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A Strategy Review of the Coffee Policies and Development by the Indonesian Government

In recent years, the trend in coffee consumption has increased rapidly in various countries, especially in Indonesia. The government has predicted that there will be a significant increase in domestic coffee consumption in the coming years — the central government plans to increase the role of coffee commodities in the national and global circular economy. A central government with the Ministries of Agriculture, Industry, Trade, together, have the confidence to increase the value and quantity of exports through increasing productivity in the coming years through various regulations that have been mature and published. Unfortunately, based on the perspective of the downstream chain or farmers, the central government is less aware of various productivity and sustainability issues arising in the field. For decades, the national coffee production has indeed increased, but due to various issues such as land productivity, seed quality, human resource management strategies on coffee and even exchange rates, slowly and volatilely, there has been a decline in coffee production. The primary objective of this study is to provide a general analysis of coffee commodities at the national level with analysis of government regulations, provide information on applicable regulations, and pay attention to current issues that affect the conditions of coffee production. The policy review section aims to clarify the functions, responsibility, and consistency of the applicable regulation that offers the opportunity to engage with people involved in the Indonesian coffee development. At the end of this study, a section describes the draft plans and strategies of the central government in increasing the value of coffee commodities in the new 2020 cabinet.

Authors

Andoko, E., Zmudczynska, A.

Keywords

indonesia coffee, sustainability issue, production, trade coffee policy review

Publication Date

1-Jul-20

Where does the fair trade money go? how much consumers pay extra for Fair Trade coffee and how this value is split along the value chain

Fair Trade certification aims at transferring wealth from the consumer to the farmer; however, coffee passes through many hands before reaching final consumers. Bringing together retail, wholesale, and stock market data, this study estimates how much more consumers are paying for Fair Trade-certified coffee in US supermarkets and finds estimates around $1.50 per lb. The study then assesses how this price premium is split between the different stages of the value chain: most of the premium goes to the roaster’s profit margin, while the retailer surprisingly makes smaller absolute profits on Fair Trade-certified coffee, compared to conventional coffee. In the period studied in this study, the coffee farmer receives about a sixth of the price premium paid by the consumer.

Authors

Naegele, H.

Keywords

CoffeeFair trade, price premium, value chain, voluntary, sustainability standards

Publication Date

15-May-20

Roasting Conditions and Coffee Flavor: A Multi-Study Empirical Investigation


This research investigates the relative importance of two roasting parameters—colour (i.e., roast degree) and time—on the sensory properties of coffee. The paper draws on data from eight studies conducted using sensory descriptive analysis with trained (in six studies) or semi-trained (in two studies) assessors, focusing on a common set of attributes. The results indicated that, while both parameters significantly affected coffee flavour, colour was the stronger predictor of the two. The effects direction for both colour and time were similar and related to the rate of non-enzymatic browning, with darker roasts/longer roasting times associated with an increase in bitterness and a decrease in acidity, fruitiness, and sweetness. With respect to roasting time, we distinguished two phases, “time to first crack”, corresponding to the time between the onset of roasting and the moment where the accumulated steam pressure causes the beans to crack, and “development time”, corresponding to the time elapsed from the first crack to the end of the roasting process. The results clearly indicated that, under the same colour, time variation also influenced flavour, and in particular, development time, rather than time to first crack, had the largest effect on coffee flavour.

Authors

Morten Münchow, Jesper Alstrup, Ida Steen, Davide Giacalone

Keywords

coffee, roasting, flavour, development time, sensory science, descriptive analysis

Publication Date

5/8/2020

Specialty Coffee Consumption and COVID-19

By collecting millions of transactions of different coffee purchases in the US, the SCA together with Square assessed the trend American coffee consumers during the COVID-19 pandemic. The objective of this study was to understand changes in trends of consumption and responses from different cafes. Results show that in this period a huge increase has been recorded of pickup purchases and deliveries. This increase of home-safe solutions was also aligned with a great rise of subscription offerings and sales. Additionally, the price paid by consumers for drinking their coffee at home increased as well as the purchase of brewing equipment. Results show a comprehensive analysis of how coffee purchasing and consumption changed in the US during the COVID-19 pandemic. This report can be interesting for any player willing to understand new coffee demand trends.

