GLOBAL MARKET REPORT
Coffee prices and sustainability
SUSTAINABLE COMMODITIES 
MARKETPLACE SERIES
Steffany Bermudez, Vivek Voora and Cristina Larrea
September 2022
Despite the effects of the 
COVID-19 pandemic, global 
coffee supply and demand 
have grown.
From the Ethiopian forests where—as the 
legend goes—goat herders first discovered 
it, coffee has become a staple for many 
consumers (Deshmukh, 2021). Coffee is one 
of the world’s most traded commodities and 
consumed beverages (Food and Agriculture 
Organization of the United Nations [FAO], 
2022b). The coffee plant is a shrub or small 
tree that needs about 3–4 years to start 
producing red cherries, which are then 
strip- or hand-harvested (National Coffee 
Association, n.d.). Strip harvesting, which 
can be mechanized, involves removing all 
the cherries from the branch at once, while 
hand harvesting, a more labour-intensive 
process, consists of selectively harvesting 
ripened cherries. Harvested coffee cherries 
are processed immediately using a dry or wet 
method to facilitate the milling process, which 
involves hulling to extract the coffee bean 
(green coffee) and an optional polishing step 
before being graded and sorted by weight, 
size, and quality so they can be sold (National 
Coffee Association, n.d.). Green coffee beans 
are then roasted to unlock their flavour, 
becoming brown roasted beans, which are 
ground and brewed to produce the coffee 
beverage we commonly enjoy. 
Arabica and Robusta are the two main 
coffee species that have come to dominate 
the market, with global production in 2020 
consisting of about 58% Arabica and 42% 
Robusta (International Coffee Organization, 
2021, p. 9). While many factors affect quality, 
Arabica coffee has historically been considered 
higher quality as it has a smoother, sweeter 
taste. Robusta has twice the caffeine content, 
making it more bitter and well suited for 
ready-to-drink applications and espresso 
blends (Petruzzello, 2021). Fine Robusta 
Standards and Protocols were introduced 
in 2019 to improve the quality of coffee 
made with Robusta (Impallomeni, 2019). 
The Arabica coffee plant is more sensitive 
to higher temperatures and must be grown 
in subtropical climates at altitudes of 600 m 
to 2,000 m. It is well suited for agroforestry 
and shaded environments (Petruzzello, 
2021). Robusta coffee is more resistant to 
temperature fluctuations and can be grown 
from sea level to 600 m in full sun (Petruzzello, 
2021). It is also more disease resistant and 
Market Overview

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generally produces higher yields. Today, coffee 
has become a highly sophisticated product, 
with producers and roasters developing a 
wide range of varietals and flavours to meet 
different users’ expectations and to respond to 
consumption trends.
The coffee sector has grown into a lucrative 
business downstream, reaching a retail market 
value of approximately USD 102 billion in 
2020. It is expected to continue expanding at 
a compound annual growth rate (CAGR) of 
at least 4.28% from 2021 to 2026 (Mordor 
Intelligence, 2021). The coffee value chain 
provides direct employment to an estimated 
125 million people worldwide (Fairtrade 
Foundation, 2022). The U.S. coffee industry 
alone employed almost 1.7 million people in 
2015. Coffee is grown on 12.5 million farms 
around the world, predominantly run by 
smallholder farmers cultivating 5 ha or less—
indeed, 95% of coffee farms span 5 ha or less 
and 84% span less than 2 ha (Panhuysen & 
Pierrot, 2020, p. 56). Smallholder farmers 
account for most global coffee production as 
they comprise 73%–80% of coffee farmers 
globally (Fairtrade Foundation, 2022; 
Panhuysen & Pierrot, 2020, p. 56). Larger 
estates produce the remainder, with coffee 
estates greater than 50 ha rarely found 
outside of Central and South America 
(Panhuysen & Pierrot, 2020, p. 56).
LIVELIHOODS
There are 12.5 million coffee farms in the world. 
95% of coffee farms have an area of 5 ha or less. 
84% have less than 2 ha.
Figure 1. Global coffee production from 2008 to 2019. Coffee that complies with voluntary 
sustainability standards (VSSs) reached 21% to 45.4% of total production in 2019.
Note: Conventional production volumes do not comply with a VSS, while VSS-compliant production volumes 
refer to coffee produced in compliance with at least one VSS. Production volumes that are defined as 
potentially VSS compliant cannot be definitively identified as conventional or VSS compliant with the data 
currently available.
Source: FAO, 2022a; Meier et al., 2021.
VSS compliant
Potentially
VSS compliant
Conventional
0
2
4
6
8
10
2019
2015
2016
2017
2018
2014
2013
2012
2011
2010
2009
2008
Tonnes (millions)

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Coffee prices and sustainability
Coffee production increased from about 
8.5 million tonnes in 2008 to 10.7 million 
tonnes in 2020 from cultivating 11 million 
ha, according to the FAO (2022). Production 
has not slowed over the last decade as its 
CAGR of 1.53% from 2008 to 2019 jumped 
to 2.73% from 2014 to 2019. About 80% of 
coffee production was exported in 2021/2022, 
up from 64% in 2020 and 74% in 2019, 
providing an important source of foreign 
exchange revenues for exporting countries 
(FAO, 2022a; Foreign Agricultural Service, 
2021; United Nations, 2022). Brazil, Vietnam, 
and Colombia have consistently been the 
highest-producing countries and largest 
exporters since 2016, exporting some 33 
million, 29 million, and 14 million 60-kg bags, 
respectively, in 2021/2022. The European 
Union (EU), United States, and Japan have 
consistently been the largest importers over 
this period, importing about 43 million, 26 
million, and 7 million 60-kg bags, respectively, 
in 2021/2022 (Foreign Agricultural Service, 
2021, p. 9). Global coffee supply and demand 
have remained fairly stable over the last 5 
years, with supply exceeding demand by 1%–
4%. Nevertheless, rising demand is expected 
to outstrip supply starting in 2021/2022, while 
supply is expected to drop, mostly due to 
unfavourable weather conditions (Foreign 
Agricultural Service, 2021; International 
Coffee Organization, 2022, p. 9).
The COVID-19 pandemic has been 
particularly challenging for the coffee sector 
as coffee is primarily grown for export 
(Foreign Agricultural Service, 2021, p. 9). 
On the production side, COVID-19 has 
disrupted the availability of labour, inputs, 
and extension services and made it difficult 
to move products to markets (Panhuysen 
& Pierrot, 2020, p. 56). Despite these 
challenges, global coffee production in 2020 
rose by about 660,000 tonnes from 2019 
(FAO, 2022a). Shipping disruptions have 
boosted transportation costs and affected 
product quality and availability (Hernandez 
et al., 2020, p. 12; Mera et al., 2021, p. 
43). Furthermore, government public 
health measures due to the pandemic have 
limited and prevented out-of-home coffee 
consumption (Mera et al., 2021, p. 43; 
Mordor Intelligence, 2021). Nevertheless, 
demand remained strong as companies over-
purchased coffee to guarantee production 
and sales and drew on stockpiles to maintain 
product output (Mera et al., 2021, p. 43). 
End consumers have also shifted their 
consumption patterns by moving to online 
shopping and at-home coffee consumption 
options (Mordor Intelligence, 2021).
Climate change continues 
to threaten the long-term 
viability of the coffee sector.
The disruptions of the pandemic on the 
global coffee value chain provide a cautionary 
tale for current and anticipated climate 
change impacts. Changing climatic conditions 
are expected to render some coffee-growing 
regions no longer suitable (Grüter et al., 
2022). Based on global climate models used 
to explore three climate scenarios and soil 
conditions, highly and moderately suitable 
Arabica coffee-growing environments around 
the world are expected to decrease by 50% 
and 30%, respectively, by 2050 (Grüter et 
al., 2022). The effects of climate change are 
also expected to lead to the emergence of 
existing and new coffee pests and diseases 
as well as the loss of productive agricultural

