WCPF Jeffrey Sachs, Keynote Speaker

This audio was recorded live at the first World Coffee Producers Forum in Medellín, Colombia in 2017 and was later transcribed from the recording.

You can access all of my archived material from the event here.

Jeffrey Sachs, University Professor. Director, Center for Sustainable Development, The Earth Institute, Columbia University
Recorded: 11 July, 2017
Transcribed: 26 April, 2018

Jeffery Sachs, WCPF 2017
© Photo by Colombian Coffee Growers Federation (FNC). Used with permission.

[Beginning of recorded material]

Good afternoon, oops. Good afternoon everybody. I can’t tell you how excited to be here because I love coffee. Period. It’s very, very simple. So [his contact] was a little surprised when I immediately accepted the invitation. But, the idea of being in a room filled with coffee producers is pure joy for me. So, I would have gone anywhere but happily and here in Medillin, in this beautiful city, in this wonderful country and at a new time of peace.

I’ll give you a hint of how much I love coffee, by the way. I’m studying a question that many of us are asking, which is if the machines get smarter and smarter, and so the machines take over all our jobs, what’s going to happen? And my theory is that we reach ultimate bliss because we get to sit in a coffee shop all day! To me that’s almost like the Garden of Eden, actually. You’re sitting in a coffee shop, you’re drinking coffee, friends, books, that’s the joy, and that really is the joy that coffee brings to billions of people around the world.

You have an absolutely wonderful, wonderful product and I am an expert in the consumption of coffee not in the production of coffee, but I want to help in any way that I can to make sure that this community, world-wide more than a hundred and twenty-five million people engaged, are able to find true prosperity and well-being because they are making prosperity and well-being for all of the rest of the world. So it’s really, extraordinarily important that we together brain-storm on how to solve the very evident problems in the region.

Now I do have a Powerpoint that is supposed to be up…

I’m afraid you’re gonna have to look at me, alright? My apologies, not as beautiful as the slides.

So, what I want to discuss is a broad topic and framework. And that is coffee and sustainable development. And the reason why this is important is that sustainable development is not only an important concept and very relevant for the coffee sector but it is the agreed, global, diplomatic framework for co-operation. So I believe that many of the things that your industry needs for its success, linking coffee with the globally agreed Sustainable Development Goals, makes strategic sense, and can actually help you to leverage some of the changes that are most important.

So it starts then, with the question of ‘what is sustainable development?’ You hear the phrase every day, but it has a specific meaning especially in the international context. And that meaning is that societies should aim to accomplish three over-arching objectives; economic prosperity, social inclusion, and environmental sustainability. So the economic, social, and environmental objectives in a wholistic framework. And in 2015, the UN member states, all 193 of them, within six weeks from September 25th, to December 12, 2015, made two huge agreements. One was on what was called agenda 2030. And the summary of that is the 17 sustainable development goals, objetivos de desarrollo sostenible.

This is a wonderful idea, of putting specific goals, as the world’s agreed objectives for the year 2030. It’s such a wonderful idea, I wish I could claim credit for it. But the credit for it belongs, totally, with Colombia. The government of Colombia was the one that put forward this idea in 2012. 2012 was the twentieth anniversary of the Earth Summit, which had take place in Rio De Janeiro. And twenty years after that summit, we had not made real progress toward sustainable development.

So the governments were scratching their heads, ‘what can we do? Because even though we have treaties, they’re not working.’ And the government of Colombia had the very important idea, I believe—still to be proved, but an important idea; and that is let us make clear, global goals. And those were negotiated over a three-year period, and they are our framework of global action. And I want to talk about coffee in the context of those global goals.

And for me coffee has two fundamental parts of that story. And the first is that coffee itself, is a motivator of well-being. It is one of the ways for all of society to achieve the goals of good health and well-being, which is at the core of sustainable development and specifically in the sustainable development goals. You have a product, which not only is fun and good to drin [sic], and pleasant to drink but it’s also medicinal, if I could call it that. It’s health-full. That’s not true of most beverages, by the way. You have one of the very few, health-full beverages. And I think this is extremely important.