Authors

Square Inc & Specialty Coffee Association

Keywords

Specialty Coffee, coffee consumption, COVID-19, coffee demand

Publication Date

5/1/2020

Volatile coffee prices: COVID-19 and market fundamentals

This report presents an overview of the coffee prices fluctuation during COVID-19 and potential future scenarios. The pandemic has represented a high volatility in prices and a considerable shock in supply and demand. According to the analysis, this fluctuation depends on the changes in the functioning of key export infrastructure which reached almost all producing countries due to lockdowns measures. Also, the pandemic caused delays and drops in shipments as well as local currency devaluations. At the farm level, social distancing measures have affected the availability of seasonal labour, causing additional delays at harvest. On the demand side, consumption has decreased causing a negative growth forecast for 2020. The report concludes with three potential policy responses for Governments to consider to decrease the economic shock for the sector. This report is interesting for all players in the value chain interested in learning more about the market fundamentals of COVID-19.

Authors

Hernandez, M. A., Pandolph, R., Sänger, C., Vos, R.

Keywords

COVID-19, Covid, pandemic, coffee markets, coffee prices

Publication Date

5/1/2020

New insights into leveraging coffee ‘middlemen’ for smallholder living incomes

This blog analyses the results of four different case studies conducted in Colombia, Vietnam, Indonesia and Uganda by IDH in partnership with Enveritas. The scope of the study was to better understand the role of middlemen into the coffee sector. According to the study, a strong majority of the coffee is sold through middlemen before it reaches exporters. Additionally, they often offer additional services to individual farmers such as transportation, access to inputs and loans. As results showed, since middlemen have such a big role in buying coffee, as well as supporting producers with other activities, IDH sees a window of opportunity to optimize service delivery via middlemen in order to reach a larger share of farmers. This blog is particularly interesting for coffee professionals looking at the dynamics of the coffee value chain and the role of the different actors.

Authors

Sustainable Trade Initiative

Keywords

Living income, middlemen, coyotes, coffee production, producers, origin

Publication Date

5/1/2020

The impacts of perceived moral obligation and sustainability self?identity on sustainability development: A theory of planned behavior purchase intention model of sustainability?labeled coffee and the moderating effect of climate change skepticism

This study sought to elucidate the antecedents that may influence the effect of people's purchase behavior on the Earth's sustainable development. It included people's perceived moral obligation and sustainability self?identity in the theory of planned behavior (TPB) model to investigate attitudes among the Taiwanese public's attitude toward purchasing sustainability?labeled coffee and their purchase intentions. The moderating effect of climate change skepticism is also considered in this study. A total of 745 nationwide and self?reported questionnaire valid data was collected in Taiwan. Hierarchical and moderated regression analysis results indicated that the components of the TPB model had positive influences on the public's purchase intention. The public's perceived moral obligation and sustainability self?identity, proposed for inclusion in the TPB model, had significant and positive influences on purchase intention. The extended TPB model has higher explanatory power than that of the original model. The positive relationship between sustainability self?identity and intention to purchase sustainability?labeled coffee was moderated by climate change skepticism. This study provides marketers and the players in the supply chain with a comprehensive framework for understanding the influence of perceived moral obligation and sustainability self?identity on purchase intention toward sustainability?labeled products. In addition, this study responds to a call for a more thorough investigation of the effect of people's skepticism about climate change in the context of ethical and sustainable consumption decision?making processes.

Authors

Chen, M.F.

