A TRUE PRICE FOR COFFEE

HOW MVO NEDERLAND IS BREAKING THE SPELL
ON UNREALISTIC COFFEE PRICES

Something has been brewing in the coffee industry. Farmers are structurally underpaid, while at the same time roasters have to contend with low margins, high costs, and fierce competition. Not to mention the impact coffee production has on people and our planet, for example in terms of carbon emissions, water pollution, soil erosion, deforestation, child labour, and labour migration. In an industry in which companies are not used to working together, MVO Nederland wanted to act as a lever. That is why, together with Solidaridad and over twenty Dutch coffee SMEs, we started the Futureproof Coffee Collective. Its main goal is to persuade companies and consumers to pay a differend price for coffee. How? By developing a joint, open source method for calculating the true price of coffee: a price that includes the social and environmental costs.

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AT A GLANCE


The Futureproof Coffee Collective aims to reveal the true price of coffee using true cost accounting. This project was launched in Colombia by more than 20 Dutch coffee companies and their trade partners.

The road to a true price tool

The first step towards a joint tool is creating the right conditions for cooperation. That means defining the challenges in the industry in detail and making sure everyone is on the same page. Meine van der Graaf, Business Developer at MVO Nederland: “We decided to start in Colombia by setting a benchmark for the average ‘true coffee price’ in that country. Together with expert organisations such as True Price, Soil & More and EY, we are working on an open source true cost accounting tool that monetises the coffee production footprint. For the first version, we selected five key indicators: living income, soil quality, biodiversity, CO2 and water use. Later in the process more variables will be added to get even closer to a true price. As we speak, four Dutch coffee companies are trialling the tool in a pilot project with their Colombian coffee farmers.”

“RIGHT NOW, FARMERS ARE PAID SO LITTLE THAT THEY CANNOT EVEN COVER THEIR PRODUCTION COSTS”

Towards a lower true price

Meine: “The true cost accounting tool points out which party in the chain should invest what to restore or prevent negative impact. We use the results to determine the ‘hotspots’: topics with a big impact on the true coffee price.” The participating entrepreneurs then address these key themes first. Their efforts will be measured to calculate their impact on the true price. “The successful cases of environmental impact reduction will prove useful in communication with both traders and consumers, persuading them to cover the remaining true costs of coffee production by paying the true price.”


Genuine will to bring about change

The participating coffee entrepreneurs are very active in the project. “The enthusiasm and genuine will they show is heart-warming. You can tell they had been waiting for a way to scale up their efforts to make an impact. Everyone knows that market prices are too low. Right now, farmers are paid so little that they cannot even cover their production costs. But as a small coffee company, what can you do? You cannot make the difference alone. The Futureproof Coffee Collective brings new faith and energy to these entrepreneurs, a belief that we can change the system.”

“If we want future generations to be able to enjoy coffee too, we need to start making the coffee and tea chain fair and sustainable now. The Futureproof Coffee Collective gives us the opportunity to quantify and tackle visible and invisible problems throughout the chain, thereby contributing to a fair and sustainable chain. I believe that by joining forces we will be able to raise awareness among consumers of how underpriced their daily cup of coffee actually is.”

Milo van Velzen, Buyer Green Coffee & Tea Simon Lévelt

“True cost accounting enables you to map the value and the costs of sustainably produced coffee. That makes it a great way to describe a comprehensive business case for Colombia. MVO Nederland connects a group of pioneering coffee entrepreneurs and supports them in revealing the hidden environmental and social costs in the chain. It also encourages traders and roasters to look for solutions to minimisze those hidden costs. With MVO Nederland’s support, we're able to communicate better with customers about both the quality of coffee and the added value of a sustainable production process.”

Joel Brounen, Country Manager Colombia Solidaridad

“In 1973, Fairtrade Original was the first in the Netherlands to import coffee for which a fair price was paid. As of 2019 we're part of the Futureproof Coffee Collective. With this collective we want to take the next steps towards making the coffee sector more sustainable. MVO Nederland, thank you for this initiative and your role as a catalyst!”

René Bakker, Managing Director Fairtrade Original

HOW IT ALL STARTED

Meine van der Graaf had been in contact with coffee companies for a while before starting the Futureproof Coffee Collective. He recalls one specific meeting that triggered him to take action. “I asked if they wanted to contribute to making coffee production more sustainable. The immediate response was: ‘that's ALL we want! But we're stuck. Stuck between sustainability goals on the one hand and the market with its ridiculously low prices on the other.’ That's when it clicked.” Soon after, MVO Nederland introduced the idea of true cost accounting, raised money and teamed up with knowledge partners to start a project. The goal was to find at least 10 SMEs to join the collective. “And here we are, with over 20 eager coffee companies. That shows how urgent the situation is.”

FUTURE POTENTIAL

MVO Nederland sees a bright future for true cost accounting. Plans are already being made to expand in Colombia. Meine: “We would like to start working with over a hundred producers and coffee companies there. The first steps are being taken in other countries too, as well as for other products such as tea, cocoa, frui, and herbs.” In the long term, the tool will also provide concrete ways to lower social and environmental impact and provide information on best practices and potential partners. “In five years’ time, we believe all SMEs with an international value chain will be able to use our tool not only to calculate but also to bring down the true price of their products. In fact, we believe that by then both government and large companies will already be buying coffee differently thanks to true cost accounting.”

STAY UPDATED

The latest news about the Futureproof Coffee Collective

WANT TO KNOW MORE?

Contact Meine van der Graaf