And just to make the point, I don’t think it was because the editors of the annals of the internal medicine that we were going to be meeting today, but they published two major articles this week. You can look them up online. The first is a paper by scientists called Association of Coffee Consumption With Total and Cause-Specific Mortality Among Nonwhite Populations. This is in the United States. Conclusion; “higher consumption of coffee was associated with lower risk of death in African Americans, Japanese Americans, Latinos, and whites.” All parts of the population. The more coffee drinking, in what is called a perspective cohort study, the lower the death rates. Very significant. Not news, because we already knew these findings but reinforced in study after study, that coffee is preventative of physical and mental illnesses. It is preventative of depression. It is preventative of suicide. It is preventative of cardio-vascular disease.

A second study published along side, this week; Coffee Drinking and Mortality in 10 European Countries: A Multinational Cohort Study. All those names [referring to a presentation slide] are the authors of this. This was a huge study. With tens of thousands of observations. Conclusion: coffee drinking was associated with reduced risk for death from various causes. This relationship did not vary by country. In other words, country-by-country in Europe, more coffee drinking, lower mortality. Please make this known. It is strategic for this industry. It’s not medicine that’s hard to take. It’s just the miraculous good news that what is so fun to drink, also will save your life. This is not true of most beverages. And I’m sorry for companies that sell both soda and coffee. I am not going to defend soda. Soda is not good for us. Both sugar beverages and unfortunately, even, zero-calorie sodas. So this was recently studied and reported just two months ago, in the magazine Stroke of the cardio-vascular disease, uh, meaning of stroke. Sugar and Artificially Sweetened Beverages and the Risks of Incident Stroke and Dementia. Conclusion: “Artificially sweetened soft-drink consumption was associated with a higher risk of stroke and dementia.” This is bad news for me. I have been drinking diet Coke for forty years. If I forget what i’m talking about, you know why now. Okay?

But I am off the sodas, personally. They’re not good for us. And they have actually been the agents of obesity epidemics, mostly in my country, in Mexico, throughout Europe. We have nearly forty percent of American adults who are obese. And this is a matter of beverage sodas, I’m sorry to say. And so, you have a product, which is very special, and very, very important for what it does. I work with beverage companies, in the soda beverage world. They want to be sustainable in what they produce, I’m sorry, in how they produce, in their water use, in their carbon emissions. But their product can not be sustainable in the same way as coffee. This is an inherent feature of the products. And it’s very import to be known. And by the way, another article that just came out in the Medical Journal of Australia, “Obesity is a major and costly public health epidemic, and an Australian national health priority that requires urgent action. While obesity is a complex condition with many contributing factors, a relative excessive kilojoule intake is a major driver of weight gain. Sugar-sweetened beverages (SSBs) contribute to this excess energy intake in children and adults, are linked with obesity, diabetes and dental caries, and are an increasing focus of public health attention.”

So this is the framework. And it’s why I’m personally passionate about this issue. But here’s another point that I think is important. And that is there is growing circumstantial evidence that coffee not only produces good health outcomes, but an overall sense of life well-being. It’s not surprising, by the way, because one of the most important dangers of ‘bad life’ is mental illness, and depression, it’s probably the number-one factor. And we know from many, rigorous studies that coffee is protective against mental illness and specifically against depression and suicidal tendencies.

But I’ve been looking at this question about coffee and happiness, because I am co-editor of a publication of the UN Sustainable Solutions Network. And we are partnered with Illy Foundation, I am delighted to say, on this annual report. And this is a report where Gallop International asks people around the world “how do you feel about your life?” And specifically people are asked “Imagine that life is like a ladder, and there are ten rungs of the ladder, and the bottom rung is the worst life you can imagine. And the top rung of the ladder is the best life you can imagine. Where do you stand on that ladder of life?” So Gallop International asks hundreds of thousands of people around the world that question. And my report together with two colleagues; Lord Richard Laird of the United Kingdom and the professor John Helliwell of the University of British Colombia in Canada. We analyzed the results of that study. Typically the countries that come out at the top of the study, are Sweden, Norway, Denmark, Netherlands. So I, being very political, said ‘well that’s because they have social democracy, that’s a good system, they take care of each other.’ My wife who’s a medical doctor, said ‘no Jeff, that’s where they drink the most coffee per-capita.’

