Opinion: How to end poverty in smallholder farming communities

Since their adoption in 2015, the development community has worked toward reaching the United Nations’ 17 Sustainable Development Goals. Yet much progress has been cut short or even reversed following the onset of the COVID-19 pandemic, with warnings of a hunger crisis from a number of U.N. agencies and various reports of the gap between rich and poor rapidly widening.

Despite collective investments of billions of dollars, millions of people in the global south are trapped in a cycle of poverty, with millions more just one crisis away from falling back into it. Eighty percent of the world’s poor still live in rural areas where farming is the primary economic driver, with 65% working directly in agriculture. Food insecurity in such areas is on the rise; globally, over 3 billion people cannot afford a healthy diet.

Decades of investment have failed to address the underlying problem: the systems and structures keeping people in poverty. Philanthropy, input provision, technical assistance, and market facilitation are powerful amplifiers in the context of a functioning system, but standing alone, they are not the foundation for thriving communities.

Ending poverty requires long-term solutions that address the root causes. This is particularly true in agriculture; actors throughout the value chain profit handsomely, while smallholder farmers who produce the core product live in poverty. For farming to be economically viable, transformative change on a global level is essential.

Take the coffee industry as a case in point. This multibillion-dollar industry is sustained by 12.5 million farming families around the world. Despite decades of initiatives to improve farm productivity and diversification, the overwhelming majority of farmers continue to see next to nothing for the industry’s success. For every $5 latte purchased, a coffee farmer earns just 2 cents.

Low coffee prices at the farm gate have forced the overwhelming majority of smallholder coffee farmers into poverty, despite decades of tireless work to improve their livelihoods.

What I have seen from more than 20 years of work in coffee-growing communities is that development programs ultimately have a marginal impact on producer incomes unless pricing is addressed. In a system where profitability is consolidated downstream, how can farmers reach living incomes if market fundamentals and equitable prices are not components of sustainability projects?

As one farmer in Guatemala told me, “We don’t earn enough with coffee to be able to live here on this Earth.”

Consumer demand for ethical coffee is substantial and growing. Over 50% of coffee drinkers report wanting coffee that is sustainable for farmers or environmentally friendly. A recent report from the National Coffee Association reveals that farmers being paid fairly is the second-biggest driver of purchases.

In turn, companies tout sustainability commitments and ethical sourcing claims, despite almost never addressing ethical prices and economic sustainability for smallholder coffee-farming communities.

Instead, farmers become responsible for achieving indicators around environmental stewardship, increased productivity, traceability, and social responsibility — measures requiring more labor, capital, and reporting. They are pushed to collect and provide production data and uphold costly certifications, all while earning less for each pound of coffee sold.

Early on in my tenure with Heifer International, I met a coffee farmer called Osma Recinos in Huehuetenango, Guatemala. To house and feed her family, send the kids to school, and cover all basic expenses, she told me the family needed $7,500 a year. Although their farm produced more high-quality coffee than any of the nearby farms, the family only earned $2,500 a year. She felt the only option was for her husband to find work elsewhere in Guatemala, Mexico, or even the United States.

This sense of being stuck is common for many farmers in the world’s lowest-income countries. Many find their only option is to uproot their families, trading poverty at home for an uncertain future elsewhere. This conversation became the beginning of our focus on living income, with benchmarks as a key part of all our programming, combined with targeted investments in areas such as transportation, farmer-owned cooperatives, and new businesses and infrastructure that enable farmers to shift market dynamics in their favor.

But loans, grants, and technical interventions cannot compensate for inadequate compensation — and will not enable farmers to escape poverty if they do not have a reliable, sustainable living income. Another coffee farmer told me: “What we need more is a different kind of help that will have a greater impact on the actual conditions in the countryside. All the help that they’ve given us — technical, training, everything — the price stays the same. There’s been no change.”

Since 1980, the price of coffee has declined by roughly two-thirds in real terms. For the past few years, Arabica coffee has traded for approximately $1 per pound, exactly the same as 40 years ago. Adjusting for inflation, that would be like a teacher making $18,000 in 1980 and today earning only $6,000. Over the same period, global yields have almost doubled.

Meanwhile, the cost of a cup of coffee has continued to increase for consumers. Average coffee shop prices in 2011 were $1.95 for a standard cup of drip coffee and $3.55 for a latte, while in 2019 these were $3.13 and $4.22 respectively. Contrary to popular rhetoric, poverty among coffee farmers is a proven economic problem — not a production problem.

In a recent pilot study, we found it was possible to tie coffee prices to living income, using procurement to close the gap. Partnering with two private sector entities to do this shows its viability. In fact, it would likely take no more than a quarter per 16-ounce cup for most of the world’s coffee farmers to live with dignity. Imagine the social return on investment if every private sector partnership tackled both pricing and production in this way. Imagine the household impact and “trickle-up” effect in communities.

As the situation for coffee-producing families grows demonstrably worse, with an unprecedented number falling into extreme poverty, we must think differently about how we approach our work. Poverty is not inevitable, but without economic infrastructure, it is intractable. By digging down to the root causes, we as a sector can actually accomplish SDG 1 and end systemic poverty not only in the coffee lands, but in smallholder farming communities around the world.