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lands, which will invariably affect coffee 
farming (Pham et al., 2019). For instance, the 
coffee leaf rust fungus greatly impacted coffee 
production in various parts of Latin America 
from 2012 to 2017, causing an estimated 
USD 3 billion in losses and negatively 
affecting 2 million farmers (McKenna et 
al., 2020; Pham et al., 2019). More recently, 
severe and unexpected frost in Brazil’s coffee 
belt in June and July 2021 caused global 
coffee prices to spike by 13% (Foreign 
Agricultural Service, 2021, p. 9; Figueiredo & 
Teixeira, 2021). 
Although coffee farmers are used to 
fluctuating weather patterns, they will need to 
adapt to less predictable growing conditions 
and more extreme climatic events. More 
attention to climate resilience is especially 
important in coffee cultivation, as it requires 
long-term planning to get a return on 
investment. The vast majority of today’s 
production comes from smallholder farmers 
with fewer resources to cope with shocks, 
making them more vulnerable to climate 
change. Numerous adaptation measures exist 
in the coffee sector. These include moving 
production to areas with more suitable 
climates and switching to more climate-
resilient species such as Robusta or adopting 
more sustainable farming practices, like 
shade-grown coffee to reduce temperatures 
or mulching to maintain soil moisture (Pham 
et al., 2019). Some countries have started 
climate-proofing their coffee sectors. For 
instance, an estimated 85% of Colombia’s 
coffee now consists of leaf rust-resistant 
varieties, and areas projected to offer suitable 
coffee-growing conditions are being mapped 
(Boer et al., 2020; David, 2021; Foreign 
Agricultural Service, 2021, p. 9). Vietnamese 
coffee growers commonly intercrop their 
Robusta coffee plants with fruits such as 
avocado and durian and are working to 
improve their irrigation efficiency to lower 
costs and maintain productivity (Foreign 
Agricultural Service, 2021, p. 9; Hofstetter, 
2016; International Union for Conservation 
of Nature, 2020). 
Moving coffee production to more suitable 
areas must be done carefully to prevent 
ecosystem losses (i.e., deforestation or 
degradation), which will exacerbate climate 
change (Panhuysen & Pierrot, 2020, p. 
56). For instance, coffee cultivation in the 
Peruvian Amazon was directly responsible 
for a quarter of its deforestation in 2012, 
and the upward expansion of coffee farming 
continues to pose a high risk to forested and 
protected areas (Panhuysen & Pierrot, 2020, 
p. 56; Rainforest Alliance, 2021a, p. 14; van 
Dijkhorst et al., 2017, p. 11). Additionally, 
consuming countries increasingly put 
legislative frameworks in place to ensure that 
industry players understand and mitigate 
deforestation risks in their supply chains, 
such as the EU proposal for a regulation on 
deforestation-free products. What is clear 
is that coffee farmers will have to become 
more resourceful and diversified by varying 
cropping patterns and livelihood activities to 
face changing weather patterns that will affect 
different parts of the global coffee value chain 
in unpredictable ways (Foreign Agricultural 
Service, 2021, p. 9).
Despite its vulnerability to the effects 
of climate change, coffee farming has 
climate change mitigation and adaptation 
potential. While deforestation-free farming is 
essential to slow global climate change and 
biodiversity losses, coffee cultivation offers 
tangible opportunities to restore mixed-use 
forests in coffee-growing regions around the

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Coffee prices and sustainability
world. Agroforestry techniques that cultivate 
trees with crops, regenerative agriculture 
practices that restore degraded land and 
ecosystems, and intercropping can provide 
shade and cooler environments suitable for 
growing good-quality Arabica coffee while 
sequestering carbon and diversifying revenue 
crops (Ahmed et al., 2021; Pham et al., 
2019). For example, coffee farmers in Peru’s 
Alto Mayo Protected Forest have been 
able to weather the COVID-19 pandemic 
by growing more sustainable certified 
coffee through agroforestry practices and 
generating revenues by selling carbon credits 
via the United Nations REDD+ programme1 
(Bauza, 2021; Specialty Coffee Association, 
2021). It is clear that regenerative coffee 
farming systems will be required not only to 
halt—but also reverse—the degradation of 
natural environments and rural communities 
around the world and to restore them. 
This can be done by building healthy and 
fertile soils that can retain and filter water, 
returning shade trees, and enhancing wildlife 
habitats (Murphy & Lilliston, 2022; Vu 
Le et al., 2021).
1  “REDD+, which stands for Reduce Emissions from Deforestation and Forest Degradation while fostering forest 
conservation, is a framework created by the UNFCCC Conference of the Parties (COP) to guide activities in the 
forest sector that reduces emissions from deforestation and forest degradation, as well as the sustainable management 
of forests and the conservation and enhancement of forest carbon stocks in developing countries” (United Nations 
Framework Convention on Climate Change, 2022).
Coffee produced in 
compliance with VSSs offers 
opportunities to improve the 
sustainability and resilience 
of the sector.
Efforts are ongoing to move the coffee sector 
toward sustainability and improve farmer 
resilience to face challenges such as climate 
change. The implementation of VSSs, which 
began in the sector more than 30 years ago, is 
one of these efforts. Complying with a VSS 
allows farmers to differentiate themselves 
from conventional coffee producers in the 
marketplace (Voora et al., 2019, p. 6). In 
exchange for adopting farming practices that 
can provide benefits to the environment and 
communities, farmers can label and sell their 
products as VSS compliant. 
VSSs in the coffee sector typically require 
farmers to adopt more sustainable farming 
practices, such as soil, water, forest, and 
energy conservation measures that can make 
their operations more resilient to changes, 
including extended droughts (Voora et al., 
2022). VSS-compliant farmers may also get 
higher prices and premiums for their coffee 
and establish stronger links with buyers, 
which can help them cope with market 
fluctuations (Bianco, 2020; Elder, 2021, p. 9). 
While offering numerous potential benefits, 
VSSs can be further strengthened to improve 
farmer resilience to challenges such as climate

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change and human health pandemics (Bianco, 
2020; Elder et al., 2021, p. 168). 
In 2019, more than 1.1 million farmers 
produced 2.09 million–4.55 million tonnes of 
VSS-compliant coffee, with a total farm gate 
value of between USD 4 billion and USD 11 
billion. This is a drop of 460,000–570,000 
tonnes from the previous year (Meier et al., 
2021). The farm gate value estimate was 
derived from FAO averaged producer prices 
per tonne multiplied by VSS-compliant coffee 
volumes produced per country. The most 
prominent VSSs in the coffee sector, ordered 
by 2019 production volumes, are 4C (1.61 
million tonnes), UTZ (1.08 million tonnes), 
Fairtrade (0.82 million tonnes), Rainforest 
Alliance (0.67 million tonnes), and Organic 
(0.37 million tonnes) (see Figure 2) (Meier 
et al., 2021). Since the Rainforest Alliance 
and UTZ Certified merger in 2018, the 
UTZ standard and correspondent label are 
gradually being replaced by the Rainforest 
Alliance Certification Program and labelled 
with the new Rainforest Alliance seal from 
2020. The Global Coffee Platform (GCP) 
(2022) supports all of these initiatives and has 
created an Equivalence Mechanism based on 
the GCP Baseline Coffee Code to establish 
a baseline of more sustainable practices 
in the industry. 
VSS-compliant coffee, which grew at a CAGR 
of 13% to 19% between 2008 and 2019, 
now represents 21% to 45% of total global 
production (see Figure 2) (Meier et al., 2021). 
Despite this significant growth, there are signs 
that the supply of VSS-compliant coffee may 
be declining as its CAGR contracted between 
1% and 7% from 2014 to 2019. Almost all of 
the losses in VSS-compliant production are 
due to a drop in 4C coffee, which fell from 
2.76 million tonnes in 2016 to 1.61 million 
tonnes in 2019. This downward trend can 
also be partly explained by coffee buyers 
shifting from sourcing coffee that complies 
with third-party-certified or verified VSSs to 
coffee that complies with their own second-
party corporate sustainability programs (i.e., 
Tchibo) or the use of other frameworks to 
report on their sourcing practices (i.e., Global 
Reporting Initiative, UN Global Compact) 
(Panhuysen & Pierrot, 2020). Additionally, 
supply outstripping demand may have 
discouraged farmers from becoming and 
remaining VSS‑compliant (Meier et al., 2021),
especially if markets do not incentivize the 
consumption of VSS-compliant coffee. 
How much coffee is 
compliant (by VSS)?
Figure 2. VSS-compliant coffee 
production volumes in 2019
Source: Meier et al., 2021.
4Cs  
1,606,821 tonnes 
Fairtrade International  
824,404 tonnes 
UTZ Certiﬁed  
1,083,649 tonnes 
Rainforest Alliance   
669,698 tonnes
Organic   
370,006 tonnes