Keywords

perceived moral obligation, sustainability development, theory of planned behavior, sustainability in coffee

Publication Date

21-Apr-20

Coffee, farmers, and trees—shifting rights accelerates changing landscapes

This info note present a participatory modelling study run to (1) understand the drivers of landscape transition and (2) explore the livelihood and environmental impacts of tenure changes in the coffee agroforestry systems of Kodagu (India). The components of the system, key actors and resources, and their interactions were defined with stakeholders, following the companion modelling (ComMod) approach. The underlying ecological processes driving the system were validated through expert knowledge and scientific literature. The conceptual model was transformed into a role-playing game and validated by eight workshops with a total of 57 participants. Two scenarios were explored, a No Policy Change as baseline, and a Restitution of Rights where rights to cut the native trees are handed over to farmers. Our results suggest that the landscape transition is likely to continue unabated unless there is a change to the current policy framework. However, the Restitution of Rights risks speeding up the process rather than reversing it, as inter alia, the deferential growth rate between exotic and native tree species, kick in.

Authors

Claude A. Garcia, Geremy Vende, Nayana Konerira, Jenu Kalla, Michelle Nay, Anne Dray, Maelle Delay, Patrick O. Waeber, Natasha Stoudmann, Arshiya Bose, Christophe Le Page, Yenugula Raghuram, Robert Bagchi, Jaboury Ghazoul, Cheppudira G. Kushalappa and Philippe Vaast'

Keywords

Companion modelling, agroforestry, grevellia robusta, india, policy, role playing games

Publication Date

4/20/2020

COVID-19 leads to firmer coffee prices: for the time being

This short article presents a market analysis of the coffee price right after the spread of COVID-19 until April 2020. According to the article, the different factors influencing the current stabilisation of the market price depend on Brazil, which is currently running down of stocks and roasters around the world trying to secure the inventories before of a possible shortage of supplies. This has temporarily increased the demand. On the other hand, importers are securing their stocks, which might have negative consequences in the future and reduce the market price again on the medium- and longer-term. Additionally, Vietnam and Central America are currently off-season and consumers demand has dropped in relation to the closing of restaurants and cafes around the world. According to the article, as soon as this scenario will change, coffee prices could be negatively affected once more. This article is of particular interest to readers passionate about the politics and economics of the sector.

Authors

IHS-Markit

Keywords

Coffee price crises, C market, COVID-19

Publication Date

4/7/2020

Impact of COVID-19 on the global coffee sector: the demand side

The International Coffee Organisation analyses in this report the impact of COVID-19 on the demand of coffee consumption among the 20 biggest consuming-countries in the world. According to an analysis focused on data collected between 1990 and 2018, a positive correlation exists between the increase of GDP and coffee consumption. As results show, a one percentage drop in GDP, causes a 0.95 percentage decrease in coffee consumption. This scenario is particularly concerning according to this unprecedented pandemic situation, whose consequences are still unclear but will definitely have strong effects on the coffee sector. More detailed assessment of the economics is presented in the report. This report is particularly interested for coffee professionals passionate about the economics of the sector.

Authors

International Coffee Organization

Keywords

COVID-19, coronavirus, coffee crises, coffee consumption, coffee demand

Publication Date

4/1/2020

Systematically Improving Espresso: Insights from Mathematical Modeling and Experiment


Espresso is a beverage brewed using hot, high-pressure water forced through a bed of roasted coffee. Despite being one of the most widely consumed coffee formats, it is also the most susceptible to variation. We report a novel model, complimented by experiment, that is able to isolate the contributions of several brewing variables, thereby disentangling some of the sources of variation in espresso extraction. Under the key assumption of homogeneous flow through the coffee bed, a monotonic decrease in extraction yield with increasingly coarse grind settings is predicted. However, experimental measurements show a peak in the extraction yield versus grind setting relationship, with lower extraction yields at both very coarse and fine settings. This result strongly suggests that inhomogeneous flow is operative at fine grind settings, resulting in poor reproducibility and wasted raw material. With instruction from our model, we outline a procedure to eliminate these shortcomings.

Authors

Cameron et al.

