Implications of Specialty Coffee Farming Costs in Colombia

Abstract

The specialty coffee industry is rapidly growing with rise of third wave coffee roasters changing and growing the way consumers experience the product. Specialty coffee differs from traditional commodity coffee crops by being a higher quality product, grown on smaller farms throughout the globe. While this product is growing in demand, the production is at risk due to increasing impacts of climate change, inconsistent financing, rural migration, and volatile global pricing markets. To best address the risks to the industry, this research aims to tackle the issue of price volatility by exploring sustainable pricing models for industry adoption. With consideration of the implications in the global market, this research focuses on unpacking the costs of specialty coffee farming in Colombia through a redesigned cost accounting model that more accurately reflects the true costs of production, as well as incorporation of farmer opportunity costs. All of the research was done in collaboration with Coffee Manufactory, a specialty coffee roaster in Los Angeles, California. Although it was studied through the lens of their business, it considers the entire coffee supply chain and advocates for continued vertical integration as well as an increase in lateral partnerships throughout the industry. Finally, while the research seeks to better understand and develop a market-driven, farmer-focused approach to pricing that can ensure long-term farm sustainability and continued industry profitability, it also builds on the current dialogue in the coffee industry and presents questions for consideration and further research.