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Coffee prices and sustainability
In 2019, almost 60% of VSS-compliant coffee 
came from Latin America and the Caribbean 
(Brazil, Colombia, and Peru), followed by 
Asia (Vietnam, Indonesia, and India) and 
Africa (Ethiopia, Côte d’Ivoire, and Uganda). 
Vietnam produced the most VSS-compliant 
coffee that year, reaching some 506,000 
tonnes (see Figure 3). 
According to our analysis, Brazil, Vietnam, 
Indonesia, Colombia, and Ethiopia offer VSSs 
the greatest potential to expand based on the 
size of their conventional coffee production. 
Among the least developed countries 
producing coffee, the Democratic Republic 
of the Congo, Ethiopia, Guinea, Haiti, and 
Yemen offer VSSs the most opportunities 
to promote sustainable development by 
Figure 3.  Coffee Growing Regions of the World: Distribution of coffee production in the 
top 10 producing countries in 2019
Note: Countries with lower Climate Risk Index scores are those that have been most impacted by extreme 
whether events in the reference period.
Sources: Meier et al., 2021; FAO, 2022a; Eckstein, D., et al. 2021; Voora, V. et al. 2019
0
1
2
3
Uganda
India
Peru
Honduras
Ethiopia
Indonesia
Colombia
Vietnam
Brazil
VSS compliant
Potentially VSS compliant
Conventional
Tonnes 
(millions)
Guatemala
1–10
11–20
21–50
51–100
>100
Harvest area
Prevalent VSS-compliant area
Climate Risk Index score for 2000–2019
Brazil
Peru
Ethiopia 
Uganda
India
Colombia
Honduras
Guatemala
Vietnam
Indonesia

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adopting more sustainable coffee farming 
practices based on their share of global coffee 
production, limited presence of VSSs, and 
Human Development Index ranking. 
Equally important, VSS-compliant coffee 
farming can also result in higher yields 
compared to conventional production. Our 
analysis shows that in 2019, VSS-compliant 
coffee yields were higher in 21 coffee-
producing countries, potentially about the 
same in three, and lower in 16. VSS-compliant 
yields tended to be higher in larger coffee-
producing countries, such as Brazil, Vietnam, 
Colombia, Indonesia, and Honduras. Ethiopia, 
Laos, and China are exceptions, as VSS-
compliant coffee yields were lower than 
conventional coffee yields in these major 
coffee-producing countries (FAO, 2022a; 
Meier et al., 2021). This may be partially 
explained by the fact that coffee-producing 
regions with well-functioning farming 
cooperatives and a supporting environment 
may be better able to take full advantage of 
VSS-compliant practices for their members, 
which can also result in higher productivity 
levels (Le Coq, 2016).
Demand for VSS-compliant 
coffee is increasing, but not 
enough to balance supply.
The availability of VSS-compliant coffee sold 
as conventional coffee is another challenge 
hindering its long-term viability, as some 
companies source VSS-compliant coffee at 
lower conventional prices to benefit from 
their risk mitigation benefits. Between 
2008 and 2019, only 12% to 65% of VSS-
compliant coffee production was sold as 
such (Meier et al., 2021). In some cases, 
coffee farmers who cannot sell their product 
as VSS-compliant do not receive premiums 
and consequently struggle to pay the costs 
of maintaining their certification (Centre for 
the Promotion of Imports from developing 
countries, 2021; Mongabay.com, 2021). 
Falling incomes due to poor prices and 
higher production costs in 2020 because 
of COVID-19 supply chain disruptions—
coupled with farmers’ reliance on coffee as 
the main source of livelihoods—have led 
to higher poverty rates among smallholder 
coffee farmers (Mongabay.com, 2021). This, 
in turn, prevents farmers from investing 
further in sustainable production and 
climate resilience (International Coffee 
Organization, 2020, p. 14). 
Although the global supply of VSS-
compliant coffee is decreasing, demand for 
VSS-compliant coffee continues to grow 
in traditional markets (Europe and North 
America). Nevertheless, this growth has 
not yet caught up with supply, leading to an 
MARKET VALUE
More than 1.1 million farmers produced 2.09 
million–4.55 million tonnes of VSS-compliant 
coffee with a total farm-gate value of USD 4 
billion to USD 11 billion.
CAGR
Conventional production contracted at a CAGR 
of 3.17% from 2008 to 2019, but grew at 7% 
from 2014 to 2019.
VSS-compliant production grew at a CAGR 
of 13% to 19% between 2008 and 2019 but 
contracted to between 1% and 7% from 2014 
to 2019.

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Coffee prices and sustainability
ongoing oversupply of VSS-compliant coffee. 
As mentioned above, this supply–demand 
gap may be reducing global VSS-compliant 
coffee production. Consumer preference for 
more sustainable coffee consumption options 
has strengthened during the pandemic, 
particularly in traditional markets (Centre for 
the Promotion of Imports from developing 
countries, 2021). A GlobalData consumer 
survey found that the consumption patterns 
of 43% of all coffee drinkers are influenced by 
“ethical, environmentally friendly, or socially 
responsible coffee options” (GlobalData 
Consumer, 2020). Many European retailers, 
including ALDI, Lidl, and Sainsbury’s, have 
developed their own sustainable product 
lines using VSS-compliant coffee, which has 
boosted sales (Centre for the Promotion of 
Imports from developing countries, 2021). 
Nevertheless, it is still too early to know what 
sort of impact the upcoming EU regulations 
on corporate sustainability due diligence and 
corporate sustainability reporting will have 
on the production and consumption trends 
of VSS-compliant coffee, as countries within 
the EU are the main consumers (European 
Commission, 2022). Furthermore, what 
happens if coffee buyers do not find VSSs 
to be a potential tool to help them comply 
with these regulations or if VSSs do not 
adapt accordingly?
The former regulation will require targeted 
companies to implement, monitor, and 
report on due diligence activities conducted 
throughout the entire value chain to identify 
and prevent potential adverse human rights 
and environmental impacts, minimize the 
effects of actual impacts, and establish 
complaint procedures for the benefit of 
communities. The new regulation—in the 
consultation phase—will require targeted 
companies to report on environmental, 
social, and governance issues, including 
climate change, pollution, water resources, 
biodiversity, workers, affected communities, 
and business ethics related to three corporate 
areas: a company’s strategies and assessments 
on the potential positive and adverse 
impacts of its direct and indirect operations; 
implementing measures such as policies, 
targets, action plans, and budget allocations; 
and performance measurement on a specific 
set of metrics (KPMG, 2022). 
Both regulations target environmental and 
social issues that most VSSs cover in their 
production requirements and can help 
coffee growers adopt practices that can 
benefit the environment and communities 
while reducing harm. Most VSSs operating 
in the coffee sector also have assurance 
and grievance mechanisms in place that 
may align with these regulations. Still, all 
VSSs are different in terms of the stage of 
the value chain and related requirements 
they cover; their effectiveness in supporting 
farmers in adopting VSS-compliant practices 
and verifying their compliance; and how 
they incorporate performance metrics, 
measurement guidelines, and technology to 
support this data journey. Going forward, 
a more in-depth review is needed of the 
potential alignment and gaps between 
VSSs operating in the coffee sector and 
regulations to support the coffee buyers 
complying with them.
Beyond traditional markets, VSS-compliant 
coffee consumption in producing countries 
and emerging economies such as Russia, 
China, and Indonesia has historically been 
very low. However, these markets offer great 
potential, as domestic consumption rates 
have been growing exponentially, primarily

