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1920 1940 1960 1980 2000 2020 Peak Coffee?ps baker

1920 1940 1960 1980 2000 2020 Peak Coffee?

A Texan oil expert is the inspirationfor this talk

● In 1956 a Texan oil geologist called● In 1956, a Texan oil geologist called Marion King Hubbert, made a startling prediction

● Oil production would peak in the US between 1966 to 1971

● No one took him seriously

● But his prediction came true in 1970 –the greatest commodities prediction ofthe greatest commodities prediction of all time

● He also suggested that world oil would peak in another generation

● I suggest it’s time to start asking if this could happen to coffee

2

Onwards and upwardsNo cause for alarm?

130

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ve increase; 1961 = 100

Coffee

People

90

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130

1960 1970 1980 1990 2000 2010

Relativ

Disaggregating the world curveTotal production is quite linear – but the components are highly non-linear

a 1000

1200

Vietnam

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Indonesia

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Ethiopia

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Peru 

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Colombia 

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Uganda

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Mexico

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Venezuela

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Kenya

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Ecuador 

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Cameroun

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El Salvador

3

Oil and coffee countries show similarities in composition

100000

Production status

Oil* Coffee**

Countries increasing

14 16

Countries flat

10 10

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10000

Pro

duct

ion

Countries declining

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Oil 1000s barrels/d

Coffee 1000s sacks/yr

Country ranking

* BP statistical review

** ICO, FAO, USDA

Coffee production is increasingly concentrated

● Proportion of coffee produced by the top 4 countries (C4) is rising – it’s now over 60%

● When only one C4 country in one year has a problem (e.g. Colombia 2009) this affects everyone

0.54

0.56

0.58

0.6

0.62

0.44

0.46

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0.5

0.52

61‐70 71‐80 81‐90 91‐00 01‐07

4

Coffee output is getting more variable (but only a bit)

• Coefficient of variation of top 20 countries is rising• Top 20 countries now produce more than 95% of world production

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1.00

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ion of production (squares)

Coeff Var

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1975 1980 1985 1990 1995 2000 2005 2010

Coefficient of variati

C20

10 of the top 25 coffee countries have been declining by 42,000 tons/yr over 20 years

2 4

y = ‐0.0424x + 86.636

1 4

1.6

1.8

2

2.2

2.4

llions tons green coffee

Colombia, Costa Rica, Côte d’Ivoire, DRC, Ecuador, El Salvador, Kenya, Mexico, Philippines, Venezuela

1

1.2

1.4

1988 1993 1998 2003 2008

Mil

5

But demand is increasing by ~ 100k tons/year

● Some of the demand is met by increasing yields

● But not enough to account for the rise – and maybe the big increases in yields in Colombia and Brazil are now over

● So where is all the new supply going to come from?from?

● After all, there is only a finite and declining amount of land suitable for coffee

A problem of perception?How do you think of coffee production?

● For many people, probably just as an ever rising graph

Re

lati

ve in

cre

as

e 1

96

0 =

10

0

● But this doesn’t give us any intuitive idea of what is really happening

● The above line is a running tally of:

● [Existing stock] + [Recently planted] – [Eradicated] = Total

6

The world’s coffee lands are in constant flux● Currently the industry depends on more new coffee entering

production than leaving

a

New coffeelands

Then & now

Coffee lands lost

The world’s coffee lands are in constant flux● Currently the industry depends on more new coffee entering

production than leaving

a b

New coffeelands

Laissez-fairefuture

Then & now

Increased loss of coffee lands

Coffee lands lost

7

The world’s coffee lands are in constant flux● Currently the industry depends on more new coffee entering

production than leaving

a b c

New coffeelands

No more new coffee lands

Laissez-faire future

Far-sightedThen & now

Increased loss of coffee lands

Losses minimized

Yields increased especially Africa

Lands lost to coffee

Coffee fading away...

● Coffee >> beef, a rational economic decision

● The land is now off the coffee ‘books’

8

Where exactly is new coffee coming from?

