Coffee farmers face poverty

Millions of coffee and sugar farmers face impoverished livelihoods next year as prices rise but not enough to match the cost of production.

Rabobank’s outlook, Supply slide saves grounded demand, tracks the prospects for a basket of 10 key agri-commodities in 2020, including coffee, sugar, palm oil and soybeans.

The oversupply of coffee and low prices in 2019 have pushed millions of farmers – mostly in Central America, east Africa and Southeast Asia – into poverty, the bank noted.

“The rest of the world is struggling to adapt to the high availability of arabica and robusta from Brazil, with the majority of other coffee producers having to sell their coffee below cost of production,” its experts noted. “The consequences are varied and, to a large degree, unknown. In principle, we expect declining production outside of Brazil in 2019/20 and 2020/21, with over 10m farmers facing poverty and some neglecting their farms.”

Consumers may also be faced with “more limited choice”, they warned.

Producers of soybeans are also under threat from trade tariffs, with the crop having become “an unlikely symbol of 
a US-China trade conflict”.

Stefan Vogel, global strategist and head of agri-commodity markets at Rabobank, said: “There is no doubt that the world’s farmers have endured a difficult year with headwinds caused by geopolitical tensions, disease and weather. Yet sadly for them, 2020 looks like offering no immediate respite.”

He added: “The hope is that the worst does not occur. In a more favourable scenario, the US and China resolve their trade dispute, China begins to replenish pork herds, stimulating demand for soybeans, and the coffee market rebalances, increasing the prices paid to farmers for their beans.”

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