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due to millennials with higher disposable 
incomes. For instance, VSS-compliant coffee 
remains niche, but its popularity is growing 
in Colombia as households have more 
disposable income (Federación Nacional 
de Cafeteros de Colombia, 2020, p. 107). 
In Indonesia, increasing VSS-compliant 
production may be due to a growing 
domestic market with more roasting facilities 
and coffee shops serving high-quality coffees 
with sustainability claims (Food ingredients 
Asia, 2022, p. 23). 
While younger generations are generally more 
willing to pay for VSS-compliant coffee, many 
people in emerging economies are still limited 
by price. Offering incentives to consumers 
to buy VSS-compliant coffee can stimulate 
sustainable consumption (Meier et al., 
2020, p. 88). This can include subscription 
services where consumers pay in advance for 
sustainable product baskets with coffee or 
chocolate at discounted prices (Alves, 2021). 
Uncertainty about VSS-compliant coffee and 
greenwashing remains challenging. On-the-
go coffees, typical coffee shops, and street 
vendors offer fewer prepared coffee options 
than what is available in supermarkets, 
making it harder for their clients to choose 
VSS-compliant coffee. In Colombia, most 
consumers do not know what VSS logos mean 
or distrust their credibility (Velez, 2020). 
Indonesian consumers have been subject to 
greenwashing and misled by companies so 
they can charge premiums (Food ingredients 
Asia, 2022, p. 23).
Nevertheless, communication campaigns 
such as the Global Coffee Platform’s efforts 
to educate consumers and promote local 
VSS-compliant coffee consumption can 
encourage sustainable consumption in these 
emerging markets (Global Coffee Platform, 
2019, p. 30; Pierides, 2019; Sierra, 2020). 
In Colombia, Toma Café’s promotional 
campaigns, barista training programs, and 
marketing strategies have reached a broad 
range of consumers, including young adults 
and students, some with prior interest and 
knowledge of sustainability (Euromonitor 
International, 2015). Building trust and 
transparency is key to shaping consumer 
behaviours, especially when many hope to 
adopt more sustainable lifestyles.
The 10 largest coffee-roasting companies, 
which account for 35% of total global coffee 
sourcing (Panhuysen & Pierrot, 2020), 
bought an estimated 3.5 million tonnes 
of coffee in 2020, up from 3.31 million 
tonnes in 2016. About 1.4 million tonnes, 
or 39%, of all coffee purchased in 2020 was 
sustainably sourced and compliant with a 
VSS or a corporate sustainability initiative, 
such as Starbucks’ C.A.F.E. Practices 
or Nestlé’s Nespresso AAA. Corporate 
sustainability initiatives refer to sustainable 
coffee production programs created by 
private companies rather than by independent 
third parties. In terms of meeting sourcing 
commitments, Nestlé, Starbucks, and 
Smuckers almost met their targets by 
2020. Major developments in sustainability 
sourcing commitments include JDE’s 40% 
and Nestlé’s 100% sustainable sourcing 
targets to be reached by 2025 and Ueshima 
Coffee Company's goal to reach 100% by 
2030 for their own coffee brands. Strauss, 
Massimo Zanetti, and Lavazza have yet to set 
sustainable sourcing commitments. Based 
on these commitments and assessing them 
against current coffee sourcing information, 
an extra 570,000 tonnes of sustainable coffee 
could be sourced by 2025.

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Sustainable sourcing commitments are yet to be met.
Figure 4. Major coffee-roasting companies and their sustainable sourcing commitments 
*Note: Data not found for sustainable sourcing commitments.
**Note. Data refers to 2019 as per Coffee Barometer 2020.
Sources: Authors’ estimations based on Panhuysen & Pierrot, 2020. Specific company sources: Keurig Dr 
Pepper, 2019; JDE Peet’s, 2020; JDE Peet’s N.V., 2020, p. 260; Lavazza, 2020, 2021; Massimo Zanetti Beverage 
USA, 2022; Navratil, 2021; Nestlé, 2020; Starbucks, 2020a, 2020b, p. 23; Strauss, 2021; Tchibo Coffee Service, 
n.d., and personal email correspondence with the company; The J.M. Smucker Co., 2020; Ueshima Coffee 
Company, 2022a, 2022b.
Sustainable consumption 
Conventional consumption 
Sustainable sourcing commitment
Tonnes (thousands)
Keurig Dr. Pepper
Massimo Zanetti*
Tchibo
Ueshima Coffee Co.**
Lavazza*
Strauss*
Starbucks
Smuckers
Jacobs Douwe Egberts
Nestle
106,881
153,000
170,000
190,000
267,000
282,000
310,000
360,000
730,000
985,000
0
200
400
600
800
1,000
10% sustainable sourcing by 2018
100% sustainable sourcing by 2020
100% sustainable sourcing by 2025
100% sustainable sourcing by 2020
40% sustainable sourcing by 2025
100% sustainable sourcing by 2025

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Although VSS-compliant production has 
declined in recent years, coffee-roasting 
companies may continue to adopt more 
ambitious sustainable sourcing commitments, 
and sustainable consumption in emerging 
economies may continue to rise. This could 
maintain and even boost demand for coffee 
compliant with a VSS and/or a corporate 
sustainability initiative. Still, demand may 
grow slowly, while the upcoming corporate 
sustainability due diligence and corporate 
sustainability reporting regulations in the 
EU, and other similar regulations that may 
emerge in other jurisdictions, may crimp 
the consumption and production of VSS-
compliant coffee. This is why a prediction on 
VSS-compliant production can, at best, be 
viewed as an educated guess. A pessimistic 
outlook weighs a short-term decreasing trend 
in VSS-compliant production more heavily. 
This translates into a steady decline to about 
1 million tonnes by 2025 due to a shift toward 
corporate sustainability initiatives, the effects 
of due diligence and corporate reporting 
regulations, and a continued inability to sell 
VSS-compliant products as such. A more 
optimistic outlook weighs the increasing long-
term VSS-compliant production trend more 
heavily and projects a steady increase to more 
than 3 million tonnes by 2025. 
VSS-compliant production is likely to 
contract in the short term. However, we 
predict that it will rebound to almost 2 
million tonnes by 2025 as demand for 
sustainable coffee continues to grow, 
motivating sustainable coffee sourcing 
commitments, and VSS-compliant coffee 
farmers enjoy more success selling their 
harvest as a VSS-compliant product. 
Consequently, we expect VSS-compliant 
coffee production to range from 950,000 
tonnes to 3.31 million tonnes by 2025.

