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What is an item—a consumer good, a handmade product, a cup of coffee—really worth? And as a given product goes from one hand to the next, how is the value of that labor determined?
Meritocracy—splashed together with capitalism—would have you believe that the value of a product is correlated with the individual effort, talent, and amount of risk required when crafting it. This rhetoric is how we justify CEO billionaires raking in exorbitant amounts of money while their employees struggle to make ends meet at just above minimum wage. (Amazon founder Jeff Bezos makes $149,353 per minute while the average Amazon employee made an annual salary of $29,007 in 2020.)
On the latest episode of Boss Barista, I talked to Vera Espíndola Rafael, a development economist who wrote a paper called “A Business Case to Increase Specialty Coffee Consumption in Producing Countries.” She argues that coffee-producing countries should strategize to promote in-country consumption—and that doing so would mean holding onto more of the value of the coffee they cultivate.
Her research was prompted by a study she read:
I think one of the best studies—I would say definitely the one that gave me more to think about—has been The Coffee Barometer. I was floored by one of the key points that they were stating: Basically, 10% of the value of coffee is for green-coffee-producing countries. And then seeing that’s just $20 billion of $200 billion just floored me.
So here we are producing these great coffees in all these countries. And then the only reward, so to say, is 10% of this $200 billion value. So apparently 90% of the value is being produced in consuming countries. So here I am, and I am thinking, “How do we ever change that?”
Coffee is grown, processed, and prepared for export within producing countries. When that coffee reaches consuming countries, it’s roasted and sold to customers. While this is a simplification of the coffee supply stream, there’s nothing in this model that suggests that 90% of coffee’s value would or should be created in consuming countries, far from where it originates.
This extraction of value is a relic of colonialism—look at any agricultural product, particularly those grown in formerly colonized countries, and you’ll see the same patterns. It could be argued that this is a distribution issue: To create more equity across the supply stream, we should shift the distribution of value to coffee-producing countries; we should pay more for coffee and be willing to sacrifice a percentage of our market share to do so. While this should happen, it hasn’t yet. In fact, coffee was more expensive in the 1970s than it is now.
In 1977, a pound of green coffee cost just above $2. Today, a pound of coffee costs $1.54. These numbers are not adjusted for inflation.
In Vera’s paper, she writes: “What is clear, looking at supply and demand, is that in the foreseeable future, a significant long-term rise in coffee prices is unlikely, despite temporary surges.” While there is talk about paying more for the things we enjoy and bringing about equity through rising prices, in coffee that just hasn’t happened.
And yet, coffee has gotten more expensive on the consumer end. While the price of a pound of roasted coffee has stayed relatively stagnant since 1980 (but has at least gone up to adjust for inflation, albeit with some fluctuations) a cup of coffee in coffee shops has gone up. In 2019, a cup of coffee cost an average of $2.99 in the United States, with coffees at specialty shops averaging $4.24 per cup. A study of restaurant menus over time show that coffee cost $0.35 per cup, or $1.57 in 2016 dollars.1
Part of that rise comes from the advent of Starbucks, which only started serving lattes in 1985 and paved the way for the modern specialty coffee shop—which goes to show that value is easily created. Starbucks didn’t suddenly add anything new to coffee. They simply found a new way to serve coffee through specialty drinks, and a new consumer class was born. We didn’t have many specialty shops in the 1970s, and now with over thousands of cafes across the nation, the value of coffee has gone up.
Opening a coffee business is no way to get rich, but there seems to be a historical upward trajectory of coffee prices going up on the consumer end in traditional coffee-consuming countries—and people in consuming countries increasing their market share of the value of coffee. (A side note: Vera uses the word “traditional” to distinguish places like the U.S. and Europe, where most coffee is sent, from producing countries, where she hopes consumption will rise.) Coffee never became a riskier industry for folks to get into on the consuming end. In fact, it became more of a sure bet.
Instead of looking at value as a distribution issue—one where the only answer is to pay more for coffee—we should instead look for new ways of creating value. We’ve seen a clear way this happens on the consumer end and how the specialization of coffee within traditional consuming countries has monopolized the value of the industry in favor of those at the end of the supply stream. Because we can’t wait for the folks who disproportionately benefit from a broken system to ever fix it, we need solutions now that are independent and decenter these actors.
We cannot wait for that. It’s so frustrating to see that we are dependent. You don’t want to be in that position when you’re traveling, just, what? Two hours from here [Mexico City] and you see sheer poverty? Come on. I’m definitely one of the people that’s like, “Okay, so where can I have influence on this? And is that even with a cup of coffee?” And the answer is yes. So let’s try to understand that better.
Ultimately, value is assigned, created, and crafted by people. There seems to be no inherent value to anything, and if there were, the folks and workers who create the most value—in this case, that should be those who grow and produce the coffee—would be the ones benefiting the most financially. The value that is assigned to coffee is entirely manmade and is demonstrated through the unequal distribution of money along the coffee supply stream.
Instead, value is influenced by power, and is unevenly dispersed. Jeff Bezos doesn’t make the items you want, package them, store them, nor deliver them to your house, but he’s certainly the one who benefits the most from your needs.
Why is this conversation important? Because we often look at problems, like the price of coffee, as only having one solution. It’d be easy to find a hundred different articles, talks, even entire conferences about how we need to pay more for coffee, and yet we don’t—not enough to make a real difference. While Vera’s suggestion of increasing in-country consumption is just one solution—she freely admits that we need to diversify how we think about this problem, and attack it from multiple angles—it’s one that would break from the dominant, and ineffective, course of action that we’ve followed for decades.
In coffee, we mythologize the inherent flavor of a bean, evoking wine terms like “terroir” to describe its characteristics. We describe microclimates, proper soil care, staggering elevations across mountains that are difficult to traverse. But we provide almost no financial acknowledgment of this inherent specialness or the work that farmers do to create it. It’s time for that to change.
Before you go…
I mentioned Jeff Bezos a couple times in this piece because 1. Fuck him, and 2. Bo Burnham.
Burnham’s song “Bezos I,” from his new Netflix special, “Bo Burnham: Inside,” makes fun of the egregiously wealthy tycoon (who, as we’ve heard time and time again, does not pay any taxes). Burnham even uses his full name—Jeffrey Bezos—which is a perfectly pedantic and condescending little touch that’s likely to resonate with every person who has ever been talked down to. I know someone is going to talk to me like a child when they use my name excessively. 2
I’ve been staying in my boyfriend’s parents’ house for the last few weeks as we get ready to move to Madison, and I’ve been trying to mark the time here with lots of books. I just finished Elena Ferrante’s newest book, The Lying Life of Adults. Ferrante is able to render the smallest feelings as an operatic symphony, reminding readers of how insular it can feel to be a child, and the way that tiny details matter to us during our youth because they’re our entire world.
I’d really and truly love your book suggestions if you have any to share.
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This is not a perfect comparison, and more studies need to be done on the costs of coffee over time.
By someone, I mean a man. If I hear my name a lot, it means a man is about to talk down to me.