True Cost Accounting in de coffee sector

The price of the coffee you drink is too low. This is because it is mainly determined by big market players. They have so much power and thus influence the price that smaller coffee farmers barely make ends meet. While it is precisely those farmers who are at the basis of our lungo, espresso or cappuccino. In 2018, CSR Netherlands founded the Futureproof Coffee Collective the only network of coffee producers, importers, roasters and retailers fighting together for the future of coffee. This collective developed a tool to calculate the hidden costs of coffee.

The true price is the cost price for the producer including the costs of the negative impact on people and nature. This includes a viable income for farmers, but also the impact on soil and biodiversity. Only by paying a true price does all parties in the chain get paid fairly and does the farmer have room to invest in sustainability. To calculate that price, the Futureproof Coffee Collective used the True Cost Accounting calculation method, which puts a price on hidden costs. However, there was no user-friendly tool yet to calculate this for a product like coffee.

Calculate the true price

Together with the Dutch coffee companies in the network and local producers, we decided to develop our own tool. For this, we first determined the needs of coffee companies and farmers. We undertook a field trip to Colombia to see what farmers needed. And involved external consultants and the coffee companies in the network to provide input. Expert partner Soil & More Impacts also contributed agronomic knowledge and expertise on biodiversity, water pollution and climate impact. Step by step, we thus arrived at a calculation tool that worked. Thanks to close cooperation with the Impact Institute, there is now a user-friendly version to be used by the partners from the Futureproof Coffee Collective.

In 2022, the partners of the Futureproof Coffee Collective tested the tool.

And what next?

After the pilot, the network also looked at the possibilities of expanding to other products and countries. At the moment, however, the available tools and methods are insufficiently developed and too complex to deploy on a large scale. Until these tools are further developed, the companies in the network remain committed to initiatives to reduce the hidden costs (negative impact) of coffee production and increase income for farmers. The project Futureproof Coffee Uganda is an example.

We use the experiences of all partners involved in the True Cost Accounting and True Pricing projects in the new Foodcost project and the multi-year public-private partnership (PPP) between Stichting Bionext, social enterprise True Price and Wageningen Economic Research, part of Wageningen University Research.