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Coffee prices and sustainability
Sustaining the coffee 
sector will require improving 
farm gate prices and the 
equitable distribution of 
information and profits.
Pricing is another crucial factor in the 
viability of VSS-compliant coffee, as it can 
determine if coffee farmers stand to gain 
financially from implementing VSSs. Efforts 
to shift the coffee sector toward sustainability, 
such as implementing VSSs, are partly driven 
by a need to internalize the external costs 
associated with the industry. Agricultural 
external costs are those typically not 
captured in the market price of agricultural 
products and not borne by farmers, such as 
the negative effects of agrochemical use on 
human health and the environment. 
The external cost of conventional coffee 
grown in Mexico in 2017 was found to 
be USD 7.80 per kg of parchment coffee 
versus USD 3.50 per kg of parchment coffee 
for traditional and organic farming coffee 
production systems, which tend to have less 
detrimental socio-ecological impacts (de 
Adelhary Toorop et al., 2017). The external 
cost of certified versus conventional coffee 
grown by smallholder farmers in Vietnam 
was found to be 20% lower and 13% more 
profitable (generating annual profits of 
EUR 1,695/ha vs. EUR 1,472/ha) in 2016 
(Verkooijen et al., 2016). Internalizing the 
external costs associated with the production 
of conventional coffee would make VSS-
compliant coffee prices much more 
competitive. Therefore, examining how coffee 
prices intersect with the sustainability of the 
sector is critical.
The behaviour of coffee market prices, which 
have been highly variable, affects the price 
that VSS-compliant farmers get. Coffee 
pricing has traditionally fluctuated with large 
swings that follow the international market 
price for coffee, or “C-price,” as coffee is also 
traded in the futures market. The C-price 
determines the price of coffee as it is bought 
and sold along the value chain. It serves as a 
pricing guide, benchmark, or price-discovery 
tool to buy and sell coffee, make business 
decisions, or plan investments. 
For instance, the C-price dropped to historic 
lows in April 1975 (just before a massive frost 
in Brazil) and in October 2001, when coffee 
was traded at USD 0.4638/pound, with prices 
recovering and reaching highs in March 
1977 of USD 3.08/pound and in April 2011 
of USD 2.98/pound (Trading Economics, 
2022). More recently, in August 2018, the 
international market price for coffee dropped 
below USD 1/pound for the first time in 12 
years, a price considered well below the cost 
of production for most coffee farmers in the 
world (Specialty Coffee Association, 2019a), 
with new lows reached in 2019. 
Several factors influence fluctuations of the 
coffee market price, the most important one 
being global supply and demand dynamics. 
Indeed, when the global supply of coffee 
outpaces demand fuelled by favourable 
weather, improved yields, production capacity 
via harvesting mechanization, increased 
cultivation land, or public support (i.e., 
subsidies), it pushes prices downward 
A Dive into Coffee Prices

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(Ballard, 2010). When the global coffee 
supply and inventories are disrupted due 
to extreme fluctuations such as rising 
temperatures, droughts, frosts, pests, diseases 
(i.e., coffee leaf rust), and government 
policies (i.e., export quotas), it pushes 
coffee prices upward. For instance, fears of 
losing up to 40% of the coffee harvest in 
Brazil due to an unexpected frost pushed 
the international coffee price above USD 2 
per pound in August 2021 (Perez & Batista, 
2021). Other factors influencing the C-price 
include speculation (Hernandez et al., 
2020) in the futures markets and exchange 
rate movements. 
These fluctuations and coffee price drops are 
mostly felt by small-scale farmers in countries 
that depend highly on coffee exports as a 
source of income, such as Burundi, Uganda, 
and Honduras, where low farm gate prices 
coupled with higher production costs have 
resulted in losses or unsustainably low 
earnings (Estrella et al., 2019; FAO, 2018; 
Meier et al. 2020). In addition, many coffee 
smallholder farmers lack the experience and 
knowledge to use risk management tools to 
mitigate the price risks and are unable to 
protect themselves from market fluctuations. 
Coffee farmers are then in the most 
vulnerable position in the value chain.
They are the first to be affected by low 
prices and price volatility but also the first to 
experience the effects of droughts, floods, and 
other weather events, intensified by climate 
change (Baptista & Jenkins, 2017, p. 32). 
The C-price, along with certain factors that 
lead to great variability, influence farm gate 
prices in coffee across producing countries. 
These factors include coffee type, origin, 
quality, differentiation (i.e., specialty or 
sustainably grown coffee), level of association 
and bargaining power of farmers, input 
availability, rural infrastructure, and the 
institutional environment, which plays a 
key role in determining the prices received 
by coffee farmers (Lerner et al., 2021; 
Lordemann et al., 2021). Agricultural policy 
and supporting actions of governments (i.e., 
coffee funds, subsidies) can—and do—make 
a huge difference in producers’ livelihoods 
(Grabs, 2018). For instance, the Government 
of Honduras passes market price volatility 
onto producers much more directly, in 
contrast to the situation in Costa Rica or 
Colombia. Furthermore, poor infrastructure 
(i.e., roads, transport services to ports) in 
producing countries may lead to the use 
of intermediaries to transport the coffee 
from farm to port, reducing the price that 
coffee farmers obtain in the end (Lerner 
et al., 2021). 
The coffee market is also highly competitive, 
with a few large companies and their value 
chains dominating it (Mordor Intelligence, 
2021), which allows exporters and roasters 
to determine a favourable price for the coffee 
they buy from farmers (Econexus, 2013; 
ETC Group, 2019). They are also better able 
to transfer any price increase upstream and to 
end consumers, protecting themselves from 
coffee price volatility and exacerbating the 
inequality and power asymmetry of farmers. 
The pattern in coffee shows that 
input costs increased by 8% annually 
between 2015 and 2020, but prices rose 
just 1% in the same period. As a result, 
some farmers break even while others 
struggle to cover their costs.

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Coffee prices and sustainability
Coffee farmers also tend to receive the 
smallest margins in the value chain. The farm 
gate price and production costs determine 
coffee farmers’ margins. Despite the 
differences in production costs across coffee 
farms, regions, and countries due to different 
taxes, transportation and input costs, the 
type of coffee grown, production methods, 
equipment, and technology (Cadena, 2019, 
p. 13; Estrella et al., 2019), the overall 
pattern in coffee shows that input costs rose 
8% annually between 2015 and 2020, while 
prices advanced just 1% in the same period 
(Keen, 2020). As a result, some farmers break 
even while others struggle to cover their costs 
(Estrella et al., 2019). 
In contrast, the greatest economic value is 
generated in the middle of the coffee supply 
chain: exporters and roasters. Exporters can 
get between 50% and 54% of the free on 
board (FOB) price in some cases (including 
cupping, grading, storing, milling, transport, 
taxes, export documentation, and margins) 
(Nordic Approach, n.d.). They often pay 
premiums to farmers by making second 
payments to coffee cooperatives or coffee 
washing stations (Nordic Approach, n.d.). 
In many cases, however, they cannot collect 
information on how these premiums are 
distributed or invested back into the farming 
communities. Profit margin outcomes from 
an exporter’s perspective are higher when 
selling coffees with high-quality scores. The 
lowest margins for all actors in the value 
chain involve the production and sale of 
ordinary or low-grade fully washed coffees 
(Church, 2018). 
Roasters usually enjoy the highest gross profit 
margins in the coffee chain (44% to 65%). 
A study by the Specialty Coffee Association 
found that when costs are considered, the 
net profit margin can vary from 7% to 12% 
(Bellwether Coffee, 2021; Specialty Coffee 
Association, 2017). However, one of the 
key issues is also the hidden trade margins 
and prices paid by roasters to farmers, or 
Table 2. Minimum prices and premiums for coffees negotiated through the Fairtrade 
Labelling Organization contract system in USD/lb, Arabica and Robusta. FOB prices paid 
for Fairtrade (2020).
Type of coffee
Conventional
Fairtrade minimum prices 
+ certified Organic
Fairtrade 
premium
Washed Arabica
1.26
1.41 plus the Organic differential:    
+30 cents
+20 cents
Non-washed Arabica
1.20
1.35 plus the Organic differential:    
+30 cents
+20 cents
Washed Robusta
1.05
1.05 plus the Organic differential:    
+30 cents
+20 cents
Non-washed Robusta
1.0
1.01 plus the Organic differential:    
+30 cents
+20 cents
Source: Authors, with data extracted from Fairtrade International, n.d.

