Potential Implications and Avenues of Change of the 2023 Farm Bill for the US Coffee Industry
By: brendan looney and candy schibli
american university farm bill practicum, may 2023
The impending 2023 Farm Bill offers a promising opportunity to advance themes of equity, sustainability, and self-sufficiency in the domestic coffee industry. While previous farm bills have included riders that touched on aspects pertaining to coffee (ex. “Coffee Plant Health Initiative” in 2014), the recent greater emphasis on agricultural justice and climate-smart agriculture provides fertile soil for expansion. As such, this brief will focus on these 3 primary tenets in which the US coffee industry could benefit from policy changes.
First is the question of corporate consolidation and skewed benefit distribution. Like many other commodity producing industries, a miniscule percentage of the capital produced is earned by the producers and/or producing country. For instance, as of 2019 the estimated worth of the global coffee industry was valued at over $200 billion. However less than 10% of that aggregate wealth stayed in the primary exporting countries, and between only 5 and 7% goes to the pockets of coffee farmers- that wealth instead goes to the multinational corporations, most notably Starbucks. As an example of Starbuck’s bitter exploitative economics, in 2011 they spent $1.1 billion to receive 367 million pounds of beans. Eight years later in 2019 they spent $1.1 billion on 650 million bags of beans, representing a 44% increase in quantity for the same exact price. To further illustrate the desperate need for corporate regulation, in 2019 Starbucks earned $26.5 billion in net profits and returned $12 billion to stakeholders. In the same year more than 125 million coffee farmers across the globe earned roughly $22 billion dollars.
Locations from which multinational corporations source their coffee can have significant impacts on investment and growth in those producing countries. While Latin America and North Africa are more common sources, there are still instances in which multinational corporations are purchasing coffee from the US and US territories like Hawaii and Puerto Rico. For example, in 2014, Starbucks reported largely sourcing coffees from Brazil, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, México, Panamá, Peru and Puerto Rico. In the case of Hawaii, more Hawaiian farms now produce coffee than any other crop. In January 2021, the USDA reported coffee cultivation over 6,900 acres of land across Hawaii producing approximately 5 million pounds (2.3 million kg) of green coffee per year (less than 1% of all coffee grown in the world). Nevertheless, Hawaii and Puerto Rico combined contribute to the country’s $250 million to the United States’ coffee sector (split between production and consumption). The Farm Bill could be used to mandate and/or incentivize multinational corporations to source a set percentage of beans from Hawaii and Puerto Rico, thus leading to greater degrees of self-sufficiency, climate resilience, and community investment.
A study conducted by the University of Michigan in 2019 indicates that resistance and resilience to climate impacts like damages from Hurricane Maria in Puerto Rico in 2017 can be indicated by the socio-economic context of individual farmers. Increased investments are needed in the US and US territory based coffee sector to improve the socio-economic status of farmers to become more self-sufficient in managing and combatting risks to climate related activities. Opportunities exist within the Farm Bill to improve the allocation of sourcing by multinational corporations in the US and US territory agricultural coffee markets to improve the socio-economic conditions of coffee farmers to better support resistance and resilience to damaging climate conditions for better US based industry and environmental sustainability. Beyond the threat of storms occurring more frequently as a result of climate change, there is also the near-existential threat of coffee rust, which thrives in warm, humid areas- of which both Puerto Rico and Hawaii belong to. While legislation like the Coffee Plant Health Initiative offers some hope as a preventative measure against this disease, much more needs to be done to support the industries in these threatened climes.
According to a 2022 study from Harvard’s Shift Project, 63% of Starbucks employees in the US make less than $15 an hour while in 2021 then-CEO Kevin Johnson received a 40% raise totaling over $20 million. Not only does Starbucks underpay their foreign producers, they also underpay their domestic retail employees. Also worth noting is, in spite of the progressive facade they don, only 15% of Starbucks senior US leaders are people of color, despite people of color representing roughly 40% of the US population. All of this in light of pressure from progressive senators like Bernie Sanders who have been critical of Starbucks alleged union-busting efforts.
With the preceding context in mind, the Farm Bill could present a handful of avenues to pursue greater corporate responsibility. For one, based on the expenses going towards foreign producers, the Farm Bill could be used to bolster the comparatively nascent and more vulnerable coffee industries in both Hawaii and Puerto Rico, where the aforementioned Coffee Plant Health Bill Initiative was specifically targeting. While likely to cut into Starbucks profit margin, based on the discrepancy between upper level salaries and those of lower level employees there is certainly room to maneuver. This would be politically feasible for two reasons- for one Republicans should appreciate the decreased reliance on federal subsidies such as SNAP while Democrats should rally behind the ensuing wage hikes and economic incentives attached to greater domestic industry support. It is worth noting that the 2014 Coffee Plant Health Initiative has been amended and reintroduced for the 2023 Farm Bill, representing a promising framework for bringing about these changes and supporting more research into climate-resilient agriculture.
Cory Gilman. “Rooted in Racism: Dark Profits in the Coffee Industry”. Heifer International. August 3, 2020. https://www.heifer.org/blog/rooted-in-racism-dark-profits-in-the-coffee-industry.html
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Nick Niedzwiadek. “Here’s what happened when Bernie Sanders put Starbucks’ former CEO in the hot seat”. Politico. March 29, 2023. https://www.politico.com/news/2023/03/29/bernie-sanders-howard-schultz-starbucks-hearing-00089509