Forced labour in the coffee industry is a growing risk that no one is taking much notice of but setting minimum price alone will not solve the problem argues SAP Ariba’s Padmini Ranganathan.

As a confirmed morning coffee addict, I never miss an opportunity to take in the simple pleasures of a well-brewed, piping-hot cup of coffee. So when my colleagues and I celebrated International Coffee Day last week, my mug runneth over with much-needed espresso shots. But in the midst of the coffee buzz, my grateful mind couldn’t help but think of the growers and pickers in the many coffee plantations I have visited.

I’ve been told by many of my Aussie friends that Australia has, unequivocally, the best coffee in the world. As self-proclaimed “coffee snobs”, Australians are always ready to brag about the unrivalled quality and taste from down under.

But what Australia’s café scene lacks, along with many coffee cultures around the world, is the awareness of the sometimes bitter origin stories behind their cup of joe.

Whilst business might be booming at the café counters, this couldn’t be further from the case for most growers and farmers. With prices near their lowest in over a decade, margins have eroded to the point where, for some, the crop is no longer profitable. To reverse this trend, growers have begun to explore establishing a global minimum price for coffee, not unlike that recently set for cocoa.


Two significant factors, however, may make a coffee bean price floor unlikely or short-lived. With so many growers producing the crop across so many countries, compliance could prove elusive. The other difficulty is that price floors, even if successfully enforced, merely mask rather than remedy the root causes of the subsistence conditions and grinding poverty that can plague coffee farmers. That’s because wages are only part of the problem. The rest includes issues ranging from forced labour and opaque supply chains, lax corporate governance and exploitive working conditions, governmental corruption and the benign neglect of regulators.

The fact of the matter is that coffee is grown in poor countries and consumed in rich ones.

As 15th biggest importer in the world – consuming 1.5 percent of the world’s coffee – Aussies who continue to wax lyrical about their top-of-the-line brew may need to eat a bit of humble pie, errrrr coffee cake. Great tasting coffee loses its satisfaction if it’s sourced unethically. Coffee growers’ plight must be viewed holistically if we are going to address the complex factors that perpetuate subsistence agriculture.

Technology can be an enabler of transparency, accountability and the traceability of labour practices. Cloud-based digital networks have the potential to reinforce accountability throughout the coffee industry, from farm to retail counter and everywhere in-between. Thanks to these networks, buyers and growers can gain insights into their total spend and visibility into each other’s interconnected operations.

This newfound transparency, augmented by real-time data analytics, sheds light not only on traditional business metrics such as cycle times, inventory turns and utilisation rates, but also on factors needed to meet a company’s sustainability policies and goals.

This includes determining whether a trading partner has the necessary governance structures to root out forced labour from its supply chain; whether it has built up a track record for ensuring humane working conditions; whether it hires and awards contracts to historically underrepresented groups of people; whether it safeguards natural resources when sourcing raw materials and recycling used ones; and dozens of other criteria that underscore ethical, sustainable business practices.

With this information to hand, sellers, distributors and growers can join forces with a strong foundation of ethics, shared values and transparency to strengthen their partnerships – from worker voice, worker rights to working conditions and beyond.

It’s not just about doing good for its own sake. If buyers are attentive to their stakeholders’ priorities and award business to socially responsible growers, price should no longer be the sole priority in sourcing coffee beans or other commodities. Coffee buyers’ diverse set of stakeholders — from consumers and shareholders to employees and marketing partners — are increasingly demanding accountability throughout the supply chain. They insist on sourcing coffee only from growers whose brand values clearly align with their own.

The transparency made possible by cloud-based digital networks is making this alignment possible like never before, enabling a more responsible, more equitable, more mutually profitable ecosystem within which all market participants can thrive. A full cup for everyone involved – now that leaves a good taste in the mouth.

The author is global vice president for risk and sustainability solutions at SAP Ariba, the world’s largest business network, linking together buyers and suppliers from 4.2 million companies in 190 countries.