John Blomster: Hello, and welcome to ºìÌÒÊÓƵ. I'm your host, John Blomster. And today we're speaking with Hilary Haddigan, Chief of Mission Effectiveness for Heifer International. Heifer International is a global nonprofit with a mission to eradicate hunger by among many other efforts, providing animals and values-based agricultural training for families and around the world. Hillary provides executive leadership to Heifer’s strategy and performance in service that the organization's overall mission. And through her vast experiences, she brings a unique expertise on some of the biggest issues facing populations in need around the globe. She's here today to discuss one such topic, the global coffee trade and the roles non-government organizations play within it. Hillary, thank you so much for joining us.
Hilary Haddigan: Thank you.
Blomster: Can you tell us a little bit about Heifer’s mission and how you carry it out?
Haddigan: So our basic mission is to end hunger and poverty and care for the earth. And the core model that we have used over 75 years of history is the provision of livestock and other assets alongside community development, so that people have access to the resources they need to feed their families and be able to sell surplus so that they can increase income. So that's the core model. And we have adapted that through the years. And now we're much more focused on building on that so that we can connect farmers to markets as well as them feeding themselves, they can be productive in marketing engagement.
Blomster: In terms of inequity in the global coffee market, how did Heifer first get involved in that particular space?
Haddigan: So our first coffee projects were in 2003, following Hurricane Stan in Guatemala, and coffee farmers were badly affected. And we provided livestock and assets to help with food security following the crisis. We continue to work with coffee farmers after that, and started to partner with coffee companies. And the work that we did was to diversify the production base of the farmers so they weren’t totally dependent on coffee, because coffee isn't productive all year round and farmers have quite high levels of malnutrition at certain times of the year and food insecurity because they cash at one time of the year and when that cash runs out they don't have and any money to buy food. So we invested in diversification strategies, so that people had access to food. And then gradually over time, we started to support farmers in their engagements in the coffee value chain. And that's how we've come to be involved in the coffee value chain.
Blomster: So I'm stealing these stats from you but 25 million smallholder farmers produce 80% of the world's coffee, with demand growing at a record rate. The flip side is that competition has contributed to driving the cost and then wages for farmers down. So using, say Honduras, as an example, how big of the gap is there between a living wage and what farmers actually made?
Haddigan: So we've started to focus a lot on a true living income so that people can lead a dignified life and be resilient. And we've got an economic model that we've used to assess what a living income is. And in Honduras, it's about 4,000, and some dollars per family per year. And in coffee growing regions, the farmers that we're working with, are earning 2, 000, and some and the gap between what they are now I want to living in community is about $2,000 a year.
Blomster: That's incredible. But if the demand is growing so fast, and I think you had mentioned it's something production is going to need to double over the next decade or so in order to meet the demand, when the cost goes down, and farmers’ wages are affected, wouldn't the inverse be true that increased demand should show them earning more?
Haddigan: So in a perfect market system, pricing is affected by supply and demand. In the coffee system, there are many links in the value chain, and the value of coffee at the time it is sold to consumers, most of the profit goes into the roasters and that value is not transferred, or the profit is not transferred down to farmers. And there are multiple other factors that are affecting farmers. The cost of fertilizer has gone up since 2000, by about 300%. And so that is a cost that farmers have to carry. Labor costs are increasing. So during harvest seasons, farmers have to employ labor. And there are, increasingly, laws around minimum wage that affect farmers. Then, because prices are low, and because life is difficult economically in rural areas, the people who are working as laborers, or coffee farmers themselves move away. Meaning there’s migration, meaning there are fewer workers, meaning it's more difficult to be productive. So there's a whole complexity of factors that are affecting the farmers, and that affect their ability to be productive. And they're getting a lower price. So they can't invest in their own coffee to make the quality higher, too.
So there's a lot of factors that are driving the situation. So that farmers are not getting fair prices and aren't able to combat it by either increasing their quality or buying larger plots of land or shifting into some of the processing work that would bring higher prices because of the higher value that could be created. If farmers could break into roasting, then they could make more money. But there are policy barriers to that. And trade barriers to that that mean, it's not possible.
Blomster: Shouldn't there be some kind of incentive? Or is there some kind of incentive for people or organizations further down the value chain to make sure that these farmers, the origin of the source of their profit, have a living wage? It seems like that would make sense.
Haddigan: Yeah, you would think so. The demand for coffee over the next 20 to 30 years is going to increase. And so coffee companies need to protect the sustainability of their supply chains, meaning there's got to be an availability of coffee, and there's got to be people producing quality coffee. So they do have coffee companies, retailers, roasters, aggregators have an interest in protecting the supply chain. But they are not putting enough money into investing in farmers to be able to do that. They will often talk about they want to buy sustainable, from a sustainable supply chain, but the true investment is going in is far below what it needs to be.
In addition, there are climate change issues that are also threatening the coffee farmers. So it's estimated by some institutions that in 20 to 30 years, coffee farmers are going to have to work at a higher altitude. Well if coffee farmers aren’t living at a higher altitude, and they don't have land there, then they're not going to be able to just transfer. And so the investments that are required to think long term aren't really being made, even though the coffee companies themselves know that that's going to be important over the next decade. But the need for coffee now, and the pricing now, is what's driving behaviors not thinking from a long term perspective.