So she sent me the data, and we looked, and this is a scatter-plot [referring to a presentation slide]. On the horizontal-axis is the estimated, average cups of coffee per day for different countries. And on the vertical axis is the average rung of the ladder for the different countries. What you see all the way, the biggest coffee drinker in the world, per-capita is the Netherlands; 2.4 cups per man, woman, and child in the Netherlands. And the next is Finland and then Sweden and then Denmark, and so on. The higher on the page, is the higher reported happiness. So there is a strong upward correlation. Correlation is not causation, but it is interesting. And so my colleagues said ‘well we know that happiness is correlated with many other things. Maybe it’s just that those countries are rich. Maybe it’s because they have a high degree of trust. Maybe it’s ‘cause corruption in those countries is low.’

So then, you make what’s called a multi-variate statistical analysis. In other words you ask ‘what is the relationship between coffee drinking and happiness, if you control for all those other potential determinants. And what is show here [referring to a presentation slide] is what is called a partial-coefficient, or partial-correlation line. A partial-regression line. It’s the relationship between coffee drinking again on the horizontal axis, with happiness on the vertical access, controlling for income, corruption levels, and other variables, even controlling for life-expectancy, which we expect to be partly determined by coffee. And the result is strongly, statistically significant. There’s something, I believe going on here. It’s not proved, don’t quote me as a scientific finding, but I think it’s definitely something worth pursuing, this study. Because what is scientific is coffee is protective of health. But I think there is growing evidence that coffee is also promotive of overall well-being. And it certainly feels that way.

So that’s the one side of the equation; what coffee offers to the world of coffee drinkers. What about the coffee producers, that’s you. What does the world offer to you? And of the hundred and twenty-five million farmers who are engaged in producing coffee in around fifty countries around the world. What the world has said, is that every one of your countries should achieve the Sustainable Development Goals. This is what the world’s promise is. So what are these sustainable development goals? There’s seventeen of them, and they are very relevant for any small coffee farmer. Because what they promise is; goal number one; no extreme poverty, goal number two; no hunger, goal number 3; access to health care. Goal number 4; access to education, at least through the secondary level. Goal number 5; gender equality, equality of girls and boys, and men and women in society. Goal number 6; clean water and sanitation. Goal number 7: modern electrification, in other words…modern energy, I should say, in other words, any coffee farm should be connected with electricity. Every village should have electricity. This is not the case right now, but this is the promise. SDG 8; decent jobs for all, and the end of child labor. Very important because children have traditionally worked from time immemorial in coffee, but they should be in school. And we need to make sure that is possible. And that is a promise of the sustainable development goals. SDG 9; decent infrastructure. SDG 10; reduced inequality of income within the society. So no huge caps between rich and poor. SDG 11; not so much for the farmers, that the cities should be sustainable. SDG 12; that the waste-management should be sustainable. SDG 13; that we should stop human-induced climate change, and make our communities resilient to climate change. Obviously of central importance for coffee growing. SDG 14; marine sustainability. SDG 15; terrestrial bio-diversity conservation. That farmers should be farming in a way that is promotive of bio-diversity. That yields the most valuable crops. Shaded farming, and farming in a diver..bio-diverse manner. And that is a commitment. SDG 16 is peace; Peaceful and inclusive societies, what President Santos won the Nobel Peace Prize for—wonderfully and completely merited. And SDG 17 is partnership. That means partnership of the rich and the poor countries to achieve all of these goals.

So my first point in this regard, is that these goals are relevant for you. They’re not achieved right now. But if they were achieved, a hundred and twenty-five million smallholder coffee growers and farm laborers would be better off. And that’s why I believe achieving these goals is so important. And it’s notable that at the G20 right now, the G20 just reaffirmed its commitment to these goals. Honestly I don’t know if Donald Trump ever heard of them, but he signed the declaration. And these days you take what you can get, right? So that’s good.

Now, where do countries stand on SDG achievement? Every year my team at the UN produces not only the Happiness Report, but what we call the SDG Index, which is a measure of how far countries are towards achieving the sustainable development goals. And this is a map [referring to a presentation slide] of the coffee belt, according to the 2017 sustainable development goal index. What does it say to you? It says that Africa needs the most progress. And when we pay attention to the global coffee industry, it’s African smallholders who are in the most need of our help, and the most need of our attention. But there are countries, of course Haiti is one of them, Central America, India, uh, parts of South East Asia, where there is a lot of still suffering or lack of access to basic services as well. And throughout the Andean region. So this SDG Index helps to give some sense of where the priorities should lie.