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indirect payments in the form of community 
infrastructure or social programs. Large 
multinationals and coffee roasters such as 
Starbucks, Nestlé, and JDE tend not to 
disclose how much they pay for their coffee 
or whether they guarantee minimum prices or 
offer premiums. 
Coffee buyers who trade directly with 
farmers tend to be more transparent about 
prices. Some publish and update pricing data 
regularly on their websites and direct trade 
platforms (i.e., Typica, Beyco) and in annual 
reports. This allows farmers to assess coffee 
market prices and better negotiate the price 
for their coffee when engaging directly with 
the roaster (Southey, 2021). Farmers selling 
through direct trade tend to receive higher 
prices for their coffee and have better profit 
margins because they save costs such as 
registration fees or exporter fees (Oden, 2021).
VSSs can improve farm gate 
coffee prices, but more must 
be done to increase farmers’ 
income.
In this context, VSS settlers are one actor 
among others who have established a 
few measures to increase coffee farmer 
prices and mitigate the historical price 
volatility, including minimum prices and 
premiums. The most recognized are Fairtrade 
International minimum prices and Fairtrade 
International and Organic premiums. Other 
VSSs, such as Rainforest Alliance, began in 
2021 to implement mandatory sustainability 
differentials, which are cash payments that 
coffee buyers make to compliant farmers 
over and above the market price (Rainforest 
Alliance, 2021b). 
In 2020, the coffee market price hovered 
around USD 1.20/lb for Arabica and USD 
1/lb for Robusta, while Fairtrade minimum 
prices stood at USD 1.35/lb for the former 
and USD 1.01/lb for the latter. An organic 
differential of USD 30 cents/lb was added 
to this minimum price when farmers sold 
their coffee in compliance with the Organic 
scheme. The Fairtrade premium stood at 
USD 20 cents/lb (see Table 2).
These floor prices and premiums act as a 
baseline for coffee pricing because producers 
and traders can also negotiate higher prices 
for VSS-compliant coffees based on quality 
and other attributes (Southey, 2021; Specialty 
Coffee Association, 2019b). They enhance the 
transparency of coffee prices. The Fairtrade 
minimum price also protects farmers 
mainly when international market prices 
are depressed. Farmers may obtain higher 
prices if they grow specialty coffee, which 
refers to high-quality coffees with cupping 
scores exceeding 80 points, according to 
the Specialty Coffee Association Q-grading. 
For instance, the median price for coffees 
ranging between 82 points and 87 points 
in 2019/2020 was USD 2.60/lb (Specialty 
Coffee Association, 2020). However, this 
market makes up only about 30% or less of 
the coffee produced in the world. Specialty 
coffees that are sold in small quantities of 
micro-lots also tend to be less volatile from 
year to year (Kornman, 2020; Specialty 
Coffee Association, 2019b).
Prices reported for VSS-compliant and 
specialty coffees often refer to FOB and not 
to farm gate prices, as several transactions 
between farm gates and ports do not

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Coffee prices and sustainability
usually stipulate prices in U.S. dollars per 
green pound. This complicates the process 
of calculating what really gets back to the 
farmers. Also, depending on the country 
and region (i.e., lack of institutional 
support, poor infrastructure) and the use of 
intermediaries who may keep a large part 
of the premiums for themselves, specialty 
and VSS-compliant farmers may end up 
receiving conventional market prices for 
their coffee (AgriLogic, 2018, p. 94). Some 
stakeholders in the sector, such as the 
Specialty Coffee Association and many 
specialty buyers, are trying to understand 
and compile information on how much of 
the FOB price makes it back to the farm 
gate to find out the real price farmers obtain. 
To better illustrate the differences between 
conventional, VSS-compliant, and specialty 
prices, Figure 5 showcases coffee market 
prices from 2010 to 2021 (USD/lb); the 
average FOB prices received in East Africa, 
Latin America, and Asia for conventional 
coffee; prices paid by VSSs such as Fairtrade 
and Organic; and specialty coffees in the 
same regions. (Please note that these are 
average prices and do not reflect the reality of 
all coffee farmers). 
According to our analysis and the data shown 
in Figure 5, coffee producers associated 
with at least one VSS—Organic or Fairtrade, 
based on data availability—may have received 
higher prices than the international market 
Figure 5. Minimum prices and premiums for Fairtrade (FT) coffee, average conventional, 
and specialty coffee prices from 2011 to 2021 
Source: Fairtrade International, n.d.; Specialty Coffee Association, 2019b; Trading Economics, 2022.
2014
2016
2018
2020
2022
1.00
0.50
0
1.50
2.00
2.50
3.00
Price (USD/lb)
Specialty coffees (average quality): 2.41
Commodity price (Arabica)
FT minimum price + organic + premium: 1.91
FT minimum price + organic: 1.71
FT minimum price conventional: 1.46
Average FOB conventional: 1.16

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price from 2015 onward. Prices tend to 
increase with double certification of Fairtrade 
and Organic. The price that farmers get is 
even higher when selling specialty coffee 
(average quality) through direct trade, which 
reduces the number of intermediaries 
as farmers establish direct commercial 
relationships with roasters or importers. 
However, we can deduce from the graph 
that coffee buyers may be more willing to 
pay premium differentials for VSS-compliant 
coffee when international coffee prices are 
depressed, while premiums above the market 
price are less frequent for VSS-compliant 
coffee when market prices are higher and are 
more commonly paid for specialty coffee. 
The price differentials that voluntary 
sustainability standards pay have sparked 
some concerns. Higher premiums will 
incentivize farmers to increase VSS-compliant 
production, but when demand for more 
sustainably grown coffee does not rise at 
the same pace as production, farmers are 
forced to sell their coffee at conventional 
prices and cannot recover the cost of using 
VSS-compliant practices. This can discourage 
farmers from continuing to comply and 
cause them to leave the schemes. As already 
mentioned, the supply of global VSS-
compliant coffee fell between 1% and 7% 
CAGR from 2014 to 2019, with research 
suggesting that a lack of demand contributed 
to this decrease (Meier et al., 2020, p. 88; 
Meier et al., 2021). 
For coffee farmers, the effects of 
participation in a VSS have been mixed. 
Research indicates that these standards 
have an overall positive impact on 
the prices that coffee farmers receive 
(Evidensia, 2020; DeFries et al., 2017). As 
Figure 5 shows, farmers certified under 
Fairtrade and Organic can get an average 
of 20%–30% higher prices than their non-
certified counterparts over a year (Fairtrade 
International, 2021; Specialty Coffee 
Association, 2019, p. 71; Trading Economics, 
2022). Research on farm revenues also 
suggests that complying with a VSS across 
a few commodities, including coffee, 
translates into markedly higher crop income 
for farmers compared to non-compliant 
farms. However, effects on net household 
income are less explored, with more studies 
revealing no significant results between VSS-
compliant and non-VSS-compliant farmers 
(Elder et al., 2019, p. 168; Evidensia, 2020; 
Panhuysen & Pierrot, 2020).
However, our analysis shows that VSS prices 
(Fairtrade, Organic) do not necessarily make 
a difference when farmers are already selling 
specialty coffee. There are also concerns 
about the minimum price offered by 
certification schemes such as Fairtrade, as it 
is deemed too low to cover production costs 
or to contribute appreciably to the overall 
household income (DeFries et al., 2017). It 
is important to recognize that an oversupply 
of VSS-compliant coffee means farmers 
may have to sell at lower conventional prices 
and therefore will not benefit from higher 
prices and premiums (Specialty Coffee 
Association, 2019, p. 71; Voora et al., 2019, 
p. 6). Imbalances in supply and demand 
will probably always remain because of time 
frame lags for production and different 
consumption trends.
Building from these issues, VSSs such 
as Fairtrade, Rainforest Alliance, and 
Bonsucro—alongside many other 
organizations that are part of the Living 
Income Community of Practice—have 
been working to develop the concept of

