One of the things repeated at World Coffee Producer’s Forum was the need to increase local consumption of coffee. After hearing everyone’s defense of the proposition, I certainly agree with it. I’ve also done a bit of research on my own, which is the basis for this article.
A healthy middle class
Before we can start to explore local consumption, we need a growing middle class. Coffee is a luxury item and even more-so with specialty coffee. Before we try to increase the local consumption of higher quality coffee, we need a customer who has the disposable income to afford a more expensive product. This increase in the size and relative wealth of the middle-class is happening in a lot of producing countries.
At a global level, we are witnessing the most rapid expansion of the middle class the world has ever seen.
In fact, the next decade could see a faster expansion of the middle class than at any other time in history. Within a few years, based on current forecasts, a majority of the world’s population could have middle-class or rich lifestyles for the first time ever.
The Unprecedented Expansion of the Global Middle Class
As local economies improve and middle classes grow and individuals gain more disposable income, they’re more able to afford to explore more expensive personal interests in coffee, which can be an expensive hobby. Consider this; your typical latte from, say Starbucks is around $3.50. That’s a lot of money in a producing country where one could probably get an entire meal for around $5.
Therefore, before promoting local consumption, there needs to be a solid middle class in place with the disposable income necessary to afford to explore better quality coffee.
I discuss this need for disposable income further in this podcast episode:
This week I discuss a program to develop local consumption in Nigeria and compare it to a successful program in Colombia.
Rural-urban connections (capital mobility)
Part of my research lead me to the concept of rural-urban connections. An example of a rural-urban connection would be producers and processors located in rural areas adjacent to urban areas that contain roasters, cafes, distributors, etc. Often rural residents send their kids to school in the neighboring urban area, do some shopping there, as well as business-to-business transactions. For coffee producers and processors, this could mean working with local roasters to provide green, un-roasted coffee, or doing the same for a distributor who might further distribute the coffee to other regions.
These links between the two regions promote the flow of wealth, capital, services, and products.
The ability of urban consumers to purchase food, feed, fiber, energy and tourism/recreational opportunities from rural areas is a crucial factor in the development of rural areas.
Federal Reserve Bank of St. Louis, Harvesting Oportunity, p. 60 (archived link)
Local consumption, meaning consumption within the producing country, or the country that grew the coffee, is important for a number of reasons. One important reason is a decrease in the carbon footprint of the coffee. Coffee consumed locally doesn’t require as extensive of a supply chain as coffee consumed in a non-producing country and that means fewer vehicles transporting it from point A to B.
Local consumption also means more pride for the locals. Despite recent trends in political discourse, there is a lot of good that comes from national pride. It’s much easier to support a local product than it is to support a global product. It’s easier to visit the producer. It’s easier to organize events that include the entire supply chain—such events are great for educating consumers, something that is critical for specialty coffee. It’s also easier to support a local product when you have familiarity with their culture and sympathy for their plight—both of which are easier when the individual is physically close, i.e. in the same country (Dumont et al., 2017). There are shared values to work with, existing social capital, networks that can be strengthened and it encourages a sense of community. This is something I’ve been talking about with others in the industry. Here’s a brief discussion about it with Adi, co-owner of a coffee lab in Bandung, Indonesia:
The video below jumps to a section of an interview with Wiliam Edison, another coffee professional in Indonesia discussing what local consumption means to him and how the local market benefits (and is currently expanding):
A thriving local market also facilitates things like family-run ventures, where part of the family may run the farm, while another part owns and operates a cafe, etc.
[I]n El Salvador we run a company called Cuatro M Cafes, and here we currently own and produce coffee at four farms, Finca Ayutepeque, Finca San Gabriel, Finca El Manzano, and Finca La Cumbre; these are located from 1,000 to 1,550 masl, and roughly cover an area of about 280 hectares. We also run a mill at Finca El Manzano that processes coffees from our farms but also from other neighboring farmers as well. It is through that company also that we export coffee from El Salvador to the U.S., most of Europe, Australia, Korea, and Japan.
Master Q+A Continued: Emilio Lopez Diaz—Part 1 - Barista Magazine Online
All of these inter-connected enterprises employ people and increase the flow of money in their given area and not only that, when one is involved in producing a quality product that is known to many locally, it can be a source of pride and that pride increases the quality of work, which increases the quality of the product—a virtuous cycle.
It’s also important to note that coffee professionals in producing countries have been exposed to the Specialty Industry, or Third Wave of coffee for quite a while now and they learn very fast. In areas where tourism is a major industry, the exposure is even greater. With a growing, local middle class, local boutique shops are booming and this will reinforce the entire chain within country. Case in point: I’m finishing this article in a coffee shop in Indonesia, called Tanamera, which sources all of their beans locally, from Indonesia. They have some great coffees on offer and roast everything fresh and local. Their supply chain is incredibly small because the beans never leave the country and even better; Indonesians are able to experience some of the best coffee their country produces. And that is a win-win if I ever heard of one!
- Dumont, A., Davis, D., Wascalus, J., Wilson, T. C., Barham, J. A., & Tropp, D. (2017). Harvesting opportunity: The power of regional food system investments to transform communities. Federal Reserve Bank of St. Louis and the Board of Governors of the Federal Reserve System.