Now, come to the economics. This is a picture well-known to you [referring to a presentation slide]. It is price of coffee, adjusted for inflation, from 1980 until now. It’s on a down-trend. So the real price that your farmers are earning, has been going down quite significantly over a forty-year period. If you just look at the dollars per pound it looks flat over thirty years, but the price of everything else doubled. And so the real earnings of farmers, per pound, has fallen by half. This is where the pain comes in, of course. This is where for us as consumers, we’re enjoying it, but the farmers have suffered the income loss as a result of this. And the price for coffee put in 19…well it’s, it’s down roughly to a third of where it was during the high-price period of the early 1980’s. It’s important to ask why this is. And I think the basic answer is not trickery or anything else. The basic answer is ‘supply and demand.’ The demand has been growing, but the supply became even faster-expanding, mainly because of the entry of Vietnam and other asian countries into the growth. Also of course because of increased productivity and therefore increased output in the traditional growers like Colombia or Brazil, of course.

But Vietnam’s entry was spectacular, of course, a huge increase of production that meant that even as the demand was increasing, there was a very elastic supply available to meet that demand. China became very importantly an increasing demander drinker of coffee, but Vietnam provided a huge amount of China’s incremental demand during this period.

What are the prospects for the future of supply and demand? That’s obviously something that I’m not an expert on, but I’m going to give you my in-expert view of that. The starting point is the following; coffee consumption varies tremendously around the world, as you know. So my household is the highest coffee consumption in the world; ten cups a day, I would say, on average. Something like that. Maybe that’s on a light day. We’re drinking Illy coffee morning ‘till night. Then Europe is averaging one and a half, to two cups of coffee per day, especially Northern Europe. That’s why they’re so happy. Europe as a whole, about one cup of coffee a day. The United States, by the way, as you know had a significant decline of coffee consumption from the late 1940’s. We drink less coffee and more soda and Americans are fatter and less happy, by the way. And I don’t think it’s an accident. And so I wouldn’t mind seeing the curves reverse again, so that American coffee consumption would rise and our soda consumption would decline.

But the rest of the world hardly drinks any coffee by these comparative standards. Because the US and Europe are completely out of scale with the rest of the world. This is a chart I pulled up [referring to a presentation slide] of coffee drinking. So Netherlands; 2.4 cups a day, The United States; 0.9 in this estimate, Japan; 0.3, China .003. So China’s hardly gotten started yet. I wanted to know, is there something cultural, or biological, or some other reason why China wouldn’t drink coffee, and pretty surely the answer is ‘no,’ because coffee consumption is soaring in China, just from almost a zero level right now. That is a wonderful point. Because I think, if I had to guess, and if you do your job, coffee consumption will rise sharply in the coming years. Not even as slow as one or two percent per year. Faster than that. And that’s because you have three-fourths of the world population, maybe five-sixths, that have not discovered the well-being of coffee yet, in a deep way. Of course everybody, every country has a little bit of coffee drinking. But only one-sixth of the world drinks coffee at something like a level one cup per day.

Now, interestingly, if you do a calculation you can ask ‘how much would demand increase?’ Let’s say, instead of saying ‘an apple a day keeps the doctor away,’ we said ‘a cup of coffee a day keeps the doctor away.’ Which seems to be literally true, what if the whole world drank one cup of coffee per day? My quick short-hand estimate is, that if you take twenty-five cups per pound, 2.2 pounds per kilo, 365 days a year, then what you need is six kilograms per person for one, for one uh, for one cup per day. And so you need a tenth of a bag, per person. Right now we have a hundred and fifty million, sixty-kg bags produced each year. But there’s seven and a half billion people in the world. So there were one bag for ever ten people, there would be seven hundred fifty million bags needed for one cup per person.

So roughly speaking, if we went from today’s use to one cup per-person in the world, you would have five times the demand. I don’t think we’re going to get there overnight, but I do think that it says that the potential for a massive increase in coffee demand is quite real. And I’m happy to promote it, because it promotes good health. Because it promotes drinking not the beverage, sweetened beverages that are doing so much harm. That are increasingly going to be taxed, by the way. Because many countries are introducing high-sweetened beverage taxes and that will shift demand, of course towards coffee-based drinks as well.