Blomster: So if farmers aren't getting good price on coffee why don’t they just grow something else?
Well, many farmers are farming land that has been in their family for generations. It might be poor land, and the only thing that it can grow is coffee. Often the land that is used for coffee is on hillsides. And it's not good land that could be used for a different crop. Also, they have to invest in the coffee plants and once they've invested in them, it takes four years, five years before the plants become productive. So once they've invested in them, they're locked into a system for the next 20 years while those plants are productive, so that’s in a vicious cycle, and they can't just escape it.
Blomster: I try as I know, many people out there try to buy coffee that says fair trade, that’s sustainable, you know, you do your best through your purchasing to try to support the farmers in the production as much as possible. And this has been a huge shift in the consumer market. But how has that shift actually affected the farmers themselves.
Haddigan: So there are lots of different kinds of certifications. And the intent of them is good. And so farmers have engaged in different kinds of certifications. And what that requires from the farmer is that they adjust their production practices so that they can ensure the quality that's required by the certification. So that's great from a consumer perspective. For the farmers, oftentimes, it costs them to be able to adjust to meet those standards. And if they've got to meet standards for four or five different certifications, then they've got to adapt their practices for all of them and so it carries a large burden.
Additionally, a lot of the benefits of having the certification get filtered down through the co-op that the farmers might be part of, etc. And so not all of the benefits of it are going to the farmer. And so oftentimes we see pictures of companies that promote themselves as fair trade, sustainably grown, etc. And what is fair trade in terms of the certification and what you and I, as regular consumers might think is fair, meaning the farmer getting a fair price, is not actually represented in reality. There's some effort and there’s some positive side to that. And the intent is certainly very positive. But the true meaning of fair is not being felt by the farmers.
Blomster: If our purchasing choices aren't having that kind of immediate impact that we want, what would a consumer campaign look like? What can the average person do to support farmers or be a part of the solution or at least not be a part of the problem?
Haddigan: So I think we can all make ourselves more aware of what we're buying, and be intentional in our purchases. There are ways that you can buy directly, but most consumers aren't going to do that. But there are ways to do that. But what Heifer International is looking at is how can we mobilize such a consumer campaign? And how can we start to bring the reality of the farmers into the awareness of the consumers so that they can make more real choices?
Blomster: After you've gotten involved with this following the hurricane, and like you mentioned, your work in 20 plus countries, what kind of efforts are you engaged in, in terms of identifying challenges and addressing challenges and also partnering, like you said, with corporations to improve the system and restore equity?
Haddigan: In the work we've done, we've shifted from working for food security, and diversification into actually understanding more deeply the reality of farmers in the coffee production and the coffee value chain. And what we're seeing is no one action at any one part of that system is going to bring change, the whole system needs to be adjusted, so that the benefits that are at the downstream end of the value chain close to the consumers, where there is $200 billion a year in coffee value created in the world, but only 20 billion of that are going to the 25 million smallholder farmers. So when you've got such disproportionate distribution of the wealth that is generated in the system, then the whole system needs to change, so that there is a true fair price. And farmers are supported in helping their own production and their farming to be truly sustainable. And that takes investment. So the whole system has to look at itself. And look at where can we make some investments? How can we truly pay a fair price, when there's competition amongst roasters, etc., and they're not necessarily going to want to be the first one to take the step to pay a fair price because if one pays a fair price, it affects their profitability, and if others aren't doing that, then they're going out on a limb, and the system isn't going to change.
So what we've tried to do as an organization is, first of all, we've identified this as an ethical dilemma for ourselves. And it's a moral problem that farmers are not being paid a fair price. And we have started to talk to people that we know working in some of our partner organizations across different parts of the value chain. And we've invited them into a conversation about how can we work together to look for options to try to influence change across the system as a whole to eventually lead to fair prices for farmers, and true sustainability. And this has affect beyond farming, you know, it's affecting many aspects of our lives. It has a contribution to environment and climate change if farming isn't sustainable. People are leaving rural areas because of the economy around coffee farming. And they are migrating either to urban areas in their own countries, or even some of the migration we see here into the U.S. So there's a lot of ripple effects that if we looked at the system as a whole, we created a just and viable income at the farm level, then it would help with many other factors that we as a world are dealing with in the 21st century.
Blomster: Obviously such a tremendous issue. So complex. But in your experience, where do you see the signs for hope or progress, like where are you inspired, as you continue to work on something, such a problem that is just so immense?
Haddigan: So what inspires me is people, organizations, corporations, NGOs, farmers. It's all made up of people. And I've met many people that are working in this field, even working for companies that we might think are being exploitative, and they have a genuine desire to change the situation for smallholder farmers. And I think through people unifying, that is where change will come from, and that's what Heifer is trying to engage in.
Blomster: Hilary Haddigan is chief of mission effectiveness at Heifer International. You can learn more about and find ways to support the organization's ongoing work around the globe at heifer.org.
Hilary, thank you very much for taking the time to join us on this ºìÌÒÊÓƵ.
Haddigan: Thank you very much.
