grows while exports fall declines after significant growth in 2018

The C-GVC facilitates FDI in post-harvest processing

and value addition. The increase in the number of coffee washing stations (CWS) is associated with major improvements in the quality of coffee produced and value addition as well as revenues for farmers. Lower transport costs along with higher prices paid for washed coffee, has led to more producers selling coffee cherries for processing in wet mills. Investments in processing stations facilitate producers’ linkages to high-value coffee markets. Foreign investors are particularly effective at turning under-performing stations into high-capacity and efficient facilities, mainly due to stable marketing channels in the export markets, superior management practices and a higher capacity to implement required changes in the CWS, (Macchiavello and Morjaria, 2021)

The expansion of the C-GVC contributes to achieving the

Sustainable Development Goals. Participation in the C-GVC can reduce poverty while improving food security, health, and access to quality education among farmers and farm workers. Voluntary Sustainability Standards and policies of lead firms improve gender equality and work conditions. It also facilitates partnerships between coffee stakeholders. Similarly, the negative environmental impact of the coffee sector can be reduced by greening the C-GVC and adopting a circular coffee economy (Figure O.12).

Coffee growers tend to benefit from close firm-to-firm relationships, but the distribution of gains in the GVC is

in part driven by governance and power dynamics. Within the C-GVC the distribution of gains is in part driven by governance and power dynamics. Important features of the coffee supply chains, such as costs and margins from farm to retail, remain opaque and living income gap assessments in producing countries are not widely available. Furthermore, private sector driven initiatives cannot be fully inclusive as they can cover only a small part of the supplier base.

Coffee year 2019/20 is a year of unprecedented challenges.

Global coffee prices have trended downwards since November 2016, when the ICO composite indicator averaged 145.82 US cents/lb. The covid-19 pandemic presents an unprecedented joint supply and demand shock to the global coffee sector. Global output in 2019/20 is estimated at 169.34 million bags, 2.2% lower than in 2018/19.5

Global coffee consumption is estimated to rise by 0.3%

to 168.39 million bags in 2019/20. There was a surge in demand at the start of the coronavirus pandemic (declared by the WHO on 11 March 2020) as a result of panic-buying and stockpiling. However, consumption in the remaining months of the coffee year is estimated downwards due to ongoing pressure from a global economic downturn and limited recovery in out-of-home consumption as countrywide social distancing measures remain in place.

The pandemic has had an impact on the downstream

components of the coffee supply chain. Commercialization and retailing are also affected by restrictions in mobility and the closure of restaurants and coffee shops and offices, with impacts on home vs out-of-home consumption as well as on revenues and employment. Again, the industry promptly established safety protocols to reduce risks for workers and customers.

SOURCE: ICO

Covid-19 has also affected labour supply in a number of countries, either directly, due to illness, or indirectly, as government measures have restricted the movement of farm

labourers and migrant workers. However, much of the supply for coffee year 2019/20 was unaffected by covid-19, as harvesting in most countries had already concluded by the time the pandemic occurred and promptly many countries established protocol for coffee harvesting, processing and transport. With the outbreak of the second wave of the pandemic in the fall of 2020, new impact of the C-GVC can be expected and possibly reduced by capitalising on the experience gained and practices developed and applied in Spring 2020.6

Regional highlights in coffee year 2019/20 are as follows:

Africa’s exports have risen. Despite the growth in coffee production, exports from Asia and Oceania have dropped. After three years of growth, Mexico and Central American coffee production declined. South America’s Arabica production has gone down while Robusta production has increased. Coffee demand in Europe and North America has fallen after significant growth in the previous year.

5 ICO refers as coffee year the period October to September. 6 The Global Coffee Platform compiled a list of best practices established to handle social distancing in coffee production prepared by a number of coffee producing countries (www.globalcoffeeplatform.org) and the publication “How to respond to covid-19 in the coffee sector”, CBI (2020).