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Coffee prices and sustainability
living income reference prices in coffee. For 
instance, Fairtrade released the first price 
reference for Colombian coffee farmers 
in July 2021. It aims to indicate the price 
needed for full-time Fairtrade farmers with 
adequate, sustainable productivity levels to 
earn a living income that gives them and their 
families a sustainable livelihood (Fairtrade 
International, 2021). 
As an example, the recommended 
Fairtrade Living Income Reference Price 
for conventional coffee is COP 9,900 
(about USD 2.75) per kilogram of dried 
parchment coffee and COP 11,000 (USD 
3.06) per kilogram for Organic. These prices 
factor in the costs for farmers to adopt the 
required agricultural practices to achieve 
sustainable yield levels and to pay a living 
wage to any workers they may hire (Fairtrade 
International, 2021).
Other tools are also available to help coffee 
buyers raise the price they pay to farmers, 
such as the Living Income Benchmark. This 
tool helps users understand the difference 
or gap between the actual household income 
and a basic, decent standard of living income 
for a farming household for a given sector 
and country. When coffee buyers know the 
living income gap, they can define price 
differentials to help close it (The Living 
Income Community of Practice, 2021). 
Several coffee buyers are involved in living 
income initiatives, including Nestlé, Tchibo, 
and Keurig (Cordes et al., 2021). It remains 
to be seen how these measures will be applied 
in practice, how they will be adjusted to 
market dynamics (i.e., inflation and exchange 
rate fluctuations), and how it will affect coffee 
farmers if they are not applied across the 
board, as traders in a free-market economy 
may opt to purchase coffee from farmers and 
countries at a lower price (Stencel, 2008). 
Other actors have also put in place measures 
to increase farm gate prices and mitigate 
volatility. For instance, the governments 
of Rwanda and Brazil have established 
minimum prices for green beans considering 
average costs of production, minimum profit 
margins for farmers, and international prices 
(Cashin & McDermott, 2002). They buy 
farmers’ coffee at that price when market 
prices fall below the minimum guaranteed 
price. Other governments have also set up 
coffee funds to alleviate the effects of low 
prices. For instance, Colombia has created a 
fund of up to USD 34 million to help coffee 
farmers (subsidies based on production/
tonnes), and Kenya has implemented a 
series of legislative actions, including a USD 
15 million subsidy program, to support 
coffee farmers affected by low international 
prices (FAO, 2018). 
However, some studies have found that in 
a global market economy, commodity price 
shocks in the coffee sector are so long-
lasting that they make mechanisms such as 
price stabilization schemes, buffer stocks, 
price ceilings and floors, and guaranteed 
prices unviable in the long term (Cashin 
& McDermott, 2002; Lewin et al., 2004). 
For instance, price floors may not reflect 
farmers’ production costs in the end (Gomes 
& Teixeira, 2019). Experts also point 
out that price guarantees can encourage 
the overproduction of coffee and lead to 
debilitating prices in the long run (Gebre, 
2020). They can promote inefficiency and 
low quality, as farmers may be reluctant 
to implement good practices if they have a 
guaranteed buyer. In addition, not all coffee-
growing countries can afford to support

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farmers, creating disadvantages for poorer 
nations (Lewin et al., 2004). 
Large roasters have also established support 
programs for farmers—for instance, to access 
loans and funds, technical assistance, and 
training on business planning and price risk 
management (Starbucks Coffee Company, 
2020). Other roasters and retailers are 
working to define living income reference 
prices or trading directly to pay higher prices 
to coffee farmers. There are examples of 
roasters involved in direct trade that have 
bought high-quality coffee for a price that 
is 25% to 30% above the Fair Trade and 
Organic combined price (Oden, 2021). 
However, these measures do not necessarily 
mean a proportional increase in the price the 
individual farmer, farmworkers, and others 
obtain (Rogers, 2019). In practice, the use 
and distribution among farmers of premiums 
or higher prices paid by these specialty buyers 
and direct traders is not usually verified or 
monitored (Baptista & Jenkins, 2017, p. 32; 
Nordic Approach, n.d.). 
A way forward: Increasing 
farm prices and sharing 
value to build sustainable 
and resilient coffee systems
Despite the efforts of VSSs, private sector 
actors, and governments in producing 
countries to provide farmers better incomes 
and mitigate their vulnerability in a volatile 
market, in the current free-market economy 
we live in and with a highly competitive 
sector, the effects of these initiatives alone 
have been temporary (excluding the living 
income reference price benchmarks that 
require further use and analysis). They also 
have had little impact in terms of defining 
and maintaining fair prices for farmers in 
the long run that reward them for facing 
risks, sustaining a wealthy value chain, and 
adopting good social and environmental 
practices. In other words, there is a need to 
share financial gains with farmers for the 
societal value and benefits they create by 
implementing sustainable practices.
Tackling the recurring cycle of a brief period 
of high coffee prices followed by an extended 
period of low prices will require coordinated 
actions from many actors. What is most 
needed is not market intervention but rather 
market cooperation among exporters, with 
the involvement of importers (Amrouk, 2018; 
Bellweather Coffee, n.d.), and governments 
in producing and consuming countries 
and VSSs to ensure that the global coffee 
market protects the livelihoods of millions 
of smallholder producers. Actors along the 
chain can put the following measures in place 
to help farmers get better prices and greater 
value for their VSS-compliant coffee.
Promote value addition and more 
efficient and resilient production 
systems. Governments in producing and 
consuming countries, buyers, exporters, 
extension service providers, and standard-
setting bodies can collaborate to help farmers 
produce and maintain high-quality coffee 
beans, as farmers can negotiate better prices 
even if they comply with VSSs. They can 
also support farmers’ groups in investing in 
roasting facilities when coffee is consumed 
locally or in neighbouring markets (i.e., urban 
centres) as they can obtain higher prices 
and margins for roasted coffee. Farmers can 
leverage voluntary standards when the market

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Coffee prices and sustainability
demands VSS-compliant coffee, and these 
supporting actors can help them in different 
ways to comply and maintain certification 
(Elder et al., 2021, p. 168). 
Jointly, these actors can also support farmers 
in adopting more efficient and diversified 
production systems that can help them 
to remain competitive when coffee prices 
are depressed and generate other revenue 
streams—for instance, by maintaining 
records of inputs used, costs, and yields; 
incorporating technology and equipment 
when appropriate and maintaining it well; 
and helping farmers cultivate other crops 
or engage in off-farm employment. They 
can also help farmers build resilience to 
climate change by maintaining good soil 
quality, capturing rainwater, and adopting 
agroforestry. VSSs can use the training and 
monitoring activities they conduct with 
farmers to improve their production efficiency 
and adaptation capabilities.
Increase demand for VSS-compliant 
coffee in producing countries. Stimulating 
demand in producing countries is considered 
an effective way to increase prices in the 
coffee sector. According to the FAO (2018), 
the greatest impact on coffee prices would 
come from actions designed to control coffee 
production and/or stimulate demand. This 
is particularly relevant for VSS-compliant 
coffee to balance the existing oversupply and 
support farmers in obtaining higher prices 
for their coffee that reflect sustainability 
investments and external benefits. 
Governments in producing countries can play 
this role by collaborating with roasters, coffee 
shops, retailers, and VSSs via education and 
awareness-raising campaigns and promotional 
activities. Governments can also help define 
accounting methods that internalize the social 
and environmental costs of growing coffee 
typically borne by society, which should be 
reflected in the prices paid to producers and, 
ultimately, the final price the consumer pays. 
This can support raising the competitiveness 
of VSS-compliant coffee and increase demand.
Governments, traders, standard-setting 
bodies, and extension services can support 
farmers and farmer groups in producing 
VSS-compliant coffee by establishing direct 
and personal relationships with roasters 
in importing countries. This could help in 
understanding the value of cultivating coffee 
sustainably and the challenges farmers face 
and determine prices that adequately reflect 
sustainability investments by farmers. This 
could be done by developing/using “direct 
trade” digital platforms and e-commerce 
channels. VSSs can encourage compliant 
farmers to use these channels and to develop 
branding and messaging to communicate the 
environmental, economic, and social benefits 
of producing coffee that complies with VSSs 
when engaging with buyers.
Reward farmers for managing risks (i.e., 
production, market, climate), applying 
sustainable production practices 
and environmental stewardship, and 
achieving positive results. Governments 
in producing countries have also started to 
reward coffee farmers for their actions and 
positive results obtained in protecting the 
environment. For instance, the Indonesian 
government, with the support of a large coffee 
buyer, partnered with the non-governmental 
organization Rikolto to create a payment for 
ecosystem services model in Jambi, one of 
the most deforested regions of Indonesia. It 
is seen as a cost-effective way to compensate 
farmers and Indigenous communities for their 
environmental maintenance and provision of

