TED Case Studies: Shade Coffee

CASE NUMBER: 367

CASE MNEMONIC: SHADECOF

CASE NAME: Costa Rica Shade Coffee

A. Identification 1. The Issue During the 1960s-1970s, changes in growing techniques made the production of coffee increasingly more devastating to the environment. Coffee which was traditionally grown under a shade canopy was now being grown without a canopy, under the sun. The elimination of the shad canopy also eliminated a vibrant habitat for wildlife. Also, growing coffee under direct sunlight required a dramatic increase in the use of fertilizers, pesticides, and insecticides. 2. Description Traditionally, coffee was grown under a shade canopy. Coffee plantations managed in this traditional manner provided a vibrant agricultural habitat able to support a variety of species of migrants and other species that prefer or are restricted to forest habitats. In some cases, shade plantations have supported more than 150 species of birds; a greater number than is found in other agricultural habitats, and exceeded only in undisturbed tropical rain forests. Traditional coffee fields attract wildlife because they mimic forests. The coffee bush is a shade-loving understory plant, sometimes growing as tall as 30 feet. The plant's propensity for blurred forest-floor light sets coffee apart from other tropical monocultures, like sugar, bananas, or cattle, which replace forest ecosystems with fields. On the other hand, shade coffee areas provide a habitat for migratory birds and other wildlife. In El Salvador, shade coffee plantations have been classified as forests due to the thriving plant and animal environment. During the 1960s-1970s, coffee growers with the support of local governments began to grow coffee without a shade canopy. Coffee growers took chainsaws and bulldozers to their plantations and introduced "sun-hedge" coffee fields as a means of increasing yields. Growers noticed a dramatic increase in yields -- as much as five times more beans than the shaded plantations (Wille, Chris. "The Birds and the Beans." Audubon. November-December 1994, p. 59). However, the increased yields had increased environmental costs. Bared to the low-altitude sun, the coffee plants and the bare, red earth washing chemical require the constant use of fertilizers and pesticides. Furthermore, with no foliage to break the fall of tropical rainstorms, the rains pound the coffee plants and the earth, washing chemicals and soil down the slopes. In addition, wildlife suffers at every level from the destruction of their habitat. While this manner of production increases coffee yields, it must also be accompanied with the additions of chemical fertilizers, as well as a range of insecticides, herbicides and fungicides. Coffee plants grown without a shade canopy are also subject to a higher incidence of premature death in environments possessing a marked dry season. As a result, the plants need to be replaced much more frequently the shade varieties. The transition from shade coffee to sun coffee has resulted in major habitat change for migratory birds in the past two decades. Overall, the transition from shade coffee to sun coffee marked a sharp decline in the diversity of migratory birds. Studies in Mexico have found 94-97% fewer bird species in sun grown coffee than in shade grown coffee. While shade coffee cultivation methods offer a favorable habitat for migrating birds, the question remains whether growers of higher-yield sun coffee can be induced to switch back to shade coffee. The problem according to Mary Townsend, a coffee buyer and vice-president of green coffee for Starbucks, the United States' largest specialty coffee company, states that the largest producers of coffee in Latin America primarily grow sun coffee because "Full- sun coffee does provide a higher yield--there's no getting around that--and farmers always look at yield first. So growing full-shade coffee requires a commitment to other priorities, and the value of shade coffee hasn't been brought to many people's attention." (Willie, p. 64). Coffee is the most widely consumed beverage in the world. Coffee is grown in all of the regions in the world, primarily: the Americas; Africa; and the Pacific. Coffee is widely consumed in the industrialized countries, but it is grown with only a few exceptions in the developing countries. In other words, coffee is an a commodity that is traded across national borders and furthermore the pattern of trade is from the lesser developed countries to the developed countries. Given coffee's popularity, the best means to convince growers to switch to shade coffee is by generating a demand for shade coffee. Some specialty roasters have begun a campaign to educate the consumer about the environmental benefits of shade and have created a niche in an otherwise competitive market. Seattle's Best Coffee--or SBC--has recently launched a whole line of organic shade coffee which resulted in an almost immediate 10 percent increase in sales. SBC is trying to encourage growers to switch to shade coffee and is willing to pay 30 to 150 percent more for shade coffee. Stewart also maintains that in addition to being environment and bird-friendly, shade coffee tastes better than sun coffee. Shade coffee is similar to fruit that is dry-farmed, the lower yields lend to an increased intensity to the coffee bean that is translated to a more flavorful cup of coffee. Stewart also suggests that local governments can also take initiatives in supporting growers to switch to shade coffee through the use of subsidies or protecting shade coffee plantations as national forests. 