● The statistics are not good enough to tell us how much and where new coffee is coming from

● But some of it is due to natural habitat destruction including deforestation (have some data & anecdotal evidence)

● It’s likely that at least 50,000 ha of new production is coming on stream each year

● If only a half (25k ha) is from deforestation, this could mean an extra carbon release/loss of 5 million tons carbon/yr

● This could be as much as one third of coffee’s total yearly s cou d be as uc as o e t d o co ee s tota yea ycarbon footprint

● If the coffee industry is serious about sustainability, it needs to think seriously about its global carbon footprint

Re-conceptualizing coffee productionaway from the idea of a limitless frontier

● Coffee production is increasingly concentrated

● And it’s not a static stock, it’s turning over

● This flux will increase in the years to come as the climate changes and human populations rise

● But new lands will be limited in the future

● We need to get a much better grip on this process● We need to get a much better grip on this process

9

We need better data :

1. To keep a careful eye on the supply/demandblproblem

2. Carbon: the industry wants to reduce carbon footprint – just selling small amounts of carbon neutral coffee is not enough if deforestation is getting worse

3. Hence any general claims to sustainabilityd d h i ddepend on having a transparent and accurate picture of world coffee

4. Coffee has shown leadership in sustainability but this could be jeopardized by unsustainable increases in production flux

Taking the temperature of global sustainable coffee

Too “hot & new” - not sustainable

● Is it time to re-think what “sustainable” means?

Too “cold & old” - not sustainable

10

Recommendations 1

We need better statistics:

● We simply don’t know enough about the coffee lands that are the foundations of a $90bn/yr industry

● It’s crazy that we know far more about a consumer of coffee in say, Milwaukee, than rate of coffee land change in producer countrieschange in producer countries

Recommendations8

9

p

Quite major variance between production estimates

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5

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8

Millions tons green

 coffee

USDA

ICO

FAO

● We need to improve accuracy of estimates

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1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

M

11

Very poor data on global coffee area

● We need to gather more types of data – not just volume

Recommendations 2

● We need to start looking at sustainability of th ff i d t h l lthe coffee industry on a much larger scalethan hitherto. Only by calculating global balances can we start to see the true costs of coffee to the global environment

● By so doing, better understand the factors likely to affect future global production

E if d l k ff i hi● E.g., if we started to look at coffee in this way, we might concentrate more on improving carbon balance by focussing on coffee yields and thereby reduce the need to deforest more land.

12

Recommendations 3

● The single most important thing that could be done to improve global sustainability of coffee is to transform African coffee production into a modern and progressive industry, because of the three continents, Africa has by far the lowest yields.

● A coffee industry that calls itself sustainable and that has become a global leader in this endeavour through use of a tree that evolved in Africa, should surely not allow this stagnation to continue.

● The answer is primarily through investment in research, extension and technology, and Brazil/Colombia have shown the way.

● Once Africa loses its coffee industry, it will be very hard to get it back again.

Will coffee peak?

● Yes, but probably not soon

● Part of “Peak Everything”: by the end of this century it i i l lik l th t th ld ill b 4°Cseems increasingly likely that the world will be 4°C

warmer than today. But this is a global average, many tropical countries will be up to 6° C hotter.

● This will make coffee production contract to fewer places, e.g. S Brazil, Argentina, but it’s difficult to say with precision

● Could coffee be especially susceptible to peak early?

● Yes, because of current concentration of production, more unpredictable climate, need for food security in the tropics as well as the desirability of coffee lands for other crops

13

More reasons for production togo down than up

Going up Going down

• Increasing demand causes rising prices

• Rising food prices and biofuel crops give farmers more lucrative optionsp

• Leads to new lands coming on stream• Large scale rehabilitation projects from the public/private sector

g p• Governments may subsidize food security campaigns• Poorest countries experience increasing political strife that leads to more disruptions in supply – western governments and UN won’t help enough• Lower altitudes increasingly too hot/dry/wet to grow coffee• Population rise & city spread eats upPopulation rise & city spread eats up coffee lands• More chaotic climate in major coffee countries leads to periodic shortages, price rises which reduces demand• Effective REDD schemes start reducing supply of coffee lands from deforestation

Lead indicator of peaking?

● During the peaking Tanzania coffee production

800

900

s

g p gprocess, amplitude of production will start to increase as weather patterns become more unstable.

