In many countries, including major producing nations such as Brazil and Colombia, workers in the coffee sector have been defined as essential workers who must continue to work during the COVID-19 pandemic. Verité research has found that even before the pandemic, the farmworkers who pick and harvest coffee are often vulnerable to serious labor violations, including forced labor, child labor, discrimination, wage and hour violations, and health and safety risks. Farmworkers in general can be a blind spot in company supply chains as corporate due diligence systems focused on Tier 1 suppliers often fail to reach down to the farm level effectively—a particular challenge in industries such as coffee that rely on independent and smallholder producers.
With funding from the U.S. Department of Labor’s Bureau of International Labor Affairs (USDOL-ILAB), Verité is currently implementing The Cooperation On Fair, Free Equitable Employment (COFFEE) Project to improve the ability of the coffee sector to address these challenges in the Latin America region. In recent weeks, Verité has been engaging COFFEE Project stakeholders both internationally and in the project focal countries of Brazil, Colombia, and Mexico to learn about the impacts COVID-19 is having on coffee farmers and farmworkers and to explore potential actions that could mitigate the effects of the pandemic on them.
At an international level, coffee producers, traders, and roasters have already seen significant changes in coffee markets. There have been increases in international coffee prices, with a strong likelihood of continued increases as countries stockpile coffee in case supply chains are hit harder by COVID-19. This could have a positive effect for coffee farmers who have until recently faced record low prices for their coffee, providing them with essential income that could go toward improving working conditions to make employment in the sector more attractive. However, coffee traders’ and roasters’ increased expenditures on coffee could decrease the amount of resources they have available for monitoring and remediating labor issues in their supply chains. Additionally, while the market price for coffee has increased, prices for fair trade coffee have stagnated, creating a risk of coffee producers abandoning fair trade schemes that promote decent working conditions. While there has been an increased demand for coffee sold by supermarkets, there have been steep decreases in demand for coffee sold at cafés, which is generally high-end or premium specialty coffee that brings much higher prices for farmers. Coffee producers face a number of challenges in the face of the COVID-19 pandemic.
Key Impacts on Coffee Producers:
- Travel Restrictions: Coronavirus containment measures are affecting the mobility of farmworkers and, thus, the availability of workers during the peak harvest season. Labor shortages could jeopardize the coffee harvest, creating disruptions in the supply of coffee to consuming countries, and affecting the profitability of farmers that are already on the brink of bankruptcy due to the extremely low coffee prices of the past few years. As the Brazilian coffee harvest started in May, there is affect the harvest due to a shortage of workers, reduced mobility, and social distancing measures.
- Quality: Bean quality is closely linked to good harvesting and postharvest practices. Without the guarantee of an adequate number of skilled workers, potential defects to the harvest are more likely and could impact the supply chains of roasters, increasing the risk of poor-quality coffee, which could further impact the income of farmers and traders.
- Logistics: Uncertainty in supply stability and fears of disruptions have put additional pressure on exporters and importers, who must fulfill contracts with roasters and accelerate shipments from origin to destination.
- Consumption: Even though coffee is considered an essential consumer good, economic hardship related to the pandemic will certainly hit the consumption of coffee, especially ultra-premium coffee, which is more expensive and more often consumed at cafés.
- Fertilizers: An increase in the cost of fertilizers is expected due to the depreciation of currencies of major coffee-producing countries against the U.S. dollar. As expressed in a recent press report, for example, most of the fertilizers used in the agricultural sector in Mexico are imported, and record depreciation of the Mexican peso will affect coffee producers’ profitability in the second half of 2020. This will cut into their already thin profit margins, resulting in fewer resources to invest in improving working conditions.
- Financing: The economic crisis is compounded by reduced cashflow from the financial sector. Cash payments are always needed during the harvest season and some long-term contract structures of roasters put restrictions on the cashflows of exporters and importers. On the farmer side, a lack of investment will certainly impact the modernization of farms, potentially affecting not only mid- and long-term productivity, but also the adoption of tools and practices related to labor issues.
