also look at what does this brand mean for farmers? And one—just to loop in this—we have to think about specialty coffee. We have Big Specialty, so the three or four major specialty coffee companies are owned by Big Coffee, right? When you go to like a Blue Bottle or Stumptown or Intelligentsia, you're really patronizing Nestle or [JEB Holdings], right?
And so for me, what I've actually struggled with, if our problem is trying to change the minds of JEB or Nestle (and as you know, Starbucks is also kind of owned by Nestle). As much as specialty coffee wants to have their own discussions, I want to see Big Specialty challenge their owners to change. Because one big decision, as you saw at JEB, one big decision on extending payment periods to 360 days, wreaked havoc on farmers.
So one coffee company can change the whole industry. In this case, they changed it for the worse, but that's the kind of decision where a Big Specialty [company] that's talking a lot can talk to their parent company about doing better things for farmers. And that can have a [more] major impact than some other programs that may not.
So that's my radical thing for today, which [might be] controversial. I don't want to hear Big Specialty brands lecture about all the good that they're doing when your parent company—where all your money is going—is wreaking havoc. So I want baristas to be brave.
And I think, Ashley, you've done such a wonderful job by the way. When I found your podcast, I cried because as you know, there aren't many people of color or women of color in the industry. And I was essentially again—as a Black woman and knowing that racial and gender inequality, are really what the industry exploits for profits, so knowing that my two identities were being exploited for profit and not being, not having someone to talk to or to even acknowledge that—I think finding your podcast that was smashing the patriarchy, I cried.
I was like, “Oh my God, I found my people.” So yeah, I've been a big fan from the beginning. And so this is such an honor to chat with you because you're doing wonderful work.
So if anyone hasn't told you, you made a difference in my life. I think you're making a difference in the lives of so many people by empowering baristas who are the first line of defense, who can influence culture, who can make brands cool or not cool.
And when you start talking about “pretend specialty” and “real specialty,” and pretend specialty is going to talk a big game about helping farmers when your parent companies are oppressing farmers.
So that's my controversial point today.
But I think I want to see more Big Specialty brands—where their parent companies are oppressing us—start to confront those instead of lecturing us about what they're paying for. Okay? So that’s my controversial point, which you can cut.
Ashley: No, I'm going to keep all of that. If you want to give a controversial take every day and I can tack them on to the end of all of my podcasts that'd be a delight.
Maggy: When you [told me] this is one of your questions, I’m like, “What is happening in the industry?” I see people talking a lot about prices, about helping farmers. But I'm saying if you can just go to your parent company and tell them to even increase the price, which they can influence by 20 cents, you can change the industry. Right? You can change the industry.
So that to me is I want to see more baristas start to talk about their employers. Obviously the word “transparency” has been such an amazing way to let people see behind the scenes. So I want to see more baristas really tell us the truth of their brands doing what they're saying, and brands we can trust.
People use 1% of their purchases for marketing when 99% of their purchases are exploitation. So I want to talk about the 99% exploitation. I don't want to hear about the 1%. That's really what I'm tired of. I’m tired of the 1% marketing. I want the 99% exploitation, and how can we move the needle on that?
Ashley: I don't think I've ever had a conversation that has challenged my thinking and really opened up the way that I understand the coffee world as much as this conversation with you. Thank you so much for lending your insights. I'm already thinking about what a part-two conversation between the two of us would look like. You're just, you're amazing. Like, you're, you're just incredible and you need to write 800 books or something.
Maggy: I hope I don't get into trouble, you know what I mean? I don't have anything to lose.
Ashley: Right, and that's a good point too, I think, to think about this conversation between me and you, is that you own a business, I'm pretty much unemployable. But this is a low-risk conversation in a certain way. I mean, it is high-risk because you do own a business and you're still a figurehead, but there's a lot of freedom that you and I can have in this conversation to say—
Maggy: Yeah, you're right. That's one thing I think of: If I don't, who will? Because a lot of people really cannot [speak out]. This is what they are thinking, but they can't really say it.
Ashley: Right, but there's a power to putting that into words and giving people, at least an ear to say, “Oh, someone else is thinking this as well. Maybe I can talk to my boss about this.” And it's not so much about baristas not wanting to have these conversations, but giving them the tools to have them, like the Barista Wage Spreadsheet, you know? That was just an idea someone had and then they went with it. There's just a lot of power to hearing ideas and seeing examples, and I hope that people listen to this and think, “I'm going to talk to my boss about this,” or “I want more focus on this other thing.” And I just hope that they leave with a better understanding.
Maggy: Yeah, I hope so. I know it was a lot. This is like my therapy almost, where I'm downloading all this info on someone that I know understands. You’re not being like, “Oh my God, I've never heard that before,” but you were being like, “Oh, I've heard that before, but this is like a new perspective on it.” So this was such a great discussion to have with someone that's knowledgeable and empathetic about the situation.
Ashley: If this was your therapy, then you can come do therapy here anytime you want it.
Maggy: I know, this is my free therapy. I mean, I get frustrated again as a Black woman from a producing country, as you know, it's a shitshow. I sometimes get frustrated. To be a little bit candid, I didn't always speak like this. I've been a bit more reserved, obviously fearful of, “What are people gonna think of me? I gotta be p.c. [politically correct].” When I look at it, if I don't say it, who's going to say it? We have to fight. We have to fight for freedom. Freedom does not just come on a plate. And so this is where I'm thinking. Coffee radicalized me. I did not really care too much about politics or any of the social issues that much before I came into coffee, because I was in a little bubble, but coffee has radicalized me.
And one of your questions was around social justice, and seeing the levels of inequality [in coffee] radicalized me. When you're a Black woman in coffee, you're an accidental activist. Because you can't not be an activist because of everything that's coming at you.
But thank you so much, Ashley. I really appreciate you making time for this chat and inviting me
Ashley: Anytime that you want to be on the show, you can be on the show. Thank you again for talking to us.
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