● We may already be seeing this in some countries, such as

0

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1960 1970 1980 1990 2000 2010

Th

ou

sa

nd

s o

f 6

0 k

g s

ac

ks

Robusta Arabica

Nicaragua

Nicaragua, Tanzania

● Hence an early warning sign of peaking is increased variation

0200400600800

100012001400160018002000

1975 1985 1995 2005

Co

ffee

pro

du

ctio

n 1

000s

bag

s

14

Waiting for the Black Swan?

● What will really happen?

● No one knows, but we are not really trying hard● No one knows, but we are not really trying hard enough at the moment to figure it out

● Or even to try to shape our thinking and formulate the right questions to ask

Peak sustainable coffee...already reached?

● Sustainable coffee certifications have grown over 10 years, from 1% to now about 8% of total productionfrom 1% to now about 8% of total production

● But coffee production has also grown, by about 10% in 10 years

● So the area of uncertified coffee remains about the same –and because of deforestation and diversification, coffee’s carbon footprint must be getting bigger

● Can you claim that sustainability of coffee is improving if the carbon footprint is getting worse?carbon footprint is getting worse?

● Unless sustainable coffee certifications accelerate, they will start to decline as a proportion of world coffee as coffee production flux increases

15

At the global level, sustainable schemes to date have had little effect

● Ten years ago sustainable coffee was ~1% of world coffee● Ten years ago, sustainable coffee was ~1% of world coffee

Globalcoffee

At the global level, sustainable schemes to date have had little effect

● Now sustainable coffee is about 8% of world coffee● Now, sustainable coffee is about 8% of world coffee

Globalcoffee

16

At the global level, sustainable schemes to date have had little effect

● But during that time world coffee supply has grown by ~● But, during that time, world coffee supply has grown by ~ 10%

Globalcoffee

At the global level, sustainable schemes to date have had little effect

● But during that time world coffee supply has grown by ~● But, during that time, world coffee supply has grown by ~ 10%

Globalcoffee

17

So, if we are not careful...

● Rate of certification of coffee will become less than the rate of change of coffee lands

∂Cert ∂Lu

∂t ∂t

the rate of change of coffee lands

<● And in the end, for true sustainability, it’s the land

what matters, not the crop

Finally: it’s an ideological battle

● It’s clear from recent financial problems, that weIt s clear from recent financial problems, that we have been living in a fool’s paradise for some time

● For Peak Coffee, you need to decide which fundamentals you believe in

● This battle can be personified by two men:

18

What sort of a coffee future?

• As personified by Alan Greenspan, neoliberal ‘regulation lite’ champion

● Greenspan (interrogated by Waxman), ‘fessed up: “ I found a flaw in the model that I perceived is the critical

neoliberal regulation lite champion

• But, by Oct 2008 - in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.”

I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.”

What sort of a coffee future?

● Or as personified by Hubbert: a scientist

● He was not just an oil jock who made a lucky● He was not just an oil jock who made a lucky guess

● But someone with deeply analytical powers who was scathing about the world economic system

● "The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledgeintellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.

19

Matter and Energythe stuff of life

● So how does the coffee world work- at the most fundamental biophysical level?

● Are we happy with our current state of data and understanding, where we let the market find new coffee?

● Or will we too one day, like Alan Greenspan, find a fatal flaw?

● As things stand, at the field level, we are still in a Greenspan mindset, with:

● Lack of investment in many countries (esp. Africa)y ( p )

● Weak and atomized coffee support institutions

● No real planning for our very uncertain future

● We simply must do better

Take home questionsWhat is it to be?

● Are you ‘Greenspan’ or ‘Hubbert’ on coffee?

L i f i ?● Laissez-faire?

● Or plan carefully for the future?

● The latter means substantial investment and increased institutional support

● What responsibilities should international, national, NGO and private institutions take?

● But whatever you decide, please don’t think that somehow these fundamental questions are all going to be taken care of

● Because the institutions that could do this, have been deliberately weakened and hollowed out

20

Thank You Anacafé

&& ICO!

for being such gracious hosts

“Intellectual traditions have been born from the study of ffcoffee; some have been overturned by it. The industry

has shaped fields of learning.”

[Robert Bates ICO World Conference 2001]