The Business of Coffee

Coffee is legendary; in fact, there are competing legends about who first drank coffee. One has a goat-herder sampling a wild coffee shrub after noticing how it affected his herds; another has a man banished to the desert surviving on coffee beans that he found and placed in water to soften them. We are quite certain that Arabia was the world's first primary source of coffee, in the fifteenth century; beans leaving the Yemeni port of Mocha for trade with Alexandria and Constantinople had to be heavily guarded. By the middle of the seventeenth century, the Dutch had introduced coffee cultivation to their colonies in Java and Sumatra.

So, we are drinking a bit of history when we order an "Arabian Mocha Java" at our local Starbucks. We may also be drinking a bit of the future when we order "Fair Trade/Equal Exchange coffee." The business of coffee continues to undergo some dramatic and important shifts, and it provides an interesting case of the reciprocal effects of economics and environment.

Coffee is big business. It is the most important legally traded commodity after oil in the world as well as the primary export of several developing countries. However, two-thirds of all coffee produced is consumed in the United States and the European Community, and demand is growing. To meet that demand, coffee growing has changed. In the past 20 years, the coffee industry has shifted from small farms where coffee was usually grown under a cover of shade trees (fruit trees and hardwoods) with no pesticides or fertilizers (too expensive for most small farmers), to larger plantations where coffee is a high-yield monoculture, grown in the sun with plenty of pesticides and fertilizers. Sun coffee plantations can yield up to five times as many beans per unit of land than shade coffee farms and governments collecting export taxes encouraged the conversions through a variety of policies.

However, the conversion from the "shade coffee" farms to the "sun coffee" plantations has had several consequences. We know that monocultures reduce soil fertility and can increase erosion and soil degradation, and that has happened. We now know that the shade coffee farms are also migratory bird habitats, especially in Central America and Colombia where many migratory routes converge; some studies have shown that sun coffee plantations support only 10% as many bird species as shade coffee farms. So, sun coffee cultivation is a form of deforestation, with all the expected effects on species diversity. The small shade farmers are also losing their non-coffee products such as timber, firewood, and fruit when their farms are converted to sun cultivation, making them more dependent on the notoriously volatile coffee market.

There are some small but encouraging trends recently as some consumers find out about and opt for coffee produced under conditions better for both the environment and the small shade farmers. Certified organic coffee (grown with no fertilizer and pesticides) sales are increasing; these organic beans usually come from shade farms and sell for 10 to 15% more than standard beans (the costs associated with the certification process can be significant). "Fair trade" coffee is also increasing. Under fair trade growing, the small farmers organize into cooperatives linked directly to importers and so get a bigger piece of the pie (in theory). Consumers will help determine just how many sun coffee plantations convert back to shade coffee farms; if demand for "certified organic" and "fair trade" keeps increasing, and if not just the price of coffee but all the costs are weighed by consumers and growers, economics and the environment will both have prevailed.


Starbucks. "History of Coffee,"

Sterling, John. 1996. "Coffee Congress," Smithsonian Migratory Bird Center.

World Resources Institute. 1999. "Trouble Brewing: The Changing Face of Coffee Production," Global Trends,