Could a new pricing model end poverty in coffee, ensure beans are ethically sourced?

According to sustainable coffee roaster Bellwether​, “decades of various interventions and initiatives” designed to uplift farmers have fallen woefully short with the nominal price of coffee remaining close to that of 40 years ago – representing a decline in real terms of almost 67%​ and resulting in 80% of the world’s coffee producers living below the poverty line.

Frustrated that the existing pricing standards for coffee don’t work for farmers, and that marketing claims around sustainability and fair pricing mislead consumers, Bellwether teamed with stakeholders across the supply chain, including Heifer International and Sustainable Harvest to create the Verified Living Income​ – a first-of-its-kind green coffee pricing model designed to meet farmers’ needs without placing a significant additional burdens on other players in the supply chain.

“Verified Living Income really flips the coffee industry’s pricing model on its head and it sets minimum green [coffee bean] prices based on farmers’ livelihood needs, instead of the commodities market,”​ Grayson Caldwell, the senior sustainability manager at Bellweather explains in this episode of Investing in the Future of Food​.

She notes that the model takes into account the unique factors each farmer or co-op faces to identify how much it costs them to produce a pound of coffee, including their average yields and productivity, land size and inputs and “overlays a living income benchmark to not just determine the cost that buyer should be paying for coffee to cover the cost of product, but really what price needs to be paid to bring coffee producers up to be able to live a dignified life and earning a living income.”

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