- Health and Safety Measures: New measures to reduce the risk of COVID-19 contagion could increase the cost of production due to the need for training, additional PPE, and extensive sanitation measures for processing areas and equipment. Proper adoption of these measures is unlikely without adequate incentives and institutional support.
With significant economic impacts on actors along the coffee supply chain as a result of the pandemic, there is a significant risk that working conditions will further deteriorate as crises usually affect the most vulnerable workers the hardest. The coffee industry must acknowledge that farmworkers are essential to ensuring the supply of coffee, and the sector must balance profit margins and long-term business goals with worker welfare through an emphasis on shared-value. Labor is both the single most expensive input and the only one over which producers have control, so when profits fall, producers are likely to attempt to cut wages or other labor, housing, or food costs in order to maintain profit margins.. On the brand and coffee trader side, as profit margins fall, scaled down commitments on social sustainability may be evidenced. Therefore, it is more important than ever that coffee retailers, roasters, traders, and producers double down on their commitments to improving working conditions in the coffee sector.
Key Impacts on Workers:
- Forced and Child Labor: Verité has found that the pandemic is increasing the risk of child labor and forced labor, especially in sectors such as agriculture, which have been declared essential services, meaning that workers are forced to continue working in these sectors despite the risk of exposure to COVID-19.
- Travel Restrictions: As states and municipalities have sought to limit travel to contain the spread of the virus, farmers are being prevented from hiring migrant workers. Coffee harvesting is highly time-sensitive, so the lack of access to migrant labor means that many coffee producers will have to turn to other sources of harvesting labor, such as inexperienced workers who have been laid off from other jobs, workers recruited by unvetted labor brokers, and family labor. This will increase forced labor risks like deceptive recruitment and recruitment fees, as well as risk of child labor. As coffee harvesters are typically paid based on their production, inexperienced workers will likely earn far less than experienced harvesters, further increasing their vulnerability to exploitation.
- Quarantines: Verité has received reports of proposals for mandatory quarantine for migrant workers for a period of up to two weeks, posing restrictions on their freedom of movement and resulting in an increased risk of debt bondage if they are expected to cover their food and housing costs during quarantine.
- Hours of Work: Social distancing may require a reduced workforce, increasing production demands on hired workers and increasing their working hours.
- Health and Safety: Many workers employed in the coffee sector will be forced to continue working independent of whether there are factors that increase their risk of COVID-19, such as advanced age (with workers employed in the coffee sector in some countries averaging over 50 years of age), pre-existing health conditions, working for employers that lack PPE, inadequate sanitary and social distancing measures, or a lack of COVID-19 diagnosis and treatment options.
- Personal protective equipment (PPE) and sanitary measures: Given that even prior to the pandemic workers were rarely provided with the PPE needed to safely harvest and process coffee — such as hats, overalls/coats, boots, facemasks, goggles, and gloves — it is unlikely that farms will provide workers with sufficient PPE and sanitary measures to effectively protect workers during the pandemic. A lack of the infrastructure for proper handwashing and disposal of gloves or masks is an additional risk.
- Social distancing: While it is possible to ensure adequate social distancing in coffee harvesting by carefully communicating guidance and monitoring compliance, the crowded nature of worker housing and dining facilities on many coffee farms makes social distancing especially challenging, particularly in bathrooms, dining rooms, and bedrooms. Social distancing is also difficult to implement when workers who are paid by the piece have to bring their coffee to weighing stations, which are centralized and few in number, meaning that many workers must congregate around them at the end of each day.
- Identification and treatment of workers with COVID-19: Most coffee farms are located in rural areas where workers lack access to advanced medical facilities, creating an obstacle for the testing and treatment of those infected with the coronavirus.
- Loosening of regulations and enforcement: There are indications that labor shortages will be severe in the coffee sector during the pandemic due to restrictions on the movement of migrant workers and worker illnesses. In response, some coffee-producing countries are already beginning to loosen protective regulations (around social distancing, worker recruitment, working hours, and even child labor). In addition, governments will have fewer resources to carry out labor inspections, and inspectors already facing challenges carrying out inspections in rural areas will face additional barriers and risks due to the pandemic.
