Thursday, April 18, 2024

 

Fluctuating coffee prices put mental pressure on Vietnamese farmers



UNIVERSITY OF COPENHAGEN




While your invigorating morning coffee may become cheaper when there are large fluctuations in the world market price, they are a major additional psychological burden for the farmers who grow the coffee.

This is documented in a new international study on the effect of income uncertainty on the mental health of Vietnamese coffee farmers.

"Our results suggest that not only poverty, but also the risk of poverty caused by fluctuating prices has a significant additional negative effect on the mental well-being of farmers in low-income countries," says Finn Tarp, Professor at the University of Copenhagen and Coordinator of the Development Economics Research Group (DERG).

Poverty and mental illness are linked

According to the WHO, poor mental health is one of the heaviest components of the global burden of disease. This burden is largely borne by people in low-income countries, as mental illness and poverty are closely linked. It is estimated that as much as 80% of the world's depressive disorders occur in low- and middle-income countries, but they are often overlooked, even though they should be at the centre of the struggle against the many dimensions of poverty.

"The soaring socio-economic costs of mental illness are rightly a growing international concern. It is therefore imperative to investigate the underlying sources of mental illness and formulate effective economic policy responses and social interventions," says Finn Tarp.

In Vietnam, volatile coffee prices contribute to the mental health burden by reducing farmers' expectations of future economic prospects, increasing their cognitive load and alcohol consumption - and by reducing farmers' social capital. They also sleep worse, feel more lonely, are depressed, can't concentrate as well as they used to, and feel significantly more diffuse anxiety in an already extremely tense daily life.

Need for a safety net

The new study not only tells us something about public health in Vietnam. The results are likely to be transferable to other low- and middle-income countries whose populations are heavily dependent on agricultural exports, according to the researchers.

The study points to the need for effective social safety nets to protect smallholder farmers from price fluctuations on the world market.

"Governments should consider introducing policies that stabilise farmers' incomes, for example by offering price insurance or increasing access to market-based risk management," suggests Finn Tarp and elaborates:

"At the same time, it is important to raise awareness of the particular problem of mental illness among farmers and offer support to those affected. Better material wealth is necessary to fight poverty, but more is needed to improve the quality of life of individuals."

The study "Commodity price volatility and the psychological well-being of farmers" was conducted by Finn Tarp together with Saurabh Singhal from Lancaster University. It is published in the American Journal of Agricultural Economics and can be read here: https://onlinelibrary.wiley.com/doi/full/10.1111/ajae.12468

Coffee – a risky crop

  • Vietnam is one of the largest coffee producers in the world. Coffee is a perennial crop and production takes place primarily in the central highlands on small family-run farms.
  • Coffee trees have a lifespan of more than 50 years, and cutting down the trees to make the land suitable for other forms of agricultural production is an expensive and labour-demanding task. Conversion is costly. This means that when coffee prices are low, farmers are unable to abandon coffee production in favour of other crops.
  • When you can't quickly adjust the area of coffee trees, farmers are vulnerable when there are large fluctuations in international commodity prices. This creates economic uncertainty, which leads to increased mental distress among coffee farmers.

More sustainability in global agricultural trade

After analysing the value chains of agricultural products, researchers show that trade relations with the EU should be renegotiated


HELMHOLTZ CENTRE FOR ENVIRONMENTAL RESEARCH - UFZ

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IMAGE: 

LAND IN THE BRAZILIAN AMAZON DEFORESTED FOR SOYA PRODUCTION

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CREDIT: YVES ZINNGREBE





Soya, palm oil, coffee, cocoa, sugar, or hazelnuts – in only a few cases is the cultivation in the countries of origin outside Europe truly sustainable. For example, rainforests are cleared and valuable grasslands are used for palm oil and cocoa plantations and soya monocultures, and harmful pesticides are used in the cultivation of cocoa and hazelnuts. In order to prevent negative consequences for biodiversity, ecosystems, and the climate, the EU has expressed its political will to share responsibility for this. It is committed to the principle of Policy Coherence for Development (PCD) in its development policy. Accordingly, it wants to not only achieve the Sustainable Development Goals (SDGs) of the UN within EU boarders, but also support developing countries for implementing them. In the Green Deal and the Farm to Fork Strategy, the EU Commission has committed to promoting the transformation towards sustainable agricultural and food systems. 

In order to provide more clarity in the tangled web of complex trade relations between the EU and exporting countries in the market for agricultural products, a research team is now proposing a new approach that analyses both the relevance and leverage effect of individual imported goods for the EU and for the country of origin. The “relevance” criterion describes the proportion of an agricultural product from a country of origin in total imports into the EU. The “leverage” criterion describes how important the proportion of an agricultural product imported into the EU is for the country of origin in the overall value chain or agricultural production. “We can thus describe the importance of trade with the EU for each agricultural product and exporting country and consider measures that could make these trade relations more sustainable”, says UFZ environmental policy expert Dr Yves Zinngrebe, lead author of the publication. The team of authors analysed the relevance and leverage effect of the most important agricultural imports for three dimensions: the economic value that these imports have for the country of origin, the footprint as a measure of land consumption for the cultivation of the imported goods, and the deforestation (i.e. how many hectares had to be cleared for the production of the imported goods).

The researchers discovered that soya, palm oil, cocoa, and coffee account for more than 80% of the land deforested for the cultivation of EU products. In addition, based on the high relevance and leverage values, they found that much of the influence of the EU is focussed on a few groups of countries with specific export profiles. These include the MERCOSUR countries of Argentina, Brazil, Paraguay, and Uruguay in particular because trade with these countries (especially in soya) accounts for 22% of the trade value, 33% of the required land area, and 40% of the imported deforestation. These are joined by Malaysia, Indonesia, and Papua New Guinea, which specialise in the cultivation of palm oil as well as a number of countries in Africa, Latin America, and Vietnam, which specialise in cocoa and coffee. “The EU could achieve a great deal if it focused on soya, palm oil, coffee, and cocoa when establishing sustainable trade relations”, says Zinngrebe.

The EU also has strong leverage in certain small sugar producer countries. For countries such as Mauritius, Fiji, Barbados, and the Bahamas, the overall relevance for the EU is low. However, the leverage (i.e. the proportion of the cultivation area reserved for EU exports) is quite high (20–40%), providing a strong potential or responsibility of the EU in establishing sustainability standards. The potential leverage effect is also high for countries in Eastern Europe (e.g. Ukraine and Russia) and Central Asia (e.g. Kazakhstan), which sell large quantities of grain to the EU. Cereals such as wheat, maize, and barley as well as oilseed crops such as sunflowers, rapeseed, and linseed account for almost 70% of the imported footprint from these countries. “If the EU hopes to ensure greater sustainability in global food systems, it should use its relationships primarily with trading partners for which the leverage is particularly high”, says Prof Sebastian Lakner, agricultural economist at the University of Rostock and final author of the study. “The aim here is to develop new agricultural standards or regulations together with our trading partners, which provide benefits to both the countries of origin and the countries of consumption”. The EU supply chain law can play an important role in this. This is intended increase the transparency of the conditions under which traded goods are produced. For example, how much primeval forest has been cleared for an agricultural product or how the land was previously used.

In the case of highly relevant agricultural goods such as soya and palm oil, which together account for almost two thirds of the EU proportion of deforestation in partner countries and one third of the footprint, it is up to the EU to reduce this relevance. For example, it could regulate demand by promoting more sustainable livestock farming or a low-meat diet in the EU. However, examples from the recent past (e.g. palm oil) show how sensitively global trade should be handled. The EU had pushed ahead with regulations for more sustainable cultivation but lost large market shares as a result because other countries such as India and China took over EU proportions of the global market. “The EU thus gambled away parts of its influence because the demand for palm oil continues. It no longer has as much influence on making this trade more sustainable because the proportion of palm oil imported into the EU is no longer as high”, says Zinngrebe. This means that the EU no longer has any effective leverage. If the EU truly hopes to implement policy coherence in the interests of development, it must support these countries in developing their economies beyond agriculture to value-adding sustainable production.


The port of Valparaiso in Chile is one of the most important trade centres between South America and the EU.

CREDIT

Sebastian Lakner

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