My conclusion is that you have a lot of potential to grow the demand, but not in the traditional markets so much. My household probably could only reach about twenty cups per day. Maybe the United States you could get to double. But the real increase in demand will be in Asia. Asia’s home to sixty percent of the world’s population. They drink a lot of tea. They like hot beverages. Introduce them to coffee drinking in a big way. That would be my humble suggestion.

What about the supply side? The supply side is complicated. Because right now, the idea of a five-time increase of output, that’s not in the cards, obviously. But even a lot of today’s production is fragile. And the reason that it is fragile and the reason why you have to care about climate change is that the coffee crop as you know, is extraordinarily vulnerable to climate. It is very temperature sensitive. And climate change is going to not only affect the temperatures, but also the water cycle, in very profound ways.

With the Illy company and Illy Foundation, my scientific colleagues undertook a study this past year, of what climate change might mean for future crop-suitability of different regions. And what you see here from a distance is a map of the coffee belt in today’s climate conditions and on the bottom, if climate change is not controlled. So this is a ‘business as usual,’ big, global warming scenario. And what you can see is that the spaces today, in color, that are climate-appropriate, a lot of them disappear. Brazil, for example, because of low-land coffee production, is profoundly threatened by climate change. And only places in higher altitudes, higher elevations, and moving up the sides of mountains, or taking other means, which need to be studied; different crop varieties that are more resilient, the scientific research on how to make the coffee crop more climate-resilient, is a big part of the story.

My advice is that this industry needs to do two things: one is to prepare for climate change, because it’s going to happen even if the global community gets its act together. And the second is to be a major voice to fight climate change. And in coffee shops around the world and on your products, tell your consumers that their favorite, life-saving drink is at threat by climate change. And it’s no joke.

We had kind-of good news at the G20 summit. My government is so corrupt, that the oil and gas interests have bought out the Republican party. And that’s why Trump and the Republicans are trying to throw away the Paris Climate Agreement. Not because they don’t agree with it—they don’t know anything about it. But because they are so corrupt, that they’re paid for by the oil and gas industry. That’s the single story of this.

So they went around, before the Hamburg Summit and tried to get other big oil countries; Russia, Saudi Arabia, Indonesia with its coal, Turkey, to sign up with Trump, to say ‘No, no, we need to be able to produce our fossil fuels.’ And you know what? Not one of them broke with the Paris Climate Agreement. All of them. If you read the declaration, theres a paragraph that the US put in, it’s gobbledygook nonsense. And then there’s a statement that says ‘all other G20 countries strongly support the Paris Agreement and it’s non-negotiable.’ So we are winning this battle. Because it’s a battle for humanity. It’s not a small deal.

We are gonna fight this in the United States, because we can name names. It’s Charles Koch, it’s David Koch, it’s corrupt individuals, who paid bill, have paid billions of dollars, to drive our politicians into the take. We’re gonna fight that, but you have to fight the big battle. To let people all over the world know, that our lives and your farmer’s livelihoods depend on fighting climate change. So that’s a very important part of meeting this growing world demand.

Now let me say a word about coffee and poverty. I’ve said that it is in part, supply and demand. As countries develop, the poverty tends to go away in the coffee areas, because people leave if they’re still working at impoverished wages. And coffee growing in a country like Colombia or Costa Rica faces a competitive challenge because of lower cost, lower earnings, in poorer countries. Right now the coffee world is pretty much evenly divided. Not in share of coffee, but in number of countries and, I didn’t do population. But there’s a large group of low-income countries, mainly the African countries. And the only low-income coffee-producers outside of Africa are Haiti and Nepal, according to the official World Bank List.

Then there are the lower-middle income countries, which are a mix of Africa, Asia, and Latin America. And there are upper-middle income countries and those are mainly the Latin American countries. Now, if you look at poverty rates, on average in the coffee belt, it’s not surprising, therefore that Africa is the home of the highest poverty rates. This is not specific to coffee it’s an economy-wide phenomenon.

The first story of ending poverty is promoting over-all economic development, including urban development, because that pulls jobs, that raises wages, and that raises incomes of coffee farmers also in over-all balance of the rural and the urban economy. But I think we’re also interested in new ways to make sure that coffee growers are getting the best deal, even as national development is taking it’s time.