For Coffee Buyers:
- Think long-term. Your business needs to be successful this year and for years to come. The best way to build socially sustainable sourcing systems is by investing in your sourcing networks, which rely on farmworkers for essential activities from planting to harvesting. The pandemic is a test of your commitment to building a sustainable coffee sector.
- Develop and communicate clear guidelines and policies to your suppliers on protocols to safeguard workers in your supply chain during the COVID-19 pandemic, reinforcing your commitments to eradicating forced and child labor and promoting decent conditions of work.
- Support your suppliers and partners in coffee producing countries to facilitate farmer and farmworker access to social assistance programs.
- Support positive cashflows by providing payments to your suppliers as soon as possible.
- Consider providing emergency cash advances or cash transfers to farmer cooperatives and farmer associations, or to individual farms, within your supply chain. Support local NGO partners providing direct emergency assistance to farms and farmworkers.
- Provide flexible contract terms to your suppliers, avoiding penalties for late deliveries of coffee that could be linked to pandemic-related restrictions on the transport and migration of workers and the shipping of coffee in place in many coffee producing countries.
- Conduct ongoing monitoring and effectively respond (in collaboration with your suppliers) to any specific risks or violations identified. Rather than terminating these relationships, promote continuous improvement in addressing labor issues identified.
- Support the generation of innovative alternatives for coffee producers in the development of feasible alternatives to piece rate pay systems and/or the implementation of pilot programs to address issues tied to piece rate payments.
- Adopt protocols to protect farmworkers and their families from the COVID-19 pandemic.
- Facilitate social distancing in places on farms where workers congregate, for example through provision of temporary additional accommodation facilities and development of protocols to ensure safe spacing of workers waiting to use bathrooms or weighing stations. Adjust work assignments to facilitate solitary work at safe distances.
- Provide instructions to workers on proper sanitation measures. Establish additional handwashing stations in common areas accessed by workers.
- Prioritize provision of masks to workers when making decisions about allocation of resources for PPE. Require workers to wear masks whenever in proximity to one another.
- To minimize labor shortages during the harvest, promote the organization of community labor strategies if feasible. Ensure that minors are allowed to participate only if they are of legal working age and that no children are engaged in hazardous tasks.
- Coordinate with buyers to implement adequate social distancing and sanitization protocols for coffee transport.
- Protect your workers by promoting better working conditions at your farm and explore the development of alternatives to improve piece rate payment systems that will attract more qualified workers.
- Conduct ongoing monitoring, communicate openly with buyers, and respond quickly to any specific risks or violations identified.
- Create protocols with local governments and coffee companies aimed at protecting essential workers, farmers, and farmworkers during the COVID-19 pandemic.
- Guarantee access to food, drinking water, sanitation, PPE, and health care in coffee producing areas.
- Facilitate the mobility of farmworkers, providing clear guidance on requirements for social distancing and health and safety measures to protect workers, farmers, and communities.
- Facilitate logistics for safe coffee production and commerce, as coffee farmers need options to sell their coffee and purchase inputs and food.
- Assist in organizing workers (farmworkers from other sectors and/or recently laid off workers) to address labor shortages in the coffee sector and ensure that employers comply with labor laws and international labor standards.
- Increase the capacity of health centers in rural areas to diagnose and detect COVID-19. Transfer patients experiencing complications to more advanced health facilities in nearby regions.
- When possible, implement financial relief strategies combined with access to finance or subsidies for farmers and coffee companies willing to invest in health and safety measures on their farms, in their warehouses, and across other facilities.
Many of the recommendations outlined in this memo are relevant to the agricultural sector more broadly. Additional memos on the agricultural sector and other goods will be posted in the near future.
For more information, contact Quinn Sandor Kepes at email@example.com.
Please send questions and topics for future articles related to COVID-19 in supply chains to firstname.lastname@example.org.
Photo credit: Andres Navia Paz/shutterstock.com
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