The balance of organic
Image: Zitzlaff
The growth of the organic tea and coffee market is accelerating, but is the cost to the producers and consumers justified by the environmental benefits? By Kathryn Brand
While organic tea and coffee has been readily available on the market for some time, the category has seen, and is expected to see, continued growth as more consumers opt for products, they believe to be more sustainable and even healthier for them, and producers seek to improve their sustainability credentials and market positioning.
Nandini Roy Choudhury, client partner of food & beverages at global market research firm, Future Market Insights, writes in a report that the organic tea market holds a value of USD $1.24 billion in 2023, and is expected to reach a value of USD $2.69 billion by 2033, at a CAGR of 8 percent during the forecast period. Meanwhile, the organic coffee market has a projected CAGR even higher, at 12.5 cent for the forecast period 2023 to 2028, according to a report by Mordor Intelligence.
Consumer interest in organic tea and coffee has been gaining especial traction since the pandemic, when wellness became a priority, and organic is often believed to be a cleaner and healthier option over regular products, due to the lack of chemical fertilisers and pesticides. The sustainability benefits are also undeniable and consumers are seeking to make more mindful and conscious purchasing decision. Meanwhile, producers are heeding to this consumer pressure, and wanting to offer tangible sustainability claims to differentiate themselves from their competitors, and perhaps even justify a higher price point of their product.
Image: Equator Coffee
In terms of consumer demand and purchasing of organic tea and coffee, the geographical distribution is similar, with Europe dominating, particularly Germany, France, and the UK, according to FMI, and North America seeing similar figures in both organic tea and coffee. In organic tea specifically, parts of Asia, including China, are witnessing significant growth in consumption, said a spokesperson from Hälssen & Lyon. Whereas in organic coffee, global insights firm, Mordor Intelligence revealed Latin America is seeing the fastest growth.
Notably, the biggest producers of organic tea are similar to the biggest global producers of tea in general, countries such as China and India, however, the case is not the same for organic coffee. Samuel Klein, green coffee buyer, Partners Coffee, explained that, while Brazil produces a third of the world’s coffee, “Only a handful of Brazilian exporters are offering certified organic coffees.”
Ted Stachura, director of coffees, Equator Coffees, concurs; “Although there is some organic coffee cultivation in Brazil, Vietnam, and Colombia, the world’s largest coffee-producing countries are not typically associated with organic production.” This is largely due to growers in such countries producing coffee on a mass scale, and the farming methods necessary to do so. Smallholder farms using semi-forested coffee cultivation, are often organic by default, in countries such as Ethiopia, Peru and Mexico, said Stachura, as well as Honduras, Guatemala, Rwanda, Burundi, and Uganda, added Klein.
Organic farming is broader and more thorough than a lot of consumers realise; it is about more than just limiting or eliminating chemical fertilisers, herbicides and pesticides. “Consumers who support organic farming practices are voting to not support the petrochemical industry. Producing chemical-based fertiliser has a negative environmental impact,” detailed Stachura. “Shipping these fertilisers internationally, as coffee producing countries typically do not produce this kind of fertiliser, incurs added environmental costs. Handling chemicals poses potential health risks to farmers and, in situations where producers lack training, application of too much fertilisation may result in runoff of these chemicals making its way to water sources.” The soil itself benefits from the lack of chemicals in the long term, increasing its biodiversity, structure, fertility, and resilience to environmental influences, leading to healthier eco systems.
“Organic farming also has the potential to sequester carbon dioxide in the soil,” noted Hälssen & Lyon’s spokesperson, “This can contribute to mitigating climate change by reducing greenhouse gas emissions.”
Organic’s financial & health benefits
Choudhury stated that consumption of organic beverages can help to support farmers on a smaller scale, in addition, “Sales of organic tea are projected to have a higher price realisation thereby improving the socio-economic situation of tea producers.” The organic certification encourages and even necessitates fairer, safer and more equitable trading for the producer that supports the tea or coffee growing community.
Further, there are evolving beliefs, especially among consumers, that the lack of chemical agents in the process results in a healthier product. “The reduction in chemical residues in organic food may result on long-term health benefits by lowering the potential risks associated with pesticide exposure,” explained Hälssen & Lyon’s spokesperson.
Image: Partners Coffee
The health claims for organic produce are still evolving, especially within the tea segment, with Choudhury stating that “compared to traditional black tea, organically cultivated tea contains more catechins such as epicatechin gallate, epigallocatechin gallate, and epicatechin.”
Roadblocks to organic production
So, if there are all these benefits to the environment, to the producer, the consumer, then why aren’t more tea and coffee companies producing organic? As with such things, the reason is multifaceted. Broadly, it is more expensive, both for the producer and consequently the consumer. The requirements and inspections for the certification are demanding, and costly, and it is by no means a quick or simple switch.