Keywords

Espresso extraction, inhomogeneous extraction, minimize coffee waste, yield monetary savings

Publication Date

03/04/2020

Strategy handbook: a fact-based exploration of the living income gap to develop effective sourcing and pricing strategies that close the gap

Authors

The Sustainable Trade Initiative

Keywords

Coffee price crises, Colombia, coffee farmers

Publication Date

3/1/2020

The potential of carbon neutral labeling to engage coffee consumers in climate change mitigation

Carbon neutral labeling of food products is a market-based approach to reduce carbon footprints in the agri-food sector. To better understand consumers’ preferences and attitudes towards a carbon neutral label on globally traded agri-food products, the willingness to pay (WTP) of German consumers for a carbon neutral label on specialty coffee was examined. A discrete choice experiment was conducted in Germany, where coffee is often sold with multiple labels or claims, in order to examine the WTP for alternative combinations of a carbon neutral label with either a Fair Trade label or a claim of direct trade coffee sourcing. Choice data were analyzed using random parameter logit models which determined a positive WTP for the carbon neutral label. This estimate exceeds the corresponding marginal costs of certification and the marginal social cost of carbon, yet it is relatively lower than the estimated WTP for the Fair Trade label and the direct trade claim. A positive synergy effect on utility was also determined for the combination of a carbon neutral label and a direct trade claim. If no additional information was provided, consumers often perceived coffee as a “natural product” that does not generate any greenhouse gas emissions. Thus, awareness-building policies are needed to make carbon neutral labels an effective market-based tool to reduce greenhouse gas emissions in the agri-food sector.

Authors

Birkenberg, A., Narjes, ME., Weinmann, B., Birner, R.

Keywords

Willingness to pay, Carbon neutral label, Coffee value chain, Certification, Climate change mitigation, Agri-food sector, specialty coffee

Publication Date

1-Mar-20

Colour and shape of design elements of the packaging labels influence consumer expectations and hedonic judgments of specialty coffee

Packaging plays an important role on attracting the consumers? attention and creating hedonic and sensory expectations, which may affect actual product experience. The present study aimed at investigating whether the colour and/or shape of design elements of packaging labels would influence sensory and hedonic judgments of specialty coffee by amateur consumers. Participants (n = 174) first evaluated their expectations of coffee acidity and sweetness by looking at the coffee package, and subsequently, their experience of the same attributes when tasting a cup of coffee, in addition to rating their liking and purchase intent. The experiment followed a 2 ? 2, between-subject design for label type (green or pink, round or angular), and the same coffee was served to all participants. Multivariate analysis of variance was conducted in order to assess main effects of colour and shape of the design elements of the packaging labels as well as interactions on sensory and hedonic ratings. Both colour and shape significantly affected consumers? sensory expectations (pre-tasting ratings) regarding the specialty coffee, but they had no significant effect on post-tasting (actual perception) sensory ratings. Interactions between colour ? shape were found to affect the hedonic measures. The coffee associated with the congruent labels (i.e., angular/green or the round/pink) received higher liking and purchase intent ratings than the one associated with the incongruent labels (i.e., angular/pink and the round/green). The implications of these results for the design of coffee packaging that convey some functional benefit as well as possible directions for future research are discussed.

Authors

de Sousa, M.M., Carvalho, F., Pereira, R.

Keywords

specialty coffee, packaging, multisensory, expectations, crossmodal

Publication Date

02/06/2020

Ways to reduce the environmental impact of your morning coffee

n terms of energy use, more than half of the environmental impact in the production of coffee occurs in the plantations where coffee is grown, to account for cultivation, fertilizers and pesticides. When you decide to have a cup of coffee, you have already made your largest contribution to the energy used to deliver coffee to your cup.

How we brew coffee determines most of the rest of the energy use. Should we use French press, a traditional drip-pot, or one of the new modular or "pod" brewing systems. There is no contest in terms of resources used to manufacture the system—pod-brewing systems use much more material, especially in plastics and electronics, all of which take energy to produce.

Authors

Schlesinge, W

Keywords

environment, french press, coffee wastage, brewing,

Publication Date

5-Feb-20

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