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ecosystem services. These payments can be 
monetary or in-kind through the provision of 
training, investments in infrastructure, and 
others (Goossens, 2020). 
Governments can also reward coffee farmers 
for reducing and capturing carbon emissions, 
as they contribute to achieving nationally 
determined contributions as part of the 
Paris Agreement. For instance, the European 
Commission plans to reward farmers in 
its jurisdiction for removing carbon by 
implementing sustainable agricultural 
practices, such as forest conservation, 
agroforestry, or restoration of peatlands, 
that are verified with a given methodology 
(Climate Action, n.d.; Taylor, 2022). 
Governments from other jurisdictions can 
also adopt these types of measures as a way 
to create value for using more sustainable 
agricultural practices in coffee production. 
Private sector actors also have a responsibility 
to reward farmers for adopting sustainable 
agricultural practices that yield positive 
results and share the cost of using and 
maintaining these practices. Some companies 
(i.e., Indigo Agriculture) are working to offer 
farmers financial incentives to implement 
regenerative practices to capture atmospheric 
carbon dioxide (CO2) from agricultural 
soil and using digital innovations such as 
software imagery analysis to measure and 
verify data related to carbon sequestered 
in farms (Indigo Ag, n.d.; Ioannou, 2019). 
Along this line, Rainforest Alliance has 
defined the concept of sustainability 
investments in its new Sustainable 
Agricultural Standard Certification Program. 
These are mandatory or in-kind investments 
that buyers of compliant goods must give to 
certified producers to help them meet the 
farm requirements of the standard. These 
kinds of initiatives can also help private 
sector actors comply with reporting and due 
diligence requirements such as those the EU 
or the Supply Chain Act in Germany defines. 
These requirements impose obligations on 
companies that source their products from 
developing and emerging economies to 
comply with human rights and environmental 
standards (Sharma & Kaps, 2021). 
VSSs would need to align with these 
approaches, including by integrating 
performance metrics in their scheme, which 
can help value chain actors comply with the 
specifics of these regulations. Furthermore, 
VSSs can also help farmers use technology 
to facilitate the collection and reporting of 
related data (i.e., volume of CO2 emissions 
reduced, removed; reforested area in a given 
period), provide supporting evidence, and 
implement more robust verification and 
assurance systems of VSS-compliant practices. 
Offering financing such as loans and blended 
finance linked to sustainability performance 
can be a way to reward farmers and promote 
access to finance in coffee-producing 
communities (Voora et al., 2022, p. 208). 
Some leading businesses already implement 
such mechanisms. For example, BNP Paribas 
teamed with Neumann Kaffe Gruppe in 2019 
to establish a EUR 25 million loan facility to 
support more than 100,000 coffee farmers 
Private sector actors also have a 
responsibility to reward farmers for 
adopting sustainable agricultural 
practices that yield positive results and 
share the cost of using and maintaining 
these practices.

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Coffee prices and sustainability
in 10 countries and offer them sustainability 
training and resources (BusinessGreen, 2019). 
Another example is the Mercon Group, which 
offers coffee farmers sustainability-linked 
loans coupled with technical assistance. Loan 
interest rates are linked to sustainability 
results, which are measured using an index 
aligned with Rainforest Alliance criteria 
(Voora et al., 2022). VSSs can collaborate 
with governments and financial service 
providers to define these measures and 
inform the performance indicators used to 
monitor the progress of farmers in achieving 
positive environmental results (Voora 
et al., 2022). 
Promote an enabling institutional 
environment. The better the institutional 
environment, the fairer the prices paid to 
coffee farmers (Lerner et al., 2021). This 
includes governments of producing countries 
investing in infrastructure and better access 
to ports and roads, as well as electricity and 
communications. Countries with organized 
coffee associations can better protect farmers 
from volatile prices in the global market. For 
instance, the Coffee Institute of Costa Rica 
(ICAFE) has the authority to reject a coffee 
transaction between a buyer and a seller 
when, for example, it considers the price 
to be too low. 
Require price transparency in coffee 
transactions. Encouraging transparency 
in prices and coffee transactions is vital. 
Roasters and buyers can ask for or invest in 
mechanisms that can trace the coffee back 
to its origin and disclose the prices paid to 
the farmer. This will help coffee roasters 
understand the destination of the premiums 
they pay and act to ensure that farmers 
receive those premiums. VSSs can also help to 
make coffee prices transparent. One example 
is Fairtrade’s pricing table, which shows the 
minimum prices of conventional, Organic, 
and Fairtrade prices as well as the premium 
(Fairtrade International, n.d.). Governments 
can also use mechanisms to better map 
and analyze production costs. Knowing 
these costs will give buyers and roasters an 
objective way to determine the FOB prices, 
guaranteeing a minimum level of profitability 
for their farmer partners (Cadena, 2019, p. 
13) and ensuring long-term viability.
Building sustainable and resilient coffee 
production systems is critical. It requires 
industry actors to coordinate to ensure that 
farmers have the conditions needed to adopt 
more sustainable practices and that they 
are rewarded fairly. The measures that VSSs 
implement can help to boost coffee prices 
and farmers’ incomes. However, many others 
are needed to ensure that different aspects 
of farming operations, value chain dynamics, 
market demand, and an institutional 
environment are favourable to support the 
continued expansion of sustainable coffee 
production and consumption by rewarding 
farmers fairly.

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The Sustainable Commodities Marketplace Series provides a market performance overview 
and outlook for key agricultural commodities that comply with a number of voluntary 
sustainability standards (VSSs), focusing on global sustainable consumption and production. 
Each year, the series focuses on a different overarching theme, with individual reports for 
that year devoted to providing a market update for a chosen commodity. These reports 
are designed to be accessible and relevant for a range of audiences, including supply chain 
decision makers, procurement officers, policy-makers and producers. The series builds on 
The State of Sustainable Markets 2021, a joint publication from IISD, the International Trade 
Center (ITC), and the Research Institute of Organic Agriculture (FiBL), which examines over a 
dozen sustainability standards for various commodities.
The Global Market Report analyzes trends in coffee production, consumption, trade flows, 
and other relevant areas. It uses 2019 data for coffee production that is VSS-compliant, 
given that this was the most current data available when we conducted the analysis. 
The report also examines prices and margins in the coffee sector, looking at how VSSs 
contribute to increasing farm prices. It also provides recommendations to VSSs and other 
actors to increase the price and income that farmers obtain for their coffee and build 
sustainable and resilient coffee systems.
IISD's State of Sustainability Initiatives (SSI) is an international research project that aims to 
advance sustainable and inclusive value chains. For over a decade, the SSI has been providing 
credible and solution-oriented analysis and dialogue on voluntary sustainability standards 
(VSSs) and their potential to contribute to sustainable development outcomes. 
©2022 The International Institute for Sustainable Development 
Published by the International Institute for Sustainable Development.
Head Office
111 Lombard Avenue, Suite 325 
Winnipeg, Manitoba 
Canada R3B 0T4 
Tel: +1 (204) 958-7700  
Website: www.iisd.org 
Twitter: @IISD_news
iisd.org
In collaboration with ITC and Fibl
With the support of the Swedish government
Steffany Bermudez and Vivek Voora are both first authors of this report. Steffany Bermudez worked on 
coffee prices and examining sustainable consumption preferences in developing countries in the market 
overview section. Vivek Voora worked on the market overview section examining supply and demand 
dynamics, production trends and forecasting, yields and climate resilience in sustainable coffee production.
Peer reviewers: Judith Ganes, Niels Haak, and Aimee Russillo
Acknowledgements
We would like to acknowledge the contributions of Audrey Wagner, Alix Albright and Jennah Landgraf 
in conducting research on sustainable consumption preferences in developing countries and collecting 
sustainable sourcing information from coffee buyers.