Partners Coffee’s Klein explained, “It begins with a multiyear period where no prohibited fertilisers, fungicides, or pesticides may be used. During that time the farm must develop and implement a documented plan to fertilise and treat the plants with organic inputs.” Throughout this conversion phase, any coffee (or tea) that is grown and produced must still be sold without the organic title, as the transition is not fully complete, with no compensation for the expense of the process or of lost yields.
Spencer Turer, vice president, Coffee Enterprises, added, “when organically grown coffees are not able receive the premium prices for the certification and are sold as non-organic coffee due to quality issues or reduced demand, the expense of producing the organic certified coffee is changed from an actual return on investment ratio to an outright business expense for meeting the social, environmental, and ethical standards of the producer.”
Lower yields are a common side effect of organic farming, especially in the short term, “as organic practices may not provide the same level of nutrient supply or pest control,” said the spokesperson from Hälssen & Lyon, resulting in additional unit costs of production. However, she also suggested that there have been successes where organic sections of farms have outperformed conventional sections, four-to-one, because the soil was more nutrient-rich and microbiologically diverse. But this is a long-term result that doesn’t offer immediate help to farmers in the short-term making the switch.
The added expense of the initial reduced yield is only the beginning, revealed Klein, “After coffee is picked there are strict handling requirements at virtually every stage of production. Different milling and eventually roasting equipment, or costly purge batches, must be used, followed by meticulous cleaning practices. Coffee must be carefully separated and documented with every movement, then production records must be audited frequently to identify accidental contaminations.
“The outcome of all of this is that, in most situations, producing an organic-certified coffee requires more labour and greater expenses while introducing new risk in terms of yields and pest management.”
The higher risk and expense for the producers, translate to higher prices for the consumer, which serve as a barrier for many, especially the price conscientious, and especially when inflation and the cost of living is soaring in many parts of the world.
“Many consumers and businesses demanding certified organic coffees expect them to be price competitive with the cheapest conventional coffees, which is unrealistic. I think for some customers it’s easy to justify a higher price because the value add is more obvious, but unfortunately, I think it means the quality of organic coffees on the market generally tend to be lower to compensate for price sensitive customers,” argued Klein.
Image: Equator Coffee
However, despite organic teas and coffees generally having a higher price point, they are both growing markets with burgeoning consumer interest. Even if consumers do not fully understand the complexities of the organic certification undertaking, they know it is better environmentally, often in quality, and possibly for their health too, so they know there is additional benefits that they are paying that bit extra for. In Turer’s judgement, “the price barrier [only] exists when the quality of the organically certified coffee, specifically the flavour, does not meet the value expectations of the consumer.” In other words, if a consumer purchases organic coffee or tea, and they experience good quality and taste, as well as the moral and environmental associations, then there is value for the money.
Do the benefits outweigh the challenges?
It could be argued that governing bodies ought to be doing more to support organic farming, to take some of the risk and cost off of producers and subsidise the products for consumers. Stachura believes that “governments in affluent coffee-consuming nations have the capacity to play a significant role in supporting and advancing regenerative organic farming practices,” and, perhaps, have the responsibility to do so if their country is the big consumer of that product in particular.
Klein feels, however, the argument that “economic stability and mobility for smallholder farmers is more urgent. I would like to see the two things promoted and supported in tandem.” He continued, “If organic production can support and increase farmers’ livelihoods, it’s absolutely a win. But if it reinforces an exploitative price structure, or expects farmers to bear unsustainable levels of risk, I think that’s a problem that needs to be confronted.”
While there is no doubt that organic farming is beneficial in so many ways, there must be support and incentives for tea and coffee farmers to make that switch for it to be viable to more than just the larger, commercial producers. But there are ways in which this can be mitigated. “Collaboration and innovation in the entire supply chain is key for helping to make organic tea more accessible and affordable for everyone involved,” explained the spokesperson from Hälssen & Lyon.
Not only can farms share knowledge and best practices, but share the costs of certification, particularly for smaller coffee or tea producers, among nearby farms. Klein also added that this challenge presents the opportunity for agricultural innovations. “People [are] learning new techniques of soil management or crop diversification specific to their farms which can improve yields with no or few synthetic inputs. If that innovation continues and expands, we might see significant improvements in the quality of organically produced coffees.”
There may still be challenges for organic farming, but they are seemingly worth confronting as the market reports demonstrate there is clear consumer demand for organic tea and coffee. Consumers may even be willing to pay that bit more for the certified products as it allows them to have a small part of environmental agency and responsibility over the way in which the products they buy are grown and produced. Stachura concluded, “As the world’s population grows, and the demand for food, including coffee, embracing organic and regenerative farming practices becomes imperative for human survival.” Therefore, we must continue to look for ways in which it can be remunerative, accessible, and equitable.
- Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: [email protected].