3. Related Cases INDIATEA Case COSTBEEF Case BANANA Case COFFEE Case COSTPEST Case Key Words (1): Coffee (2) Bird (3) Deforestation 4. Tom DeLorme (May 1996) B. Legal Cluster 5. Discourse and Status: Agreement and In progress 6. Forum and Scope: Costa Rica and Unilateral Shade plantations have in some cases been classified by local governments as forests and it is possible that the maintenance of shade coffee plantations, could receive financial assistance from local governments to ensure their protection. Over the past 40 years, two-thirds of the rainforest in Central America has been destroyed. By promoting shade plantations, local governments can assist in recovering lost areas and creating havens for both resident and migratory wildlife. It is also possible that efforts to promote shade plantations could be funded by international organizations or Nongovernmental Organizations (NGOs). Corporations in the North could also assist by promoting shade coffee. For example, Starbucks Coffee could carry a line of shade coffees and market the coffees for their environmental virtues -- educating the public while creating a niche in the market. 7. Decision Breadth: 1 Growers want to maximize their profits and the transition to sun coffee has increased yields and profits in the short-term. At the same time, increased yields have increased the supply of coffee on the world market, leading to a decline in coffee prices over the long-term. Governments may not be enthusiastic about promoting shade coffee. Governments may have to provide cash incentives to promote shade coffee. Furthermore, governments in the developing countries are dependent on export revenues generated by coffee and decreased yields would inevitably lead to decreased revenues. Finally, consumers would have to pay more for shade coffee. If consumers were willing to pay more for shade coffee, the potential decreases in yields would be compensated for by higher prices. However, if consumers were unwilling to pay higher prices, demand would deter transitions to growing shade coffee. 8. Legal Standing Currently, there are no legal agreements or regulations concerning shade coffee. As the shade coffee debate evolves it is more likely that non-legal measures will be employed to promote shade coffee. These measures would likely be supported by NGOS and non-profit organizations. C. Geographic Filters As previously indicated, coffee is grown throughout most of the world. However, the vast majority of coffee is grown in the developing world. This domain is identified by the continental group: North America, South America, Africa, and the Pacific. 9. Geography The vast majority of coffee is now sun coffee, a process which produces higher yields than shade coffee but has negative effects on the environment. Historically, coffee has long been an important export crop for developing countries. Coffee plantations were consolidated during the early part of the last century which resulted in the concentration of land and wealth. In the case of Mexico and Central America, coffee is one of the top five export earners in all of the countries in the region. The primary market for coffee is in the developed countries. a. Geographic Species Domain: North America b. Geographic Conflict Site: Southern North America c. Geographic Impact: Costa Rica 10. Subnational Factors: NO 11. Type of Habitat: TROPICAL IV. Trade Filters The impacts of the coffee trade are diverse as well as numerous. Coffee has played a central role in the social, political, and economic development of Mexico and Central America. The development of coffee as a trade commodity on the international market had direct consequences on the distribution of land. With the exception of Costa Rica, coffee plantations lead to a concentration of land. Then during the 1960s and 1970s coffee plantations switched from shade coffee farming to sun coffee farming leading to increased environmental degradation. The elimination of a shade canopy (trees) also eliminated the habitat that provided birds nesting areas. The trade of coffee occurs on the international market. Coffee is an agricultural product that is sold on the world market as a green, unroasted beans. 12. Type of Measure: SUBSIDY 13. Direct vs. Indirect Impacts: N/A 14. Relation of Measure to Impact: N/A 15. Trade Product Identification: RAW: GREEN UNROASTED COFFEE 16. Economic Data: 17. Degree of Competitive Impact Cost ($): MEDIUM - HIGH As indicated by Steward of SBC, shade coffee (the unroasted beans) may be sold on the market for 30 to 150 percent higher than sun coffee. At a minimum, this cost would be passed on to the consumer. 18. Industry Sector: FOOD 19. Exporter and Importer As mentioned previously, coffee is primarily grown in the Global South. It is widely consumed in the Global South as well, but the majority of the premium coffee is sold in the Global North. Most of the direct environmental effects are experienced in the Global South as well. V. ENVIRONMENT CLUSTERS 20. Environment Problem Type: DEFORestation 21. Species Information 22. Impact and Effect: Medium and Structural 23. Urgency and Lifetime: Low and 100s of years 24. Substitutes: LIKE A switch to shade coffee would provide a sustainable alternative that is bird and environment friendly. 25. Culture: YES Coffee is a cultural beverage that is ritually used throughout the world. 26. Human Rights: NO 27. Trans-Boundary Issues: YES 28. Relevant Literature Elson, Diane and Streeton, Paul. Diversification and Development: The Case of Coffee. New York: Praeger Publishers, 1971. Rosebury, William. Coffee and Capitalism. Austin: University of Texas Press, 1983. Rosebury, William. Coffee, Society, and Power in Latin America. Baltimore: Johns Hopkins Press, 1995. Wille, Chris. "The Birds and the Beans." Audubon, November-December 1994.