And I want to suggest that there really are three pillars to poverty reduction, in coffee growing communities, as I understand it. And I work in many of them, not in advising on coffee growing, but in advising on poverty reduction. So the first is a good, community-based poverty reduction strategy. Every community needs schools that function, needs healthcare systems that function, needs connectivity, needs wireless these days, broad-band wireless, and so forth. So, integrated, rural development is crucial. I hope that I can continue to advise those of you who are interested on what we’ve learned. I’ve been the UN’s main advisor on the global poverty-reduction goals for the last seventeen years. We’ve learned a lot about community-based development. We have highly effective ways to bring health-care and education to low-income communities. And off-grid electricity and other infrastructure. So this is purpose number one: that your communities need to get organized for a wholistic approach, and not to settle for not having a school, not to settle for the absence of secondary education. Because no child should stop before completing secondary school in the world today. There are no jobs that are decent if you can’t have at least a secondary education looking forward. That’s for coffee growers as well as urban employment.

Second, we need to revisit mechanisms for making consumers pay a little bit more and for making producers receive a bit more. And this is bit tricky. It is the Fair Trade idea, but in my view, the Fair Trade is not doing enough. It’s not quantitatively important enough. It’s not generous enough. It’s not big enough. It doesn’t cover transfers enough. And this, I believe, needs to be revisited, now.

Simple calculation; one pound gives twenty-five tall cups of Starbucks coffee. I looked it up. Okay, at a dollar twenty-five a pound, that is six cents of coffee contained in a cup of Starbucks coffee. I’m sorry, five cents. Dollar twenty-five divided by twenty-five; five. So it’s just five cents, is the coffee content of what I pay in Manhattan, a dollar eighty-five a cup. And I’m happy to pay that, by the way. And incidentally, if it was a dollar eighty-nine I wouldn’t even notice. But if it was an extra five cents a cup, the farmer would be getting twice the amount. Twice, what they’re getting right now. So the logic is clear; that a small increment for consumers, could mean a huge increment all the way up stream for the farmers.

That’s the idea of Fair Trade. But think of Fair Trade; the premium is just, first of all, twenty cents a pound. That’s less than one cent a cup. That’s not good enough. And in addition, that just covers a tiny, tiny fraction of the market place. So I don’t have a plan, but I do have a thought. That there should be a way to design a more, I’m tempted to say robust, but I don’t mean robusta here, I just mean robust, strong system, for consumers to know that by paying a tiny bit more, but I’m thinking like five cents a cup, that they would be enabling communities to really take off. And we should be thinking about how to do that. So I want to put that on the table as well.

Finally I want to say that I hope that we can build a connection of the coffee growers and the coffee industry, generally, with academia. For me, it’s a joy to work with Andrea Illy, and Illy Foundation, it’s a joy for me to work with Lavaza Company, it’s a joy, this industry is filled with very, very nice people. It comes with drinking coffee, I’m sure. I think academics around the world, people who are trained in studying poverty reduction or helping in public health, or helping in local infrastructure, or other development approaches, and of course in agronomy, and in agro-bio-technology, because now thanks to Illy and others, and great scientific work in this country, we have the genome, for arabica. And that is a god-send in terms of development of new varieties and resilience to climate change as well.

So I would like to propose a very strong alliance of the coffee industry and academia. I’m sure you know the definition of an academic mathematician, by the way; one of the great mathematicians of the twentieth century; Erdős, a Hungarian mathematician defined a mathematician as a machine that turns coffee into theorems. So you’ve got a lot of coffee drinkers in academia. And we would be very happy to cooperate. I lead a global network of universities committed to sustainable development, called the Sustainable Development Solutions Network. We partner closely with Los Andes University in this country and Javeriana in this country. And with universities all over the world. Last week I was in Rwanda, and we had sixty vice chancellors of African universities coming together to talk about how to promote sustainable development teaching and research in African universities. So I believe we could make a very strong, vibrant, and exciting network that combines growers, traders, roasters, coffee consumers, and the political leadership, as you saw today, with the strong commitment, into global problem solving. We’re going to be launching a new center on the sustainable development goals at Los Andes University. I hope that it can be a hub, a regional hub, or a global hub for our work together ahead.

Thank you very much.

[End of recorded material]

Links to some of the things mentioned in his speech: