Translating the Adaptation of Ethiopian Coffee Farmers to Higher Temperatures into Economic Costs and Price Premiums: A Community-Based Breakeven Cost Approach

Translating the Adaptation of Ethiopian Coffee Farmers to Higher Temperatures into Economic Costs and Price Premiums: A Community-Based Breakeven Cost Approach | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Translating the Adaptation of Ethiopian Coffee Farmers to Higher Temperatures into Economic Costs and Price Premiums: A Community-Based Breakeven Cost Approach J. Nicolas Hernandez-Aguilera, Amanda Grossi, Nick Pelaccio, Ryan Kopper, and 8 more This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6786282/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract A broad spectrum of climate models predict substantial changes in coffee landscape configurations that will disproportionately affect 25 million smallholder coffee farmers in the Global South. Most studies and modeling, however, do not inform farmers who struggle with low yields, insufficient market instruments, and climate vulnerability, nor stakeholders -i.e., importers, retailers, and consumers- interested in supporting smallholders who provide around 70% of the coffee supply. Smallholders' input is rarely part of climate risk assessments, and general conclusions and scenarios overlook local context, farmers' capabilities, and their contributions to identifying solutions 1 . To better connect farmers' needs with research, we go back to the basics of cost analysis and incorporate their knowledge and reported climate adaptation strategies. In particular, and in collaboration with 202 Ethiopian smallholder coffee farmers, we assessed farmers' capacity to adapt to perceived higher temperatures across all stages of coffee production based on the real costs they face, the practices they implement, and the associated profitability. Limitations in farmers' economic ability to increase short-term productivity suggest that a 35-cent price premium may compensate for the extra costs borne by farmers due to higher temperatures. This premium is comparable with other voluntary sustainability standards supporting social and conservation goals. Our research advances the integration of smallholder coffee growers' knowledge for grounded climate action, suggesting actionable and context-based strategies. Earth and environmental sciences/Environmental social sciences/Climate change adaptation Earth and environmental sciences/Environmental social sciences/Socioeconomic scenarios Earth and environmental sciences/Environmental social sciences/Sustainability adaptation costs climate services coffee Ethiopia price premium Figures Figure 1 Figure 2 Figure 3 1. Introduction Coffee is a critical cash crop produced and marketed worldwide, including more than 50 developing countries 2 . It is one of the most widely traded commodities globally, providing jobs to more than 125 million people 3 , including an estimated 25 million smallholder farmers 4 who produce around 70% of coffee supply worldwide 5 . Coffee value chains in Africa have been defined by inefficiencies in supply chains and comparatively low yields 6 , progressively losing participation in the global share (around 11% in 2023 7 , compared to around 19% on average in the 1990s 8 ). However, these figures and declining global share understate the significance of the coffee industry in sub-Saharan Africa. In Ethiopia, Africa’s largest coffee producer and consumer 9 and the world’s fifth largest exporter of Coffee arabica 10 , coffee is the backbone of the economy. The crop accounts for more than one-third (34%) of the nation’s total export earnings 11 . More than 15 million people, 70% of the labor force, including women and girls 12 , rely upon the sector for their livelihoods 13 . Beyond this, Ethiopia is the main storehouse of genetic diversity of Coffee arabica 14 , and its farming systems, especially its forest and semi-forest systems, provide protection for biodiversity as well as other environmental benefits 15 , 16 . Overall, coffee is critically important for addressing food security and secure income for millions of smallholders 17 and lies at the intersection of multiple social, economic, and environmental issues. Sub-Saharan Africa is facing the reality of unprecedented climate variability, underscoring the critical need for agricultural adaptation across the region. Because of climate change, agricultural productivity per capita has already decreased by around 35% in Africa -including coffee crops- since the 1960s, the highest value compared to other global regions 18 . Coffee arabica , which accounts for 70% of the global coffee market share and is globally recognized by its superior quality profile compared with Coffea canephora , (popularly known as robusta), is particularly sensitive to temperature and precipitation changes, which reduce its growth, flowering, and fruiting, and make it more susceptible to coffee pests and diseases 19 – 22 . As such, increasingly erratic precipitation and temperature patterns brought about by climate variability and change 23 – 25 threaten not only the production of coffee but also the broad diversity of flavor profiles that give rise to its quality 26 – 28 and are ultimately tied to its price and farmers’ incomes 15 . Although there is the potential to increase the area where coffee can be grown via relocation and expansion due to climate change, recent projections show an overall negative influence on coffee due to climate change 10 . In the long term, Ethiopia’s current suitable coffee-growing regions could decrease by an estimated 39–59%, even in the most conservative emissions scenarios 10 , with wild Arabica populations facing a potential near-total loss of suitable bioclimatic space 20 . Meanwhile, in the shorter term, impacts are already being felt as farmers in the coffee-growing regions of southwest Ethiopia report that the duration of the rainy season has declined by 50%, from 9 to 5.5 months, coinciding with increasing temperatures 29 . Regional studies support these perceptions as they indicate high variability in rainfall trends across Ethiopia. Some reports suggest a decline in rainy season duration 30 , while others emphasize that total annual rainfall has not significantly declined in all areas but has become increasingly erratic, with shifts in seasonality impacting rainfall distribution and reliability 31 . Given the significance of seasonal predictability for agricultural decision-making, along with the unpredictable changes and varying perceptions of impact by farmers, community-reported observations offer insight into how farmers experience and respond to climate stress in practice. In pursuit of advancing climate services that are at once useful, usable, and used for Ethiopia’s coffee sector for sustaining income in the face of climate variability and change, it is necessary to understand the real and not just perceived climate information needs of coffee farmers, the economic costs of climate on their production systems, and the viability of specific strategies that can support climate adaptation 32 . However, research to date has focused predominantly on the climate modelling and agro-ecology of the coffee crop 20 , 21 , 33 , 34 or asymmetries of power in the international coffee market 13 , 35 – 38 , generally neglecting the more nuanced, localized and field-based assessments of the social and economic dynamics 39 needed to meaningfully inform climate services at the farm level. To address this gap, we gathered farm-level information and quantified how smallholder Ethiopian coffee farmers perceive and respond to higher temperatures by analyzing the direct costs of adaptation, including additional labor, materials and equipment. This analysis estimates the capacity of farmers to cope with and adapt to higher temperatures based on profitability and real costs of adaptation, including the costs of shade-grown coffee maintenance and establishment, and to quantify prices and productivity improvements required to support the extra costs associated with adaptation. In doing so, we assessed whether a price premium could offset these costs. By directly linking adaptation responses to economic impacts, this study highlights how adaptation decisions influence farm finances and underscores the value of cost-based advisory tools that help farmers translate climate variability into financial decision-making. Despite the exigency of addressing the climate threat in Ethiopia’s coffee sector, there is a lack of actionable, tailored advisories at the farm level for sustaining income in the context of an uncertain climate. In particular, while about half of all interventions targeting Ethiopia’s coffee sector address climate in some way, a 2020 landscape analysis of the sector revealed that less than 6% of these interventions work to promote climate adaptation through the provision of climate services to inform decision-making at the farm level 40 . In other words, there is an unmet need for climate information on shorter time and spatial scales that can pragmatically inform and be integrated with specific decision-making processes and strategies for adaptation 29 , 41 . Climate scenarios that project conditions 50 or 100 years in the future, while valuable for understanding longer-term climate change, are misaligned with the shorter-term needs of coffee farmers and the network of agricultural extensions and other agents who support them, which are deeply impacted by shorter-term climate variability. In addition to assessing real costs of adapatation, we examine the types of climate information that smallholder coffee farmers currently use and the channels through which they receive this information. This analysis aims to inform future interventions and climate services tailored to the sector. The findings offer policymakers, agricultural extension officers, and industry stakeholders a framework for supporting smallholder farmers’ adaptation in actionable and financially viable ways. 2. Results Characterization of the coffee production system, climate risk and real costs The average farm size and productivity for the 202 Ethiopian farmers we surveyed were 4.5 hectares and 1,340 pounds of clean coffee per hectare, respectively, with around 3,000 coffee trees planted per hectare. Around 80% of participants processed and sold their coffee dried and stored it in their homes before selling. Around 66% of participants totally or partially sold their coffee to a farmers’ union or cooperative. Other significant buyers include traders and direct clients at local markets. About 75% of farmers were part of a farmer’s cooperative union and interacted with the cooperative either biannually (24%), annually (13%), or monthly (11%). In addition, all farms were classified as organic. Around 59% of farmers used fertilizers (compost) while the other 41% did not. About half of the respondents were 31 to 45 years old and had 15 or more years of experience working with coffee, making them well positioned to identify shifts in production patterns. The most popular farm type, which accounted for 40% of the participants, was the plantation. While farmers self-identified their farms as plantations based on their intensive management practices, their average farm size (4.5 ha) falls below the threshold typically used in literature which define plantations as intensively managed plots generally larger than 50 ha 15 . Most farmers (76%) self-reported having between 40–60% shade coverage on their farms, while only 3% reported having less than 10% shade. The average number of shade trees reported per hectare was 80, and the most popular species of shade trees were locally known as “Wanza” ( Cordia africana ) and “Berbera” ( Millettia ferruginea ) (Supp. Figure 1). Farmers’ reported that delayed rain onset and high temperatures had the top negative impact on their coffee farms (Fig. 1a). For the delayed rain, the three most common specific impacts on their coffee trees were flower abortion (71%), soil drying (55%), and drying of trees (55%). For perceived high temperatures, the top three impacts from the farmers’ perspective were poorer yields (58%), poorer quality (47%), and soil drying (44%). In fact, 68% of farmers confirmed that high temperatures negatively affected their coffee production. The terms “soil drying” and “drying of trees” were used in the survey to reflect the language farmers use to describe the effects of climate stressors on their crops. While these are not technical terms typically used in scientific literature, they align with how farmers perceive and articulate the impact of delayed rain and higher temperatures on their coffee plants. Our focus on higher temperatures stems from the fact that many adaptation practices, such as shade management, are already in use and within farmers' existing means. Moreover, in the last production year (2021), 73% of farmers said the temperatures were above usual but not extreme, and only 24% said the temperature was usual or typical for their farm. Participants reported that higher temperatures affected their coffee production the most in January, February, and March. Regarding farmers' access to climate and weather information (Fig. 1b), most farmers obtain this information from the radio, regular face-to-face extensionist services, and/or Kebele or Woreda (district) postings. Most farmers at least used current climate (60%) and forecasted climate (56%) information. A small percentage of farmers (11%) also used historical climate data. Finally, a structured cost benchmark was necessary to quantify the economic impacts of higher temperatures more precisely. A useful comparison emerged with smallholder coffee farmers in Chiapas, Mexico, who share key structural similarities with Ethiopian coffee farmers such as reported farm size, plant density, average productivity, and organic production farming systems. 42 . The daily wage for Ethiopian farmers when adjusting Ethiopian daily payments in local currency by purchasing power parity (PPP) conversion factor (to eliminate the differences in price levels) was almost the same as the daily wage for farmers in Mexico, 5.22 and 5.11 USD respectively (Supp. Note and Supp. Table 1 ). Comparable wages and the additional similarities in the production systems support our assumption of equivalent factors’ productivity, factors’ remuneration, and cost structures in both cases. As explained in the Supplementary Information, we used the detailed cost framework and distribution established for the Mexican smallholder coffee farmers as the cost benchmark for Ethiopia. Then we used cost analysis to drill down into the specific factors affected by climate variables. The real costs of higher temperatures Many of the farmers interviewed experienced increased costs and labor due to the measures they took to cope with perceived higher temperatures. Consequently, we focused on translating these adaptation efforts to perceived temperature changes to real costs and on understanding the economic implications of specific adaptation strategies already implemented by farmers, particularly regarding shade-grown coffee. We focused the real cost analysis on the subgroup of farmers that self-reported that high temperatures affect coffee production and that experienced higher than usual temperatures during the last production year (66% of total surveyed farmers). Figure 2 shows the additional hours, materials, and equipment that this subgroup of farmers reported needing on average to manage the impacts of perceived higher temperatures during specific activities. Harvesting and nursery management were the two most frequently affected activities by higher temperatures. Maintaining optimal growing conditions under perceived higher temperatures required additional shade coverage and more frequent maintenance. Harvesting under higher-than-normal temperatures required, on average, an extra five days of labor (Fig. 2 a), eight dollars for additional materials (Fig. 2 b), and an extra five dollars on equipment per hectare per year (Fig. 2 c). The highest needs for labor, however, were associated with establishment and shade regulation activities that required 10 to 30 extra days for cutting down trees, establishing shade tree seedlings, and pruning of coffee trees and seedbeds (Fig. 2 d). The box sizes in each quadrant of Fig. 2 are directly proportional to how many farmers reported that extra cost. Farmers observed that coffee flowering and cherry development were the two stages most affected during periods of perceived higher temperatures, with 57% and 36% of farmers respectively, reporting noticeable changes consistent with previous literature reports 43 . Around 70% of farmers said there was a slight reduction in coffee flowering, while 87% reported a slight loss in cherry development. Farmers reported that vegetative growth, seedling establishment, and nursery seed germination were affected by higher temperatures, with 32%, 10%, and 9% of farmers reporting an effect respectively. Most farmers reported observing a slight loss in vegetative growth and seedlings during periods of higher temperature. However, 47% of farmers reported that higher temperatures lead to a slight gain during nursery seed germination, while 37% reported a slight loss. Considering these effects during the establishment and maintenance phases, temperatures reported by farmers that were above average but not extreme, and the most probable baseline scenarios suggested by the literature 43 – 45 , we estimated a net productivity reduction of 4% due to higher temperatures in our sample of farmers. The Climate Premium: Integrating higher temperatures into a general profitability assessment After incorporating the real costs of responding to perceived higher temperatures into the most specific cost structure (Table 1 ), we found that higher temperatures increased the total costs of coffee production by around 23% during the establishment stage (from USD 709 to 871) and 50% during maintenance stage (from USD 840 to 1,252 on average). Total costs rose mainly due to the increase of variable costs that almost doubled because of additional labor and materials requirements. Specific costs impact on labor, materials, and equipment are summarized in Supplementary Table 2. Table 1 General Costs Structure. Baseline Vs. Higher temperatures (HT) Variable, Fixed and Total Costs Establishment Maintenance Baseline HT Young trees Baseline HT Mature trees Baseline HT Old trees Baseline HT Average Baseline HT Variable Costs (USD/ha) Germinator 63.51 130.47 Nursery 326.01 426.02 Land Preparation 307.09 369.65 Vegetative Growth 193.68 260.68 Maintenance, fertilization, and pest control 205.33 511.89 179.96 463.88 176.58 489.22 186.24 484.84 Harvest 25.95 31.33 78.82 91.87 122.78 147.42 76.27 90.44 Processing 28.53 28.53 61.82 61.82 77.92 77.92 56.91 56.91 Partial Variable Costs (PVC) 890.30 1,186 259.80 571.75 320.60 617.57 377.28 714.57 319.43 632.19 Overhead & Interests (10% PVC ) 89.03 118.68 25.98 57.18 32.06 61.76 37.73 71.46 31.94 63.22 Total Variable Cost 979.33 1,305 285.78 628.93 352.66 679.33 415.01 786.02 351.37 695.41 Fixed Costs (USD/hectare) Total Cost of loans, certifications, memberships 117.46 117.46 39.00 39.00 39.00 39.00 39.00 39.00 39.00 39.00 Fees 39.47 39.47 Cooperative Loans 55.77 55.77 27.89 27.89 27.89 27.89 27.89 27.89 27.89 27.89 Bank Loans 22.22 22.22 11.11 11.11 11.11 11.11 11.11 11.11 11.11 11.11 Total Depreciation Costs 69.34 97.39 237.05 266.89 237.05 266.89 237.05 266.89 237.05 266.89 Depreciation of tools 69.34 97.39 69.34 97.39 69.34 97.39 69.34 97.39 69.34 97.39 Depreciation of processing equipment 63.57 63.57 63.57 63.57 63.57 63.57 63.57 63.57 Depreciation of other equipment and materials 104.15 105.94 104.15 105.94 104.15 105.94 104.15 105.94 Total Interest/Opportunity Cost (4%) 61.23 126.16 122.45 126.16 122.45 126.16 122.45 126.16 122.45 126.16 Land 12.78 25.57 25.57 25.57 25.57 25.57 25.57 25.57 25.57 25.57 Equipment 48.44 100.59 96.89 100.59 96.89 100.59 96.89 100.59 96.89 100.59 Total Other Fixed Costs 62.88 66.57 82.14 116.53 88.85 121.59 95.09 132.28 88.72 123.20 Miscellaneous Supplies (10% of variable costs) 10.68 28.74 28.64 63.04 35.35 68.09 41.60 78.78 35.22 69.70 Land Taxes 1.30 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 2.60 Management Cost 50.90 50.90 50.90 50.90 50.90 50.90 50.90 50.90 50.90 50.90 Total Fixed Costs 252.17 285.77 480.64 548.58 487.35 553.64 493.60 564.33 487.22 555.25 TOTAL COSTS 709.61 871.51 767.07 1,179 840.81 1,235 909.55 1,352 839.38 1,252 Amounts in 2021 US dollars at an average exchange rate of 51.15 Birr/USD. All factors’ costs (labor, materials, and equipment) were reported in Ethiopian currency (Birr) and converted to USD using the Ethiopian 2021 PPP rate for estimation purposes. We assume that overhead and short-term interests represent 10% of partial variable costs, which in turn are the sum of germinator, nursery, land preparation, vegetative growth maintenance, and harvesting and processing variable costs (depending on the specific phase and stage of production). We assume a 4% opportunity cost of land. However, this could change if the price of land per hectare changes due to persistent climate risk. By factoring in depreciation, reinvestment, and opportunity costs on top of variable and fixed costs, our analytical framework offers a guide for determining whether a farm is profitable over time. Specifically, four breakeven points define a degree of profitability over time. If the price that farmers receive is below the first breakeven point (variable cost/productivity), then coffee is uneconomical to produce. The additional labor and material costs incurred due to farmers’ adaptation efforts in response to perceived higher temperatures increased this first break-even point from 0.26 to 0.54 USD per pound (Table 2 ). The second breakeven point, total cash costs, adds fees, taxes, and miscellaneous supplies to the variable costs. Producers should be able to cover cash costs to stay in business in the short term. Because adaptation activities required higher variable costs, this breakeven was also duplicated. The third breakeven point, out-of-pocket costs, incorporates depreciation costs, and it should be covered to stay in business in the long run. This third breakeven point increased from 0.4 to 0.72 USD per pound. Finally, the farmers recover all out-of-pocket expenses plus opportunity costs when the four breakeven points are covered—the total cost breakeven return. The additonal expenditures required to maintain productivity in response to perceived higher temperatures increased the total cost breakeven return to 0.87 USD per pound. The sensitivity analysis (Table 3 ) reflects the estimated net returns for coffee (USD/ha) at different prices and yields. Our economic analysis incorporates all capital and labor opportunity costs and assumes a competitive market; for that reason, the net return should be zero in equilibrium. At the baseline productivity level (1351 lb/ha), the price that covered the total cost was 0.52 USD per pound. In contrast, the equilibrium price was 0.87 USD under the scenario where farmers adapted to perceived temperature increase. It means there was a 35 USD cents difference in the equilibrium price between baseline and higher temperatures scenarios. This differential might serve as a climate premium reference. Parallel, to cover total costs in a higher temperature scenario and keep the current price constant (0.4 USD per pound), it would be required to duplicate productivity levels from 1300 lb/ha to 2800 lb/ha. Table 2 Breakeven points during Maintenance Stage Baseline Higher Temperatures Breakeven implications Production cost (USD/ha.) Breakeven (USD/pound) Production cost (USD/ha.) Breakeven (USD/pound) Total Variable Costs 352 0.26 697 0.54 If the return is below this level, coffee is uneconomical to produce. Total Cash Costs = Total Variable Costs + Membership & Certification Costs + Taxes on Land + Miscellaneous Supplies 358 0.27 711 0.55 The second breakeven return allows the producer to stay in business in the short run. Out of Pocket Costs = Total Cash Costs + Depreciation Costs 546 0.40 923 0.72 The third breakeven allows the producer to stay in business in the long run. Total Costs = Out of Pocket Costs + Amortized Establishment Costs + Management Costs + Opportunity Costs 702 0.52 1123 0.87 The fourth breakeven return is the total cost breakeven return. Only when this breakeven return is received can the grower recover all out-of-pocket expenses plus opportunity costs. When estimating the average breakeven costs per hectare during the maintenance stage, we adjusted significant investments such as de-pulping machines and vehicles by the median farm size. In that way, significant expenses do not overestimate breakeven points. Total cash costs include other indirect costs, such as average loans and transfers from/to the cooperative or similar lenders and borrowers. These adjustments explain the total cost differences between breakeven estimations and total costs per hectare (Table 1 ). Table 3 Sensitivity Analysis. Net profits based on coffee price (USD/lb) and productivity (lb/ha) Productivity (lb/ha) Coffee Price (USD/lb) $ 0.29 $ 0.32 $ 0.36 $ 0.40 $ 0.52 $ 0.60 $ 0.87 $ 1.60 a. Baseline 692 -500 -478 -453 -425 -343 -287 -103 405 865 -450 -422 -391 -356 -253 -183 46 682 1081 -387 -352 -313 -270 -140 -53 233 1028 1351 -308 -264 -216 -162 0 109 467 1460 1622 -229 -177 -118 -53 140 271 701 1892 1754 -191 -134 -71 0 209 350 816 2104 2105 -88 -20 56 140 392 561 1119 2666 b. Higher Temperatures 664 -929 -907 -883 -857 -777 -724 -548 -60 830 -880 -854 -824 -790 -691 -624 -404 206 1038 -820 -786 -749 -707 -583 -500 -225 538 1297 -744 -702 -656 -604 -449 -344 0 953 1946 -555 -492 -422 -344 -112 45 561 1991 2807 -304 -213 -112 0 336 562 1307 3369 3368 -140 -31 90 225 628 898 1792 4267 A minimum price of $ 0.52 USD should be required to cover the total costs under the baseline productivity (1,351 lb/ha). In this same baseline scenario (a), if smallholders receive a price of $ 0.4 USD per pound, a 30% productivity increase (1,754 lb/ha) should be required to achieve equilibrium. The higher temperature scenario (b) increases costs and reduces productivity (1,297 lb/ha) and it requires a minimum price of $ 0.87 USD per pound to achieve equilibrium. 3. Discussion: Economic Costs and the Role of Climate Premiums in Coffee Farming Fieldwork interviews with agricultural officers Dilla and Wensho woredas in 2019 suggested that at the primary central market, the price of coffee was around 11.79 Birr or 0.40 USD per pound (at an exchange rate of 29 Birr/USD in 2019). These officers provided this estimate based on their extensive field interactions and maintained engagement across the coffee value chain. While individual farmgate prices vary due to cooperative membership, trader negotiations, and local market conditions, this price serves as a woreda-level benchmark. Consequently, under the baseline conditions, coffee in Ethiopia might be economically profitable only in the short term, barely covering out-of-pocket costs (which we estimated at 0.40 USD per pound). This result is common for coffee farmers in other producer countries 42 , 46 , 47 . However, when the higher temperature costs are incorporated, coffee is uneconomical to produce as the first breakeven point (0.54 USD variable costs per pound) is above the price, and coffee production is not profitable anymore. Although the coffee prices might experience significant variation depending on coffee quality and the business model behind coffee commercialization (i.e., direct trade) 48 , it is clear that a higher price—or productivity improvements—might be required to make coffee production profitable after response to increased temperatures. Productivity may be increased through practices such as improving farmer access to climate information services (CIS) and implementing climate-smart agriculture (CSA) practices 49 . Rarely do smallholders have the resources needed to invest in physical capital and technology and improve long-term productivity 50 , 51 . Instead, a climate price premium might be an immediate market instrument to support the farmers. Our static analysis that compares a baseline coffee production system to cost shifts after perceived temperature increase suggests that a 0.35 USD farmgate price premium would offset the increased cost of adaptation and contribute to keeping coffee activity profitable. This estimate is based on the observed rise in labor, materials, and adaptation-related expenses (Table 1 ) and the corresponding increase in breakeven price from 0.52 USD per pound under baseline conditions to 0.87 USD per pound under high-temperature conditions (Table 2 ). The 0.35 USD premium reflects the additional revenue required to prevent financial losses for farmers adapting to higher temperatures. Our detailed quantifications at the farm level support new “climate-adaptation premiums” that can be paid to coffee farmers and their organizations in the same way that traditional voluntary sustainability standards such as Fair Trade, Organic, or Smithsonian Bird Friendly recognize and certify premiums associated with social responsibility or conservation initiatives. Moreover, farmers' limitations to adapt compromise the whole industry, as smallholders supply 80% of coffee 52 . There is a clear value and need to support smallholders' climate adaptation efforts and extra costs on a demand-driven model led by importers and roasters. In the specific case of Ethiopia, organizations like Fair Trade in Africa, which sources from farmers, could be partners for offsetting price premiums. At the same time, development actors like Technoserve, GIZ, and Ethiopian Coffee Forest Forum could serve as vigorous advocates for climate premiums or provide technical assistance and capacity development for coffee farmers to adapt to an increasingly erratic climate. Meanwhile, the Ethiopian Coffee and Tea Authority (ECTA), re-established in 2016 and mandated to support, guide, protect, and empower the development of Ethiopia’s coffee industry 53 , recently released a comprehensive strategy for the country’s coffee sector underscoring climate resilience 54 . ECTA could be an influential broker to correct climate price distortions and advance market instruments that acknowledge climate costs. It's important to note that the price that buyers pay exporters when coffee is ready to be shipped out (FOB price) is not the same price that individual farmers receive for their coffee—that would be the farmgate price. Uncovering farmgate prices is complicated because pinpointing each farmer's exact amount is difficult, and the conversation in the industry around farmgate pricing is still developing 47 . However, most farmers worldwide get paid twice: first, when they sell their coffee at the exchange points and again after the coffee is cupped. The second payment includes differentials, quality premiums, and other associated certification premiums. Reputable cooperatives and producer organizations will honor the second payment fairly and transparently, but it's not uncommon for less scrupulous buyers to pocket the extra cash 55 . Fairtrade premium is 0.20 USD, and organic premium recently increased from 0.30 USD to 0.40 USD. Those premiums are not far from the 0.35 USD climate premium we estimated and demonstrate that premium-based models are already in place to incentivize sustainable practices. However, these premiums are not designed to account for the direct economic burden of climate adaptation on farmers, a gap that climate premiums can fill and repurpuse. When implemented, climate premiums must go hand-in-hand with transparent and traceable communication systems to effectively monitor and track climate price premiums based on farmers’ specific needs and investment possibilities. Many Ethiopian coffee farmers grow their coffee under shade, and our sample reflected that more than 70% of farmers reported shade levels around optimal levels of 40–60% 16 . Shade-grown coffee under a forest-like canopy of trees is one of the most common and at-hand adaptation strategies to confront higher temperatures 16 , 56 . The presence of trees with coffee reduces sun-light radiation, soil temperature, total evapotranspiration, and wind movement 43 , 57 – 59 , alleviating the negative impact of higher temperatures on coffee flowering, cherry development, yields, and quality. Besides, shade-grown coffee offers additional benefits such as providing food and other products of economic value, enhanced taste, carbon sequestration, natural pest control, improved pollination, and increased quality of coffee beans, which may be associated with quality-related price premiums 16 , 60 . Despite the longer-term benefits of shade, our research also reflects that preserving optimal shade levels under higher temperatures involves additional costs for farmers. Notably, new labor requirements for establishment activities include the germinator, nurseries, transplanting, and planting shade trees, in addition to extra days for maintenance activities, such as pruning and cutting down trees. Women and girls, who comprise approximately 70% of Ethiopia’s labor force in the coffee sector 12 , 61 , will most likely fully contribute to cover those establishment and maintenance costs, although their male counterparts might focus on activities such as cutting down trees and pruning. This gender dimension must be considered in designing, monitoring, and targeting adaptation instruments and climate premiums. Customizing Climate Information for Cost-Based Decision-Making The insights gathered from the community and translated into real costs in this manuscript will enhance the integration of economic and profitability assessments with sub-seasonal and seasonal climate modeling. This integration will create more comprehensive representations of the complex interactions among coffee farmers, the environment, and the market, ultimately aiding stakeholders and guiding decision-making. Additionally, customizing and downscaling climate data is essential to increase farmers' use of climate information and models, while also complementing traditional methods of engaging with farmers. Current climate information accessed by farmers—mainly through radio (60%) and forecasted climate reports (56%)—provides only raw weather data rather than actionable insights that translate into farm-level decisions. Information provided must be meaningful, translated to daily tasks and decisions that farmers face at the farm level, and communicated in mediums that farmers can easily access. A common and meaningful language for everyone is money. Understanding the costs (or benefits) of specific climate events and shocks facilitates the recognition and translation of extreme events (such as droughts and excess rain) and the economic feasibility of advised adaptation practices. In this context, it is vital to consider cost implications at different time horizons, including short-term opportunity costs for labor (formal and informal) and cost implications for production factors such as land that are fixed in the short and midterm. A common component in any communication endeavor should have farmer needs and real conditions at the center of the design process 1 . This approach includes developing suitable, skills-based, and practical curricula and training for smallholder farmers and other stakeholders to understand and take action to manage climate risks, real costs, and adaptation. A critical component in this process is ensuring that climate information is communicated through trusted, farmer-accessible channels. Communication mediums ought to prioritize radio, regular extension services, and kebele or woreda (district) postings that represent the channels most used by coffee farmers for obtaining climate and weather information (Fig. 1b). Additionally, in this study, 30% of farmers reported relying on face-to-face extension services, suggesting a potential opportunity to train and leverage extension officers to bridge the gap between climate data and financial decision-making at the farm level. Customization efforts should align with and harness government priorities and policies towards a climate-smart coffee sector. Ethiopia’s Climate Smart Agriculture Roadmap for 2020-2030 62 and the National Strategy for Ethiopia’s Agricultural Extension System 63 , for example, have long-identified location-specific, agro-ecology-based interventions and climate-smart adaptation practices as one of the main systemic bottlenecks for effective adaptation. Yet, Ethiopia’s more than 72,000 agricultural agents serving over 16 million farmers 64 , including those in coffee-growing regions, have not been supported with practical training materials on how to access and use historical, monitoring, or forecast climate information products such as those freely available through the Ethiopian Meteorological Institute 65 . Investments in equipping farmers with actionable and decision-relevant information underpin Ethiopia’s vision to transform the agricultural sector to meet its growth and development goals, including those outlined in the Climate Resilience Green Economy (CRGE) Strategy 66 and 2030 Digital Agricultural Extension and Advisory Services (DAEAS) Roadmap 67 . 4. Conclusions and Future Directions Microdata in climate adaptation are critical for an in-depth understanding of the socio-economic implications of climate events and the feasibility of specific adaptation strategies. We established a methodology to analyze production costs at the farm level and to translate and understand the specific effect of climate events on the smallholder's cost structure. This translated information provides practical insights to the growers and their organizations, helping them understand and consider the economic feasibility of alternative scenarios and adaptation strategies. Moreover, understanding the farm-level cost of coffee and climate provides the industry and policymakers a better picture of the smallholders' businesses, livelihoods, and business viability, improving the effectiveness of market and policy interventions for climate risk. We specifically suggest a 0.35 USD climate premium to support farmers’ efforts for adaptation and, importantly, shade-grown coffee maintenance in the context of higher temperatures. The generation of microdata at the farm level would benefit from innovative ways to scale and incentivize the generation of economic and climate information. Most sub-Saharan African smallholder farmers do not use or are unable to access digital agricultural solutions and tools. A 2019 report found that digital agricultural solutions reach 13% of smallholder farmers in sub-Saharan Africa and access is growing 68 . The translation of climate events to costs might serve as the backbone of customized online and digital tools that incentivize and allow individual farmers and stakeholders to adjust their profitability and climate risk estimations according to their parameters and conditions. However, more than using digital tools per se , we emphasize the need to provide meaningful and understandable information connected to on-farm decisions. Climate information is complex, and understanding how it affects individual farmers is even more complicated, especially if climate information isn’t translated or intended for a local audience. The combination of smallholder farmer insights and innovations with economic and ecological tools can help provide context-specific climate adaptation tools while facilitating more sustainable and resilient coffee landscapes that also meet farmers’ on-the-ground economic needs. To simplify the complexity of coffee systems, we suggested a framework that measured coffee farmers' profitability based on real costs and focused on a single climate event—higher temperatures. It is essential, however, to differentiate between profitability and sustainability. Profitability is necessary to achieve economic sustainability but insufficient to affirm that conditions are sustainable for farmers. Isolated profitability metrics might underestimate social and environmental costs. Moreover, economic sustainability encompasses a broader definition of living and adequate income that, in the long term, might require an increase in physical and human capital endowments for farmers and, consequently, their returns and costs. Future estimations and more complex modeling might incorporate these target remuneration and dynamics. Additionally, they might include metrics of transparency and traceability on the business models, potential mark-ups, quality premiums and differentials, synergistic effects of climate change, and farmers' perceptions and expectations among additional market, climate and commercialization conditions. Furthermore, frontier techniques in crowdsourcing data and complex systems might integrate biophysical interactions with rain, droughts, and other climate events, as well as the market risk and volatility that characterizes coffee markets. Finally, men were primarily sampled for this study (93%), given their cultural predominance over household financial assets and decision-making in Ethiopia. As women and girls typically do most of the labor on coffee farms (e.g., harvesting, nursery management) 61 , future research should recognize the first-hand experience that women and girls can provide, presenting the opportunity for more accurate data and representation of labor hours and implications. Tools and curricula should be expanded to democratize access and support gender inclusion. 5. Methodology: Translating Climate Events to Climate Costs at the Farm Level Between March and April 2022, we surveyed 202 coffee farmers in eight woredas (districts) of four coffee-growing regions in Ethiopia: Mena and Limmu Kosa in the Oromia region, Gimbo and Decha in the Southwest region, Shebedino and Dale in the Sidama region, and Yirgachefe and Wonago in the Southern Nations, Nationalities, and Peoples' (SNNP) region (Fig. 3 ). We used the information gathered from these field surveys implemented using Kobo Toolbox to translate climate events into specific costs at the farm level. In particular, we analyzed the effects of higher temperature, reported as one of farmers’ two most relevant climate threats (alongside delayed rain onset), and specific adaptation practices such as shade-grown coffee. ​​ We specifically focused on temperature considerations due to its classification as a top threat by farmers and its connection with a specific adaptation practice (i.e., shade-grown coffee). Once we attributed specific costs in terms of additional labor or capital requirements, we compared this new cost structure with the baseline case to estimate changes in break-even points and quantified the changes in productivity or price required to compensate for higher temperatures and the adaptation strategies (sensitivity analysis). In general, production costs can be divided into variable and fixed costs. Variable costs are those inputs and labor used during a specific production cycle—or year—and depend on the amount of coffee produced on that specific cycle (short-term). In contrast, fixed costs must be paid whether coffee is produced or not and encompass annual payments, as well as tools and equipment that can be reused for more than one production cycle and are subject to depreciation costs. Longer-term costs involve opportunity costs of production factors, such as land, that are fixed in the short and midterm and only become variable in the long term (i.e. selling, renting, or buying land). If a farmer’s return is below their variable costs, then coffee is uneconomical to produce at any time. In contrast, if a farmer can pay and cover his or her inputs and labor costs but cannot save and make important investments in equipment and land improvements, they are profitable in the short term but not in the long term. A major driving force behind implementing the survey in Ethiopia was to better understand how farmer’s response to perceived climate shocks affects coffee production costs at different time horizons, including extra labor (i.e. additional hours), additional inputs (e.g. organic fertilizers, pesticides), and equipment. To this end, we separated a subgroup of farmers that self-reported that high temperatures affect their coffee production and experienced above-usual temperatures in the last production year. We then counted how many farmers said they experienced higher costs or required more labor when temperatures were higher than normal and averaged the extra hours or extra money reported for each input and activity across the coffee production cycle, including the establishment and maintenance phases (Table 4 ). Our survey guided the farmer on all the major activities associated with land preparation and planting, vegetative growth, and maintenance and harvest of the established plantation. Table 4 Coffee Farming Business Cycle and Main Activities Phase Stage Main Activities Establishment Preparation and planting Seeds collection and selection Seedbed & Germinator Nursery Land preparation and planting Vegetative Growth Weeding Watering Fertilization Maintenance Established Plantation (Stages: Young, mature and old coffee trees) Weeding Fertilization Shade management Harvest Dry processing Seedbed is defined as the location where coffee seeds are sown to induce germination. Seedling is the name for the young plants that have grown in the seedbed. Nursery bed is the name for the place to which seedlings are transplanted. Shade management activities include pruning shade trees and cutting down trees. No wet processing was considered for Ethiopian farmers. Many African coffee cherries and beans are processed in a dry place either on hard and very clean ground, plastic, or on planks 69 . Maintenance activities also include coffee tree management, pruning, and removal. Our cost analysis has two distinctive methodological aspects compared to similar studies. First, all hours of labor reported by the smallholders were valued at the hourly payment for own-account coffee workers in rural Ethiopia 70 , regardless of whether that effort came from hired or unpaid household labor. Labor has traditionally been underestimated in the literature when omitting family or unpaid labor 71 – 73 . For that reason, a detailed estimation of hours provides a better approach to the real cost to farmers 42 , 74 . This opportunity cost approach is important when a farmer decides whether or not to invest their effort in coffee production. Opportunity costs were also calculated for land and physical capital that otherwise would receive an alternative return or rent (estimated at 4%). Smallholders’ profitability is not limited to a cash flow or a thorough accounting of their physical assets or materials. The second distinctive aspect of our cost analysis is a detailed record of farmers’ activities, hours, materials, and equipment during the coffee production cycle. This level of specificity allows the identification of detailed input needs and gaps at the farm level, and it was established through extensive fieldwork and consultation with coffee farmers around the globe 48 . Declarations Author Contribution This manuscript has not been published previously and is not being considered concurrently by another publication. This article results from a novel research study and collaboration between an interdisciplinary group of scholars from Yale University(1), Columbia University(2), the Alliance of Bioversity International and CIAT(3), the International Livestock Research Institute in Ethiopia4 and Kenya(5), the Ethiopian Institute of Agricultural Research(6), and the Ethiopian Institute of Resilience to Climate Change (EIRCC), Jimma University in Ethiopia(7). The co-authors are J. Nicolas Hernandez-Aguilera(1,2), Amanda Grossi(2,3), Nick Pelaccio(2), Ryan Kopper(2), Gebermedihin Ambaw(4), Tufa Dinku(2), John W. Recha(5), Tesfaye Shimber Gessese(6), Kefelegn Getahun(7), Christine Ibrahim Puri(1), Cynthia J. Miles(1), and Dawit Solomon(5). J.N.H.A, A.G., N.P., and R.K. designed the study and performed the data analysis; J.N.H.A., A.G., N.P., R.K., and T.S.G. all contributed to survey design. G.A. with support from T.S.G. and J.W.R. led the field work and data collection. 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As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-6786282","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Article","associatedPublications":[],"authors":[{"id":469506900,"identity":"6597096b-d562-405e-882e-96598aa8c124","order_by":0,"name":"J. Nicolas Hernandez-Aguilera","email":"data:image/png;base64,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","orcid":"","institution":"Yale University","correspondingAuthor":true,"prefix":"","firstName":"J.","middleName":"Nicolas","lastName":"Hernandez-Aguilera","suffix":""},{"id":469506901,"identity":"2bcac80e-7de4-44c9-b6dd-a308219571ae","order_by":1,"name":"Amanda Grossi","email":"","orcid":"","institution":"Alliance of Bioversity International and CIAT","correspondingAuthor":false,"prefix":"","firstName":"Amanda","middleName":"","lastName":"Grossi","suffix":""},{"id":469506902,"identity":"4f479f54-3bb7-47f0-a498-b7d77ad1d49b","order_by":2,"name":"Nick Pelaccio","email":"","orcid":"","institution":"Columbia University","correspondingAuthor":false,"prefix":"","firstName":"Nick","middleName":"","lastName":"Pelaccio","suffix":""},{"id":469506903,"identity":"47bc182c-523d-4d91-a120-37ef4a58acd3","order_by":3,"name":"Ryan Kopper","email":"","orcid":"","institution":"Columbia University","correspondingAuthor":false,"prefix":"","firstName":"Ryan","middleName":"","lastName":"Kopper","suffix":""},{"id":469506904,"identity":"27efe39b-e4ff-4f64-96a7-885eef51e341","order_by":4,"name":"Gebermedihin Ambaw","email":"","orcid":"","institution":"International Livestock Research Institute","correspondingAuthor":false,"prefix":"","firstName":"Gebermedihin","middleName":"","lastName":"Ambaw","suffix":""},{"id":469506905,"identity":"dd593062-6cec-477c-bd8a-4fe2f700a8bc","order_by":5,"name":"Tufa Dinku","email":"","orcid":"","institution":"Columbia University","correspondingAuthor":false,"prefix":"","firstName":"Tufa","middleName":"","lastName":"Dinku","suffix":""},{"id":469506906,"identity":"d6219c25-50c6-4748-bf79-01c4b42aa78d","order_by":6,"name":"John W. Recha","email":"","orcid":"","institution":"International Livestock Research Institute","correspondingAuthor":false,"prefix":"","firstName":"John","middleName":"W.","lastName":"Recha","suffix":""},{"id":469506907,"identity":"88d72766-5fa3-4403-adca-a25192cac9db","order_by":7,"name":"Tesfaye Shimber Gessese","email":"","orcid":"","institution":"Ethiopian Institute of Agricultural Research","correspondingAuthor":false,"prefix":"","firstName":"Tesfaye","middleName":"Shimber","lastName":"Gessese","suffix":""},{"id":469506908,"identity":"484f0e33-d52f-4233-9684-a200511276fa","order_by":8,"name":"Kefelegn Getahun","email":"","orcid":"","institution":"Jimma University","correspondingAuthor":false,"prefix":"","firstName":"Kefelegn","middleName":"","lastName":"Getahun","suffix":""},{"id":469506909,"identity":"7b011736-3268-4cb6-9f39-006c85b45a1e","order_by":9,"name":"Cynthia J. Miles","email":"","orcid":"","institution":"Yale University","correspondingAuthor":false,"prefix":"","firstName":"Cynthia","middleName":"J.","lastName":"Miles","suffix":""},{"id":469506910,"identity":"eb724106-de25-40f8-aafe-4ccaac84cdf5","order_by":10,"name":"Christine Ibrahim Puri","email":"","orcid":"","institution":"Yale University","correspondingAuthor":false,"prefix":"","firstName":"Christine","middleName":"Ibrahim","lastName":"Puri","suffix":""},{"id":469506911,"identity":"c1524fa4-c6e0-4dca-a8c3-b18ee79c3de7","order_by":11,"name":"Dawit Solomon","email":"","orcid":"","institution":"International Livestock Research Institute","correspondingAuthor":false,"prefix":"","firstName":"Dawit","middleName":"","lastName":"Solomon","suffix":""}],"badges":[],"createdAt":"2025-05-30 16:08:18","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-6786282/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-6786282/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":84480467,"identity":"cc45adf6-1098-4054-91d8-e32cb6422b27","added_by":"auto","created_at":"2025-06-12 12:33:38","extension":"png","order_by":1,"title":"Figure 1","display":"","copyAsset":false,"role":"figure","size":97768,"visible":true,"origin":"","legend":"\u003cp\u003e\u003cstrong\u003e(a)\u003c/strong\u003e Top negative climate/weather impacts reported by coffee farmer respondents, and \u003cstrong\u003e(b)\u003c/strong\u003e climate information sources used by coffee farmer respondents.\u003c/p\u003e","description":"","filename":"1.png","url":"https://assets-eu.researchsquare.com/files/rs-6786282/v1/0e0c273006750c5f0e09bcf7.png"},{"id":84480466,"identity":"14a957e7-998e-48a7-b058-7f26d6eff246","added_by":"auto","created_at":"2025-06-12 12:33:38","extension":"png","order_by":2,"title":"Figure 2","display":"","copyAsset":false,"role":"figure","size":956108,"visible":true,"origin":"","legend":"\u003cp\u003e\u003cstrong\u003eMajor coffee production activities are affected by higher temperatures and lead to an increase in (a) labor, (b) material costs, (c) equipment, and (d) shade regulation and establishment.\u003c/strong\u003e Numbers in parentheses and box size indicate how many farmers reported the associated event. Inputs reported in local currency were converted to USD with a 51.15 Ethiopian Birr / USD exchange rate (that corresponds to the 180-day average rate before January 9\u003csup\u003eth,\u003c/sup\u003e 2022). We estimated the daily cost of labor taking as a reference the hourly earnings for own-account coffee farmers in Ethiopia estimated by the International Labour Organization. This is 0.21 per hour in 2020 USD\u003ca href=\"https://www.zotero.org/google-docs/?igxffC\"\u003e\u003csup\u003e37\u003c/sup\u003e\u003c/a\u003e. All changes were\u003cstrong\u003e \u003c/strong\u003emeasured per year in one hectare for all coffee tree ages surveyed. Seedbed management materials include seeds, germinator frames, sand substrate, lime, and transportation (gas). Nursery materials include materials for nursery construction (netting, studs, wires, staples), sowing (plastic bags, soil), and nursery management (fertilizers). Shade management includes weddings, removing parasitic plants, and pest management. Shade regulation includes pruning of canopy and branch trees for optimal light regulation.\u003c/p\u003e","description":"","filename":"2.png","url":"https://assets-eu.researchsquare.com/files/rs-6786282/v1/6d96892eb431c5f7aee47d21.png"},{"id":84482072,"identity":"e71c7a8d-4cdb-4821-b553-585a5b0347c7","added_by":"auto","created_at":"2025-06-12 12:49:39","extension":"png","order_by":3,"title":"Figure 3","display":"","copyAsset":false,"role":"figure","size":659330,"visible":true,"origin":"","legend":"\u003cp\u003e\u003cstrong\u003eMap of the study area. \u003c/strong\u003eThe survey was implemented in eight coffee-growing \u003cem\u003eworedas\u003c/em\u003e (districts) of Ethiopia.\u003c/p\u003e","description":"","filename":"3.png","url":"https://assets-eu.researchsquare.com/files/rs-6786282/v1/1e91e586b16fa6e9388c5155.png"},{"id":88302285,"identity":"d3487670-fcc8-4d09-a3b3-2317b03ed2b0","added_by":"auto","created_at":"2025-08-05 04:53:45","extension":"pdf","order_by":0,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":3228314,"visible":true,"origin":"","legend":"","description":"","filename":"manuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-6786282/v1/720c9e70-91f8-47f7-923d-053584933f5b.pdf"},{"id":84481631,"identity":"5bc158a9-7089-48d7-b71c-17ae89d18eb8","added_by":"auto","created_at":"2025-06-12 12:41:39","extension":"docx","order_by":0,"title":"","display":"","copyAsset":false,"role":"supplement","size":251192,"visible":true,"origin":"","legend":"","description":"","filename":"053025SASupplementaryInformation.docx","url":"https://assets-eu.researchsquare.com/files/rs-6786282/v1/c08baf4f52dd904ca47ce827.docx"}],"financialInterests":"No competing interests reported.","formattedTitle":"Translating the Adaptation of Ethiopian Coffee Farmers to Higher Temperatures into Economic Costs and Price Premiums: A Community-Based Breakeven Cost Approach","fulltext":[{"header":"1. Introduction","content":"\u003cp\u003eCoffee is a critical cash crop produced and marketed worldwide, including more than 50 developing countries\u003csup\u003e\u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2\u003c/span\u003e\u003c/sup\u003e. It is one of the most widely traded commodities globally, providing jobs to more than 125\u0026nbsp;million people\u003csup\u003e\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e3\u003c/span\u003e\u003c/sup\u003e, including an estimated 25\u0026nbsp;million smallholder farmers\u003csup\u003e\u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e4\u003c/span\u003e\u003c/sup\u003e who produce around 70% of coffee supply worldwide\u003csup\u003e\u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e5\u003c/span\u003e\u003c/sup\u003e. Coffee value chains in Africa have been defined by inefficiencies in supply chains and comparatively low yields\u003csup\u003e\u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e6\u003c/span\u003e\u003c/sup\u003e, progressively losing participation in the global share (around 11% in 2023\u003csup\u003e7\u003c/sup\u003e, compared to around 19% on average in the 1990s\u003csup\u003e\u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e8\u003c/span\u003e\u003c/sup\u003e). However, these figures and declining global share understate the significance of the coffee industry in sub-Saharan Africa. In Ethiopia, Africa\u0026rsquo;s largest coffee producer and consumer\u003csup\u003e\u003cspan citationid=\"CR9\" class=\"CitationRef\"\u003e9\u003c/span\u003e\u003c/sup\u003e and the world\u0026rsquo;s fifth largest exporter of \u003cem\u003eCoffee arabica\u003c/em\u003e\u003csup\u003e\u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e10\u003c/span\u003e\u003c/sup\u003e, coffee is the backbone of the economy. The crop accounts for more than one-third (34%) of the nation\u0026rsquo;s total export earnings\u003csup\u003e\u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e11\u003c/span\u003e\u003c/sup\u003e. More than 15\u0026nbsp;million people, 70% of the labor force, including women and girls\u003csup\u003e\u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e12\u003c/span\u003e\u003c/sup\u003e, rely upon the sector for their livelihoods\u003csup\u003e\u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e13\u003c/span\u003e\u003c/sup\u003e. Beyond this, Ethiopia is the main storehouse of genetic diversity of \u003cem\u003eCoffee arabica\u003c/em\u003e\u003csup\u003e\u003cspan citationid=\"CR14\" class=\"CitationRef\"\u003e14\u003c/span\u003e\u003c/sup\u003e, and its farming systems, especially its forest and semi-forest systems, provide protection for biodiversity as well as other environmental benefits\u003csup\u003e\u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e15\u003c/span\u003e,\u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e16\u003c/span\u003e\u003c/sup\u003e. Overall, coffee is critically important for addressing food security and secure income for millions of smallholders\u003csup\u003e\u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e17\u003c/span\u003e\u003c/sup\u003e and lies at the intersection of multiple social, economic, and environmental issues.\u003c/p\u003e \u003cp\u003eSub-Saharan Africa is facing the reality of unprecedented climate variability, underscoring the critical need for agricultural adaptation across the region. Because of climate change, agricultural productivity per capita has already decreased by around 35% in Africa -including coffee crops- since the 1960s, the highest value compared to other global regions\u003csup\u003e\u003cspan citationid=\"CR18\" class=\"CitationRef\"\u003e18\u003c/span\u003e\u003c/sup\u003e. \u003cem\u003eCoffee arabica\u003c/em\u003e, which accounts for 70% of the global coffee market share and is globally recognized by its superior quality profile compared with \u003cem\u003eCoffea canephora\u003c/em\u003e, (popularly known as robusta), is particularly sensitive to temperature and precipitation changes, which reduce its growth, flowering, and fruiting, and make it more susceptible to coffee pests and diseases\u003csup\u003e\u003cspan additionalcitationids=\"CR20 CR21\" citationid=\"CR19\" class=\"CitationRef\"\u003e19\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e22\u003c/span\u003e\u003c/sup\u003e. As such, increasingly erratic precipitation and temperature patterns brought about by climate variability and change\u003csup\u003e\u003cspan additionalcitationids=\"CR24\" citationid=\"CR23\" class=\"CitationRef\"\u003e23\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR25\" class=\"CitationRef\"\u003e25\u003c/span\u003e\u003c/sup\u003e threaten not only the production of coffee but also the broad diversity of flavor profiles that give rise to its quality\u003csup\u003e\u003cspan additionalcitationids=\"CR27\" citationid=\"CR26\" class=\"CitationRef\"\u003e26\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e28\u003c/span\u003e\u003c/sup\u003e and are ultimately tied to its price and farmers\u0026rsquo; incomes\u003csup\u003e\u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e15\u003c/span\u003e\u003c/sup\u003e. Although there is the potential to increase the area where coffee can be grown via relocation and expansion due to climate change, recent projections show an overall negative influence on coffee due to climate change\u003csup\u003e\u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e10\u003c/span\u003e\u003c/sup\u003e. In the long term, Ethiopia\u0026rsquo;s current suitable coffee-growing regions could decrease by an estimated 39\u0026ndash;59%, even in the most conservative emissions scenarios\u003csup\u003e\u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e10\u003c/span\u003e\u003c/sup\u003e, with wild Arabica populations facing a potential near-total loss of suitable bioclimatic space\u003csup\u003e\u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e20\u003c/span\u003e\u003c/sup\u003e. Meanwhile, in the shorter term, impacts are already being felt as farmers in the coffee-growing regions of southwest Ethiopia report that the duration of the rainy season has declined by 50%, from 9 to 5.5 months, coinciding with increasing temperatures\u003csup\u003e\u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e29\u003c/span\u003e\u003c/sup\u003e. Regional studies support these perceptions as they indicate high variability in rainfall trends across Ethiopia. Some reports suggest a decline in rainy season duration\u003csup\u003e\u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e30\u003c/span\u003e\u003c/sup\u003e, while others emphasize that total annual rainfall has not significantly declined in all areas but has become increasingly erratic, with shifts in seasonality impacting rainfall distribution and reliability\u003csup\u003e\u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e31\u003c/span\u003e\u003c/sup\u003e. Given the significance of seasonal predictability for agricultural decision-making, along with the unpredictable changes and varying perceptions of impact by farmers, community-reported observations offer insight into how farmers experience and respond to climate stress in practice.\u003c/p\u003e \u003cp\u003eIn pursuit of advancing climate services that are at once useful, usable, and used for Ethiopia\u0026rsquo;s coffee sector for sustaining income in the face of climate variability and change, it is necessary to understand the real and not just perceived climate information needs of coffee farmers, the economic costs of climate on their production systems, and the viability of specific strategies that can support climate adaptation\u003csup\u003e\u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e32\u003c/span\u003e\u003c/sup\u003e. However, research to date has focused predominantly on the climate modelling and agro-ecology of the coffee crop\u003csup\u003e\u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e20\u003c/span\u003e,\u003cspan citationid=\"CR21\" class=\"CitationRef\"\u003e21\u003c/span\u003e,\u003cspan citationid=\"CR33\" class=\"CitationRef\"\u003e33\u003c/span\u003e,\u003cspan citationid=\"CR34\" class=\"CitationRef\"\u003e34\u003c/span\u003e\u003c/sup\u003e or asymmetries of power in the international coffee market\u003csup\u003e\u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e13\u003c/span\u003e,\u003cspan additionalcitationids=\"CR36 CR37\" citationid=\"CR35\" class=\"CitationRef\"\u003e35\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e38\u003c/span\u003e\u003c/sup\u003e, generally neglecting the more nuanced, localized and field-based assessments of the social and economic dynamics\u003csup\u003e\u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e39\u003c/span\u003e\u003c/sup\u003e needed to meaningfully inform climate services at the farm level. To address this gap, we gathered farm-level information and quantified how smallholder Ethiopian coffee farmers perceive and respond to higher temperatures by analyzing the direct costs of adaptation, including additional labor, materials and equipment. This analysis estimates the capacity of farmers to cope with and adapt to higher temperatures based on profitability and real costs of adaptation, including the costs of shade-grown coffee maintenance and establishment, and to quantify prices and productivity improvements required to support the extra costs associated with adaptation. In doing so, we assessed whether a price premium could offset these costs. By directly linking adaptation responses to economic impacts, this study highlights how adaptation decisions influence farm finances and underscores the value of cost-based advisory tools that help farmers translate climate variability into financial decision-making.\u003c/p\u003e \u003cp\u003eDespite the exigency of addressing the climate threat in Ethiopia\u0026rsquo;s coffee sector, there is a lack of actionable, tailored advisories at the farm level for sustaining income in the context of an uncertain climate. In particular, while about half of all interventions targeting Ethiopia\u0026rsquo;s coffee sector address climate in some way, a 2020 landscape analysis of the sector revealed that less than 6% of these interventions work to promote climate adaptation through the provision of climate services to inform decision-making at the farm level\u003csup\u003e\u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e40\u003c/span\u003e\u003c/sup\u003e. In other words, there is an unmet need for climate information on shorter time and spatial scales that can pragmatically inform and be integrated with specific decision-making processes and strategies for adaptation\u003csup\u003e\u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e29\u003c/span\u003e,\u003cspan citationid=\"CR41\" class=\"CitationRef\"\u003e41\u003c/span\u003e\u003c/sup\u003e. Climate scenarios that project conditions 50 or 100 years in the future, while valuable for understanding longer-term climate change, are misaligned with the shorter-term needs of coffee farmers and the network of agricultural extensions and other agents who support them, which are deeply impacted by shorter-term climate variability. In addition to assessing real costs of adapatation, we examine the types of climate information that smallholder coffee farmers currently use and the channels through which they receive this information. This analysis aims to inform future interventions and climate services tailored to the sector. The findings offer policymakers, agricultural extension officers, and industry stakeholders a framework for supporting smallholder farmers\u0026rsquo; adaptation in actionable and financially viable ways.\u003c/p\u003e"},{"header":"2. Results","content":"\u003cp\u003e \u003cb\u003eCharacterization of the coffee production system, climate risk and real costs\u003c/b\u003e \u003c/p\u003e \u003cp\u003eThe average farm size and productivity for the 202 Ethiopian farmers we surveyed were 4.5 hectares and 1,340 pounds of clean coffee per hectare, respectively, with around 3,000 coffee trees planted per hectare. Around 80% of participants processed and sold their coffee dried and stored it in their homes before selling. Around 66% of participants totally or partially sold their coffee to a farmers\u0026rsquo; union or cooperative. Other significant buyers include traders and direct clients at local markets. About 75% of farmers were part of a farmer\u0026rsquo;s cooperative union and interacted with the cooperative either biannually (24%), annually (13%), or monthly (11%). In addition, all farms were classified as organic. Around 59% of farmers used fertilizers (compost) while the other 41% did not. About half of the respondents were 31 to 45 years old and had 15 or more years of experience working with coffee, making them well positioned to identify shifts in production patterns.\u003c/p\u003e \u003cp\u003eThe most popular farm type, which accounted for 40% of the participants, was the plantation. While farmers self-identified their farms as plantations based on their intensive management practices, their average farm size (4.5 ha) falls below the threshold typically used in literature which define plantations as intensively managed plots generally larger than 50 ha\u003csup\u003e\u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e15\u003c/span\u003e\u003c/sup\u003e. Most farmers (76%) self-reported having between 40\u0026ndash;60% shade coverage on their farms, while only 3% reported having less than 10% shade. The average number of shade trees reported per hectare was 80, and the most popular species of shade trees were locally known as \u0026ldquo;Wanza\u0026rdquo; (\u003cem\u003eCordia africana\u003c/em\u003e) and \u0026ldquo;Berbera\u0026rdquo; (\u003cem\u003eMillettia ferruginea\u003c/em\u003e) (Supp. Figure\u0026nbsp;1).\u003c/p\u003e \u003cp\u003eFarmers\u0026rsquo; reported that delayed rain onset and high temperatures had the top negative impact on their coffee farms (Fig.\u0026nbsp;1a). For the delayed rain, the three most common specific impacts on their coffee trees were flower abortion (71%), soil drying (55%), and drying of trees (55%). For perceived high temperatures, the top three impacts from the farmers\u0026rsquo; perspective were poorer yields (58%), poorer quality (47%), and soil drying (44%). In fact, 68% of farmers confirmed that high temperatures negatively affected their coffee production. The terms \u0026ldquo;soil drying\u0026rdquo; and \u0026ldquo;drying of trees\u0026rdquo; were used in the survey to reflect the language farmers use to describe the effects of climate stressors on their crops. While these are not technical terms typically used in scientific literature, they align with how farmers perceive and articulate the impact of delayed rain and higher temperatures on their coffee plants. Our focus on higher temperatures stems from the fact that many adaptation practices, such as shade management, are already in use and within farmers' existing means. Moreover, in the last production year (2021), 73% of farmers said the temperatures were above usual but not extreme, and only 24% said the temperature was usual or typical for their farm. Participants reported that higher temperatures affected their coffee production the most in January, February, and March.\u003c/p\u003e \u003cp\u003eRegarding farmers' access to climate and weather information (Fig.\u0026nbsp;1b), most farmers obtain this information from the radio, regular face-to-face extensionist services, and/or Kebele or Woreda (district) postings. Most farmers at least used current climate (60%) and forecasted climate (56%) information. A small percentage of farmers (11%) also used historical climate data.\u003c/p\u003e\u003cp\u003eFinally, a structured cost benchmark was necessary to quantify the economic impacts of higher temperatures more precisely. A useful comparison emerged with smallholder coffee farmers in Chiapas, Mexico, who share key structural similarities with Ethiopian coffee farmers such as reported farm size, plant density, average productivity, and organic production farming systems.\u003csup\u003e\u003cspan citationid=\"CR42\" class=\"CitationRef\"\u003e42\u003c/span\u003e\u003c/sup\u003e. The daily wage for Ethiopian farmers when adjusting Ethiopian daily payments in local currency by purchasing power parity (PPP) conversion factor (to eliminate the differences in price levels) was almost the same as the daily wage for farmers in Mexico, 5.22 and 5.11 USD respectively (Supp. Note and Supp. Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e). Comparable wages and the additional similarities in the production systems support our assumption of equivalent factors\u0026rsquo; productivity, factors\u0026rsquo; remuneration, and cost structures in both cases. As explained in the Supplementary Information, we used the detailed cost framework and distribution established for the Mexican smallholder coffee farmers as the cost benchmark for Ethiopia. Then we used cost analysis to drill down into the specific factors affected by climate variables.\u003c/p\u003e \u003cp\u003e \u003cb\u003eThe real costs of higher temperatures\u003c/b\u003e \u003c/p\u003e \u003cp\u003eMany of the farmers interviewed experienced increased costs and labor due to the measures they took to cope with perceived higher temperatures. Consequently, we focused on translating these adaptation efforts to perceived temperature changes to real costs and on understanding the economic implications of specific adaptation strategies already implemented by farmers, particularly regarding shade-grown coffee. We focused the real cost analysis on the subgroup of farmers that self-reported that high temperatures affect coffee production and that experienced higher than usual temperatures during the last production year (66% of total surveyed farmers). Figure\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003e shows the additional hours, materials, and equipment that this subgroup of farmers reported needing on average to manage the impacts of perceived higher temperatures during specific activities. Harvesting and nursery management were the two most frequently affected activities by higher temperatures. Maintaining optimal growing conditions under perceived higher temperatures required additional shade coverage and more frequent maintenance. Harvesting under higher-than-normal temperatures required, on average, an extra five days of labor (Fig.\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003ea), eight dollars for additional materials (Fig.\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003eb), and an extra five dollars on equipment per hectare per year (Fig.\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003ec). The highest needs for labor, however, were associated with establishment and shade regulation activities that required 10 to 30 extra days for cutting down trees, establishing shade tree seedlings, and pruning of coffee trees and seedbeds (Fig.\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003ed). The box sizes in each quadrant of Fig.\u0026nbsp;\u003cspan refid=\"Fig1\" class=\"InternalRef\"\u003e2\u003c/span\u003e are directly proportional to how many farmers reported that extra cost.\u003c/p\u003e \u003cp\u003e \u003c/p\u003e \u003cp\u003eFarmers observed that coffee flowering and cherry development were the two stages most affected during periods of perceived higher temperatures, with 57% and 36% of farmers respectively, reporting noticeable changes consistent with previous literature reports\u003csup\u003e\u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e43\u003c/span\u003e\u003c/sup\u003e. Around 70% of farmers said there was a slight reduction in coffee flowering, while 87% reported a slight loss in cherry development. Farmers reported that vegetative growth, seedling establishment, and nursery seed germination were affected by higher temperatures, with 32%, 10%, and 9% of farmers reporting an effect respectively. Most farmers reported observing a slight loss in vegetative growth and seedlings during periods of higher temperature. However, 47% of farmers reported that higher temperatures lead to a slight gain during nursery seed germination, while 37% reported a slight loss. Considering these effects during the establishment and maintenance phases, temperatures reported by farmers that were above average but not extreme, and the most probable baseline scenarios suggested by the literature\u003csup\u003e\u003cspan additionalcitationids=\"CR44\" citationid=\"CR43\" class=\"CitationRef\"\u003e43\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e45\u003c/span\u003e\u003c/sup\u003e, we estimated a net productivity reduction of 4% due to higher temperatures in our sample of farmers.\u003c/p\u003e \u003cp\u003e \u003cb\u003eThe Climate Premium: Integrating higher temperatures into a general profitability assessment\u003c/b\u003e \u003c/p\u003e \u003cp\u003eAfter incorporating the real costs of responding to perceived higher temperatures into the most specific cost structure (Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e), we found that higher temperatures increased the total costs of coffee production by around 23% during the establishment stage (from USD 709 to 871) and 50% during maintenance stage (from USD 840 to 1,252 on average). Total costs rose mainly due to the increase of variable costs that almost doubled because of additional labor and materials requirements. Specific costs impact on labor, materials, and equipment are summarized in Supplementary Table\u0026nbsp;2.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab1\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eGeneral Costs Structure. Baseline Vs. Higher temperatures (HT)\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"11\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c7\" colnum=\"7\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c8\" colnum=\"8\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c9\" colnum=\"9\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c10\" colnum=\"10\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c11\" colnum=\"11\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eVariable, Fixed and Total Costs\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003eEstablishment\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"8\" nameend=\"c11\" namest=\"c4\"\u003e \u003cp\u003eMaintenance\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003eBaseline HT\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c5\" namest=\"c4\"\u003e \u003cp\u003e\u003cb\u003eYoung trees\u003c/b\u003e\u003c/p\u003e \u003cp\u003eBaseline HT\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c7\" namest=\"c6\"\u003e \u003cp\u003e\u003cb\u003eMature trees\u003c/b\u003e\u003c/p\u003e \u003cp\u003eBaseline HT\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c9\" namest=\"c8\"\u003e \u003cp\u003e\u003cb\u003eOld trees\u003c/b\u003e\u003c/p\u003e \u003cp\u003eBaseline HT\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c11\" namest=\"c10\"\u003e \u003cp\u003e\u003cb\u003eAverage\u003c/b\u003e\u003c/p\u003e \u003cp\u003eBaseline HT\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eVariable Costs (USD/ha)\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eGerminator\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e63.51\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e130.47\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eNursery\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e326.01\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e426.02\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLand Preparation\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e307.09\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e369.65\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eVegetative Growth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e193.68\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e260.68\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eMaintenance, fertilization, and pest control\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e205.33\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e511.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e179.96\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e463.88\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e176.58\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e489.22\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e186.24\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e484.84\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eHarvest\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e25.95\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e31.33\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e78.82\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e91.87\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e122.78\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e147.42\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e76.27\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e90.44\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eProcessing\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e28.53\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e28.53\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e61.82\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e61.82\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e77.92\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e77.92\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e56.91\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e56.91\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cem\u003ePartial Variable Costs (PVC)\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cem\u003e890.30\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cem\u003e1,186\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cem\u003e259.80\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cem\u003e571.75\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cem\u003e320.60\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cem\u003e617.57\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cem\u003e377.28\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cem\u003e714.57\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cem\u003e319.43\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cem\u003e632.19\u003c/em\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eOverhead \u0026amp; Interests (10% \u003cem\u003ePVC\u003c/em\u003e)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e89.03\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e118.68\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e25.98\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e57.18\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e32.06\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e61.76\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e37.73\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e71.46\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e31.94\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e63.22\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTotal Variable Cost\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e979.33\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e1,305\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e285.78\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e628.93\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e352.66\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e679.33\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e415.01\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e786.02\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e351.37\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e695.41\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eFixed Costs (USD/hectare)\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cspan type=\"BoldItalicUnderline\" class=\"BoldItalicUnderline\" name=\"Emphasis\"\u003eTotal Cost of loans, certifications, memberships\u003c/span\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e117.46\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e117.46\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e39.00\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eFees\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e39.47\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e39.47\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c10\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e\u0026nbsp;\u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eCooperative Loans\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e55.77\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e55.77\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e27.89\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eBank Loans\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e22.22\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e22.22\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e11.11\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cspan type=\"BoldItalicUnderline\" class=\"BoldItalicUnderline\" name=\"Emphasis\"\u003eTotal Depreciation Costs\u003c/span\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e69.34\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e97.39\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e237.05\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e266.89\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e237.05\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e266.89\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e237.05\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e266.89\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e237.05\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e266.89\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eDepreciation of tools\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e69.34\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e97.39\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e69.34\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e97.39\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e69.34\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e97.39\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e69.34\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e97.39\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e69.34\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e97.39\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eDepreciation of processing equipment\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e63.57\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eDepreciation of other equipment and materials\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e\u0026nbsp;\u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e104.15\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e105.94\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e104.15\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e105.94\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e104.15\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e105.94\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e104.15\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e105.94\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cspan type=\"BoldItalicUnderline\" class=\"BoldItalicUnderline\" name=\"Emphasis\"\u003eTotal Interest/Opportunity Cost (4%)\u003c/span\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e61.23\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e126.16\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e122.45\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e126.16\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e122.45\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e126.16\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e122.45\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e126.16\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e122.45\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e126.16\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLand\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e12.78\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e25.57\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eEquipment\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e48.44\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e100.59\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e96.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e100.59\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e96.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e100.59\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e96.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e100.59\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e96.89\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e100.59\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cspan type=\"BoldItalicUnderline\" class=\"BoldItalicUnderline\" name=\"Emphasis\"\u003eTotal Other Fixed Costs\u003c/span\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e62.88\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e66.57\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e82.14\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e116.53\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e88.85\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e121.59\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e95.09\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e132.28\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e88.72\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e123.20\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eMiscellaneous Supplies (10% of variable costs)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e10.68\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e28.74\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e28.64\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e63.04\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e35.35\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e68.09\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e41.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e78.78\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e35.22\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e69.70\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eLand Taxes\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e1.30\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e2.60\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003eManagement Cost\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e50.90\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTotal Fixed Costs\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e252.17\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e285.77\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e480.64\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e548.58\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e487.35\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e553.64\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e493.60\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e564.33\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e487.22\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e555.25\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTOTAL COSTS\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e\u003cb\u003e709.61\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cb\u003e871.51\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e\u003cb\u003e767.07\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e1,179\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e840.81\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cb\u003e1,235\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e909.55\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cb\u003e1,352\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c10\"\u003e \u003cp\u003e\u003cb\u003e839.38\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c11\"\u003e \u003cp\u003e\u003cb\u003e1,252\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eAmounts in 2021 US dollars at an average exchange rate of 51.15 Birr/USD. All factors\u0026rsquo; costs (labor, materials, and equipment) were reported in Ethiopian currency (Birr) and converted to USD using the Ethiopian 2021 PPP rate for estimation purposes. We assume that overhead and short-term interests represent 10% of partial variable costs, which in turn are the sum of germinator, nursery, land preparation, vegetative growth maintenance, and harvesting and processing variable costs (depending on the specific phase and stage of production). We assume a 4% opportunity cost of land. However, this could change if the price of land per hectare changes due to persistent climate risk.\u003c/p\u003e \u003cp\u003eBy factoring in depreciation, reinvestment, and opportunity costs on top of variable and fixed costs, our analytical framework offers a guide for determining whether a farm is profitable over time. Specifically, four breakeven points define a degree of profitability over time. If the price that farmers receive is below the first breakeven point (variable cost/productivity), then coffee is uneconomical to produce. The additional labor and material costs incurred due to farmers\u0026rsquo; adaptation efforts in response to perceived higher temperatures increased this first break-even point from 0.26 to 0.54 USD per pound (Table\u0026nbsp;\u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e). The second breakeven point, total cash costs, adds fees, taxes, and miscellaneous supplies to the variable costs. Producers should be able to cover cash costs to stay in business in the short term. Because adaptation activities required higher variable costs, this breakeven was also duplicated. The third breakeven point, out-of-pocket costs, incorporates depreciation costs, and it should be covered to stay in business in the long run. This third breakeven point increased from 0.4 to 0.72 USD per pound. Finally, the farmers recover all out-of-pocket expenses plus opportunity costs when the four breakeven points are covered\u0026mdash;the total cost breakeven return. The additonal expenditures required to maintain productivity in response to perceived higher temperatures increased the total cost breakeven return to 0.87 USD per pound.\u003c/p\u003e \u003cp\u003eThe sensitivity analysis (Table\u0026nbsp;\u003cspan refid=\"Tab3\" class=\"InternalRef\"\u003e3\u003c/span\u003e) reflects the estimated net returns for coffee (USD/ha) at different prices and yields. Our economic analysis incorporates all capital and labor opportunity costs and assumes a competitive market; for that reason, the net return should be zero in equilibrium. At the baseline productivity level (1351 lb/ha), the price that covered the total cost was 0.52 USD per pound. In contrast, the equilibrium price was 0.87 USD under the scenario where farmers adapted to perceived temperature increase. It means there was a 35 USD cents difference in the equilibrium price between baseline and higher temperatures scenarios. This differential might serve as a climate premium reference. Parallel, to cover total costs in a higher temperature scenario and keep the current price constant (0.4 USD per pound), it would be required to duplicate productivity levels from 1300 lb/ha to 2800 lb/ha.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab2\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eBreakeven points during Maintenance Stage\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"6\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"char\" char=\".\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c3\" namest=\"c2\"\u003e \u003cp\u003eBaseline\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"2\" nameend=\"c5\" namest=\"c4\"\u003e \u003cp\u003eHigher Temperatures\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eBreakeven implications\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e\u0026nbsp;\u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eProduction cost (USD/ha.)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eBreakeven (USD/pound)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003eProduction cost (USD/ha.)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003eBreakeven (USD/pound)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTotal Variable Costs\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e352\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.26\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e697\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.54\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eIf the return is below this level, coffee is uneconomical to produce.\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTotal Cash Costs\u0026thinsp;=\u003c/b\u003e\u0026thinsp;Total Variable Costs\u0026thinsp;+\u0026thinsp;Membership \u0026amp; Certification Costs\u0026thinsp;+\u0026thinsp;Taxes on Land\u0026thinsp;+\u0026thinsp;Miscellaneous Supplies\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e358\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.27\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e711\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.55\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eThe second breakeven return allows the producer to stay in business in the short run.\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eOut of Pocket Costs\u0026thinsp;=\u003c/b\u003e\u0026thinsp;Total Cash Costs\u0026thinsp;+\u0026thinsp;Depreciation Costs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e546\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.40\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e923\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.72\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eThe third breakeven allows the producer to stay in business in the long run.\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003eTotal Costs\u003c/b\u003e\u0026thinsp;=\u0026thinsp;Out of Pocket Costs\u0026thinsp;+\u0026thinsp;Amortized Establishment Costs\u0026thinsp;+\u0026thinsp;Management Costs\u0026thinsp;+\u0026thinsp;Opportunity Costs\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c2\"\u003e \u003cp\u003e702\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c3\"\u003e \u003cp\u003e0.52\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c4\"\u003e \u003cp\u003e1123\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"char\" char=\".\" colname=\"c5\"\u003e \u003cp\u003e0.87\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003eThe fourth breakeven return is the total cost breakeven return. Only when this breakeven return is received can the grower recover all out-of-pocket expenses plus opportunity costs.\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eWhen estimating the average breakeven costs per hectare during the maintenance stage, we adjusted significant investments such as de-pulping machines and vehicles by the median farm size. In that way, significant expenses do not overestimate breakeven points. Total cash costs include other indirect costs, such as average loans and transfers from/to the cooperative or similar lenders and borrowers. These adjustments explain the total cost differences between breakeven estimations and total costs per hectare (Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e).\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab3\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eSensitivity Analysis. Net profits based on coffee price (USD/lb) and productivity (lb/ha)\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"9\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c4\" colnum=\"4\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c5\" colnum=\"5\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c6\" colnum=\"6\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c7\" colnum=\"7\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c8\" colnum=\"8\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c9\" colnum=\"9\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\" morerows=\"1\" rowspan=\"2\"\u003e \u003cp\u003eProductivity (lb/ha)\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colspan=\"8\" nameend=\"c9\" namest=\"c2\"\u003e \u003cp\u003eCoffee Price (USD/lb)\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.29\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.32\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c4\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.36\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.40\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c6\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.52\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c7\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.60\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c8\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 0.87\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c9\"\u003e \u003cp\u003e\u003cspan\u003e$\u003c/span\u003e 1.60\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003ctr\u003e \u003cth align=\"left\" colspan=\"9\" nameend=\"c9\" namest=\"c1\"\u003e \u003cp\u003ea. Baseline\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e692\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-500\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-478\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-453\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-425\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-343\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-287\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e-103\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e405\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e865\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-450\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-422\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-391\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-356\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-253\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-183\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e46\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e682\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1081\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-387\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-352\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-313\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-270\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-140\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-53\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e233\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e1028\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1351\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-308\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-264\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-216\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e-162\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e\u003cb\u003e0\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e109\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e467\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e1460\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1622\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-229\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-177\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-118\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-53\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e140\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e271\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e701\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e1892\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1754\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-191\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-134\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-71\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e0\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e209\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e350\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e816\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e2104\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e2105\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-88\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-20\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e56\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e140\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e392\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e561\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e1119\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e2666\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colspan=\"9\" nameend=\"c9\" namest=\"c1\"\u003e \u003cp\u003eb. \u003cb\u003eHigher Temperatures\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e664\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-929\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-907\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-883\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-857\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-777\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-724\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e-548\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e-60\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e830\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-880\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-854\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-824\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-790\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-691\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-624\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e-404\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e206\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1038\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-820\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-786\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-749\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-707\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-583\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-500\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e-225\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e538\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1297\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-744\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-702\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-656\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e-604\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-449\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e-344\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e\u003cb\u003e0\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e953\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e1946\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-555\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-492\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-422\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e-344\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e-112\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e45\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e561\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e1991\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e2807\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-304\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-213\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e-112\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e\u003cb\u003e0\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e336\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e562\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e1307\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e3369\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\"\u003e \u003cp\u003e\u003cb\u003e3368\u003c/b\u003e\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\"\u003e \u003cp\u003e-140\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003e-31\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c4\"\u003e \u003cp\u003e90\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c5\"\u003e \u003cp\u003e225\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c6\"\u003e \u003cp\u003e628\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c7\"\u003e \u003cp\u003e898\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c8\"\u003e \u003cp\u003e1792\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c9\"\u003e \u003cp\u003e4267\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eA minimum price of \u003cspan\u003e$\u003c/span\u003e0.52 USD should be required to cover the total costs under the baseline productivity (1,351 lb/ha). In this same baseline scenario (a), if smallholders receive a price of \u003cspan\u003e$\u003c/span\u003e0.4 USD per pound, a 30% productivity increase (1,754 lb/ha) should be required to achieve equilibrium. The higher temperature scenario (b) increases costs and reduces productivity (1,297 lb/ha) and it requires a minimum price of \u003cspan\u003e$\u003c/span\u003e0.87 USD per pound to achieve equilibrium.\u003c/p\u003e"},{"header":"3. Discussion: Economic Costs and the Role of Climate Premiums in Coffee Farming","content":"\u003cp\u003eFieldwork interviews with agricultural officers Dilla and Wensho \u003cem\u003eworedas\u003c/em\u003e in 2019 suggested that at the primary central market, the price of coffee was around 11.79 Birr or 0.40 USD per pound (at an exchange rate of 29 Birr/USD in 2019). These officers provided this estimate based on their extensive field interactions and maintained engagement across the coffee value chain. While individual farmgate prices vary due to cooperative membership, trader negotiations, and local market conditions, this price serves as a woreda-level benchmark. Consequently, under the baseline conditions, coffee in Ethiopia might be economically profitable only in the short term, barely covering out-of-pocket costs (which we estimated at 0.40 USD per pound). This result is common for coffee farmers in other producer countries\u003csup\u003e\u003cspan citationid=\"CR42\" class=\"CitationRef\"\u003e42\u003c/span\u003e,\u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e46\u003c/span\u003e,\u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e47\u003c/span\u003e\u003c/sup\u003e. However, when the higher temperature costs are incorporated, coffee is uneconomical to produce as the first breakeven point (0.54 USD variable costs per pound) is above the price, and coffee production is not profitable anymore. Although the coffee prices might experience significant variation depending on coffee quality and the business model behind coffee commercialization (i.e., direct trade)\u003csup\u003e\u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e48\u003c/span\u003e\u003c/sup\u003e, it is clear that a higher price\u0026mdash;or productivity improvements\u0026mdash;might be required to make coffee production profitable after response to increased temperatures. Productivity may be increased through practices such as improving farmer access to climate information services (CIS) and implementing climate-smart agriculture (CSA) practices\u003csup\u003e\u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e49\u003c/span\u003e\u003c/sup\u003e.\u003c/p\u003e \u003cp\u003eRarely do smallholders have the resources needed to invest in physical capital and technology and improve long-term productivity\u003csup\u003e\u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e50\u003c/span\u003e,\u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e51\u003c/span\u003e\u003c/sup\u003e. Instead, a climate price premium might be an immediate market instrument to support the farmers. Our static analysis that compares a baseline coffee production system to cost shifts after perceived temperature increase suggests that a 0.35 USD farmgate price premium would offset the increased cost of adaptation and contribute to keeping coffee activity profitable. This estimate is based on the observed rise in labor, materials, and adaptation-related expenses (Table\u0026nbsp;\u003cspan refid=\"Tab1\" class=\"InternalRef\"\u003e1\u003c/span\u003e) and the corresponding increase in breakeven price from 0.52 USD per pound under baseline conditions to 0.87 USD per pound under high-temperature conditions (Table\u0026nbsp;\u003cspan refid=\"Tab2\" class=\"InternalRef\"\u003e2\u003c/span\u003e). The 0.35 USD premium reflects the additional revenue required to prevent financial losses for farmers adapting to higher temperatures. Our detailed quantifications at the farm level support new \u0026ldquo;climate-adaptation premiums\u0026rdquo; that can be paid to coffee farmers and their organizations in the same way that traditional voluntary sustainability standards such as Fair Trade, Organic, or Smithsonian Bird Friendly recognize and certify premiums associated with social responsibility or conservation initiatives. Moreover, farmers' limitations to adapt compromise the whole industry, as smallholders supply 80% of coffee\u003csup\u003e\u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e52\u003c/span\u003e\u003c/sup\u003e. There is a clear value and need to support smallholders' climate adaptation efforts and extra costs on a demand-driven model led by importers and roasters.\u003c/p\u003e \u003cp\u003eIn the specific case of Ethiopia, organizations like Fair Trade in Africa, which sources from farmers, could be partners for offsetting price premiums. At the same time, development actors like Technoserve, GIZ, and Ethiopian Coffee Forest Forum could serve as vigorous advocates for climate premiums or provide technical assistance and capacity development for coffee farmers to adapt to an increasingly erratic climate. Meanwhile, the Ethiopian Coffee and Tea Authority (ECTA), re-established in 2016 and mandated to support, guide, protect, and empower the development of Ethiopia\u0026rsquo;s coffee industry\u003csup\u003e\u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e53\u003c/span\u003e\u003c/sup\u003e, recently released a comprehensive strategy for the country\u0026rsquo;s coffee sector underscoring climate resilience\u003csup\u003e\u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e54\u003c/span\u003e\u003c/sup\u003e. ECTA could be an influential broker to correct climate price distortions and advance market instruments that acknowledge climate costs.\u003c/p\u003e \u003cp\u003eIt's important to note that the price that buyers pay exporters when coffee is ready to be shipped out (FOB price) is not the same price that individual farmers receive for their coffee\u0026mdash;that would be the farmgate price. Uncovering farmgate prices is complicated because pinpointing each farmer's exact amount is difficult, and the conversation in the industry around farmgate pricing is still developing\u003csup\u003e\u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e47\u003c/span\u003e\u003c/sup\u003e. However, most farmers worldwide get paid twice: first, when they sell their coffee at the exchange points and again after the coffee is cupped. The second payment includes differentials, quality premiums, and other associated certification premiums. Reputable cooperatives and producer organizations will honor the second payment fairly and transparently, but it's not uncommon for less scrupulous buyers to pocket the extra cash\u003csup\u003e\u003cspan citationid=\"CR55\" class=\"CitationRef\"\u003e55\u003c/span\u003e\u003c/sup\u003e. Fairtrade premium is 0.20 USD, and organic premium recently increased from 0.30 USD to 0.40 USD. Those premiums are not far from the 0.35 USD climate premium we estimated and demonstrate that premium-based models are already in place to incentivize sustainable practices. However, these premiums are not designed to account for the direct economic burden of climate adaptation on farmers, a gap that climate premiums can fill and repurpuse. When implemented, climate premiums must go hand-in-hand with transparent and traceable communication systems to effectively monitor and track climate price premiums based on farmers\u0026rsquo; specific needs and investment possibilities. Many Ethiopian coffee farmers grow their coffee under shade, and our sample reflected that more than 70% of farmers reported shade levels around optimal levels of 40\u0026ndash;60%\u003csup\u003e16\u003c/sup\u003e. Shade-grown coffee under a forest-like canopy of trees is one of the most common and at-hand adaptation strategies to confront higher temperatures\u003csup\u003e\u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e16\u003c/span\u003e,\u003cspan citationid=\"CR56\" class=\"CitationRef\"\u003e56\u003c/span\u003e\u003c/sup\u003e. The presence of trees with coffee reduces sun-light radiation, soil temperature, total evapotranspiration, and wind movement\u003csup\u003e\u003cspan citationid=\"CR43\" class=\"CitationRef\"\u003e43\u003c/span\u003e,\u003cspan additionalcitationids=\"CR58\" citationid=\"CR57\" class=\"CitationRef\"\u003e57\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR59\" class=\"CitationRef\"\u003e59\u003c/span\u003e\u003c/sup\u003e, alleviating the negative impact of higher temperatures on coffee flowering, cherry development, yields, and quality. Besides, shade-grown coffee offers additional benefits such as providing food and other products of economic value, enhanced taste, carbon sequestration, natural pest control, improved pollination, and increased quality of coffee beans, which may be associated with quality-related price premiums\u003csup\u003e\u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e16\u003c/span\u003e,\u003cspan citationid=\"CR60\" class=\"CitationRef\"\u003e60\u003c/span\u003e\u003c/sup\u003e.\u003c/p\u003e \u003cp\u003eDespite the longer-term benefits of shade, our research also reflects that preserving optimal shade levels under higher temperatures involves additional costs for farmers. Notably, new labor requirements for establishment activities include the germinator, nurseries, transplanting, and planting shade trees, in addition to extra days for maintenance activities, such as pruning and cutting down trees. Women and girls, who comprise approximately 70% of Ethiopia\u0026rsquo;s labor force in the coffee sector\u003csup\u003e\u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e12\u003c/span\u003e,\u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e61\u003c/span\u003e\u003c/sup\u003e, will most likely fully contribute to cover those establishment and maintenance costs, although their male counterparts might focus on activities such as cutting down trees and pruning. This gender dimension must be considered in designing, monitoring, and targeting adaptation instruments and climate premiums.\u003c/p\u003e \u003cp\u003e \u003cb\u003eCustomizing Climate Information for Cost-Based Decision-Making\u003c/b\u003e \u003c/p\u003e \u003cp\u003eThe insights gathered from the community and translated into real costs in this manuscript will enhance the integration of economic and profitability assessments with sub-seasonal and seasonal climate modeling. This integration will create more comprehensive representations of the complex interactions among coffee farmers, the environment, and the market, ultimately aiding stakeholders and guiding decision-making. Additionally, customizing and downscaling climate data is essential to increase farmers' use of climate information and models, while also complementing traditional methods of engaging with farmers.\u003c/p\u003e \u003cp\u003eCurrent climate information accessed by farmers\u0026mdash;mainly through radio (60%) and forecasted climate reports (56%)\u0026mdash;provides only raw weather data rather than actionable insights that translate into farm-level decisions. Information provided must be meaningful, translated to daily tasks and decisions that farmers face at the farm level, and communicated in mediums that farmers can easily access. A common and meaningful language for everyone is money. Understanding the costs (or benefits) of specific climate events and shocks facilitates the recognition and translation of extreme events (such as droughts and excess rain) and the economic feasibility of advised adaptation practices. In this context, it is vital to consider cost implications at different time horizons, including short-term opportunity costs for labor (formal and informal) and cost implications for production factors such as land that are fixed in the short and midterm.\u003c/p\u003e \u003cp\u003eA common component in any communication endeavor should have farmer needs and real conditions at the center of the design process\u003csup\u003e\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e\u003c/sup\u003e. This approach includes developing suitable, skills-based, and practical curricula and training for smallholder farmers and other stakeholders to understand and take action to manage climate risks, real costs, and adaptation. A critical component in this process is ensuring that climate information is communicated through trusted, farmer-accessible channels. Communication mediums ought to prioritize radio, regular extension services, and kebele or woreda (district) postings that represent the channels most used by coffee farmers for obtaining climate and weather information (Fig.\u0026nbsp;1b). Additionally, in this study, 30% of farmers reported relying on face-to-face extension services, suggesting a potential opportunity to train and leverage extension officers to bridge the gap between climate data and financial decision-making at the farm level.\u003c/p\u003e \u003cp\u003eCustomization efforts should align with and harness government priorities and policies towards a climate-smart coffee sector. Ethiopia\u0026rsquo;s Climate Smart Agriculture Roadmap for 2020-2030\u003csup\u003e62\u003c/sup\u003e and the National Strategy for Ethiopia\u0026rsquo;s Agricultural Extension System\u003csup\u003e\u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e63\u003c/span\u003e\u003c/sup\u003e, for example, have long-identified location-specific, agro-ecology-based interventions and climate-smart adaptation practices as one of the main systemic bottlenecks for effective adaptation. Yet, Ethiopia\u0026rsquo;s more than 72,000 agricultural agents serving over 16\u0026nbsp;million farmers\u003csup\u003e\u003cspan citationid=\"CR64\" class=\"CitationRef\"\u003e64\u003c/span\u003e\u003c/sup\u003e, including those in coffee-growing regions, have not been supported with practical training materials on how to access and use historical, monitoring, or forecast climate information products such as those freely available through the Ethiopian Meteorological Institute\u003csup\u003e\u003cspan citationid=\"CR65\" class=\"CitationRef\"\u003e65\u003c/span\u003e\u003c/sup\u003e. Investments in equipping farmers with actionable and decision-relevant information underpin Ethiopia\u0026rsquo;s vision to transform the agricultural sector to meet its growth and development goals, including those outlined in the Climate Resilience Green Economy (CRGE) Strategy\u003csup\u003e\u003cspan citationid=\"CR66\" class=\"CitationRef\"\u003e66\u003c/span\u003e\u003c/sup\u003e and 2030 Digital Agricultural Extension and Advisory Services (DAEAS) Roadmap\u003csup\u003e\u003cspan citationid=\"CR67\" class=\"CitationRef\"\u003e67\u003c/span\u003e\u003c/sup\u003e.\u003c/p\u003e"},{"header":"4. Conclusions and Future Directions","content":"\u003cp\u003eMicrodata in climate adaptation are critical for an in-depth understanding of the socio-economic implications of climate events and the feasibility of specific adaptation strategies. We established a methodology to analyze production costs at the farm level and to translate and understand the specific effect of climate events on the smallholder's cost structure. This translated information provides practical insights to the growers and their organizations, helping them understand and consider the economic feasibility of alternative scenarios and adaptation strategies. Moreover, understanding the farm-level cost of coffee and climate provides the industry and policymakers a better picture of the smallholders' businesses, livelihoods, and business viability, improving the effectiveness of market and policy interventions for climate risk. We specifically suggest a 0.35 USD climate premium to support farmers\u0026rsquo; efforts for adaptation and, importantly, shade-grown coffee maintenance in the context of higher temperatures.\u003c/p\u003e \u003cp\u003eThe generation of microdata at the farm level would benefit from innovative ways to scale and incentivize the generation of economic and climate information. Most sub-Saharan African smallholder farmers do not use or are unable to access digital agricultural solutions and tools. A 2019 report found that digital agricultural solutions reach 13% of smallholder farmers in sub-Saharan Africa and access is growing\u003csup\u003e\u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e68\u003c/span\u003e\u003c/sup\u003e. The translation of climate events to costs might serve as the backbone of customized online and digital tools that incentivize and allow individual farmers and stakeholders to adjust their profitability and climate risk estimations according to their parameters and conditions. However, more than using digital tools \u003cem\u003eper se\u003c/em\u003e, we emphasize the need to provide meaningful and understandable information connected to on-farm decisions. Climate information is complex, and understanding how it affects individual farmers is even more complicated, especially if climate information isn\u0026rsquo;t translated or intended for a local audience. The combination of smallholder farmer insights and innovations with economic and ecological tools can help provide context-specific climate adaptation tools while facilitating more sustainable and resilient coffee landscapes that also meet farmers\u0026rsquo; on-the-ground economic needs.\u003c/p\u003e \u003cp\u003eTo simplify the complexity of coffee systems, we suggested a framework that measured coffee farmers' profitability based on real costs and focused on a single climate event\u0026mdash;higher temperatures. It is essential, however, to differentiate between profitability and sustainability. Profitability is necessary to achieve economic sustainability but insufficient to affirm that conditions are sustainable for farmers. Isolated profitability metrics might underestimate social and environmental costs. Moreover, economic sustainability encompasses a broader definition of living and adequate income that, in the long term, might require an increase in physical and human capital endowments for farmers and, consequently, their returns and costs. Future estimations and more complex modeling might incorporate these target remuneration and dynamics. Additionally, they might include metrics of transparency and traceability on the business models, potential mark-ups, quality premiums and differentials, synergistic effects of climate change, and farmers' perceptions and expectations among additional market, climate and commercialization conditions. Furthermore, frontier techniques in crowdsourcing data and complex systems might integrate biophysical interactions with rain, droughts, and other climate events, as well as the market risk and volatility that characterizes coffee markets.\u003c/p\u003e \u003cp\u003eFinally, men were primarily sampled for this study (93%), given their cultural predominance over household financial assets and decision-making in Ethiopia. As women and girls typically do most of the labor on coffee farms (e.g., harvesting, nursery management)\u003csup\u003e\u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e61\u003c/span\u003e\u003c/sup\u003e, future research should recognize the first-hand experience that women and girls can provide, presenting the opportunity for more accurate data and representation of labor hours and implications. Tools and curricula should be expanded to democratize access and support gender inclusion.\u003c/p\u003e"},{"header":"5. Methodology: Translating Climate Events to Climate Costs at the Farm Level","content":"\u003cp\u003eBetween March and April 2022, we surveyed 202 coffee farmers in eight \u003cem\u003eworedas\u003c/em\u003e (districts) of four coffee-growing regions in Ethiopia: Mena and Limmu Kosa in the Oromia region, Gimbo and Decha in the Southwest region, Shebedino and Dale in the Sidama region, and Yirgachefe and Wonago in the Southern Nations, Nationalities, and Peoples' (SNNP) region (Fig.\u0026nbsp;\u003cspan refid=\"Fig2\" class=\"InternalRef\"\u003e3\u003c/span\u003e). We used the information gathered from these field surveys implemented using Kobo Toolbox to translate climate events into specific costs at the farm level. In particular, we analyzed the effects of higher temperature, reported as one of farmers\u0026rsquo; two most relevant climate threats (alongside delayed rain onset), and specific adaptation practices such as shade-grown coffee. ​​ We specifically focused on temperature considerations due to its classification as a top threat by farmers and its connection with a specific adaptation practice (i.e., shade-grown coffee). Once we attributed specific costs in terms of additional labor or capital requirements, we compared this new cost structure with the baseline case to estimate changes in break-even points and quantified the changes in productivity or price required to compensate for higher temperatures and the adaptation strategies (sensitivity analysis).\u003c/p\u003e \u003cp\u003e \u003c/p\u003e \u003cp\u003eIn general, production costs can be divided into variable and fixed costs. Variable costs are those inputs and labor used during a specific production cycle\u0026mdash;or year\u0026mdash;and depend on the amount of coffee produced on that specific cycle (short-term). In contrast, fixed costs must be paid whether coffee is produced or not and encompass annual payments, as well as tools and equipment that can be reused for more than one production cycle and are subject to depreciation costs.\u003c/p\u003e \u003cp\u003eLonger-term costs involve opportunity costs of production factors, such as land, that are fixed in the short and midterm and only become variable in the long term (i.e. selling, renting, or buying land). If a farmer\u0026rsquo;s return is below their variable costs, then coffee is uneconomical to produce at any time. In contrast, if a farmer can pay and cover his or her inputs and labor costs but cannot save and make important investments in equipment and land improvements, they are profitable in the short term but not in the long term.\u003c/p\u003e \u003cp\u003eA major driving force behind implementing the survey in Ethiopia was to better understand how farmer\u0026rsquo;s response to perceived climate shocks affects coffee production costs at different time horizons, including extra labor (i.e. additional hours), additional inputs (e.g. organic fertilizers, pesticides), and equipment. To this end, we separated a subgroup of farmers that self-reported that high temperatures affect their coffee production and experienced above-usual temperatures in the last production year. We then counted how many farmers said they experienced higher costs or required more labor when temperatures were higher than normal and averaged the extra hours or extra money reported for each input and activity across the coffee production cycle, including the establishment and maintenance phases (Table\u0026nbsp;\u003cspan refid=\"Tab4\" class=\"InternalRef\"\u003e4\u003c/span\u003e). Our survey guided the farmer on all the major activities associated with land preparation and planting, vegetative growth, and maintenance and harvest of the established plantation.\u003c/p\u003e \u003cp\u003e \u003cdiv class=\"gridtable\"\u003e\u003ctable float=\"Yes\" id=\"Tab4\" border=\"1\"\u003e \u003ccaption language=\"En\"\u003e \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e \u003cdiv class=\"CaptionContent\"\u003e \u003cp\u003eCoffee Farming Business Cycle and Main Activities\u003c/p\u003e \u003c/div\u003e \u003c/caption\u003e \u003ccolgroup cols=\"3\"\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c1\" colnum=\"1\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c2\" colnum=\"2\"\u003e\u003c/div\u003e \u003cdiv align=\"left\" class=\"colspec\" colname=\"c3\" colnum=\"3\"\u003e\u003c/div\u003e \u003cthead\u003e \u003ctr\u003e \u003cth align=\"left\" colname=\"c1\"\u003e \u003cp\u003ePhase\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c2\"\u003e \u003cp\u003eStage\u003c/p\u003e \u003c/th\u003e \u003cth align=\"left\" colname=\"c3\"\u003e \u003cp\u003eMain Activities\u003c/p\u003e \u003c/th\u003e \u003c/tr\u003e \u003c/thead\u003e \u003ctbody\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\" morerows=\"6\" rowspan=\"7\"\u003e \u003cp\u003eEstablishment\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\" morerows=\"3\" rowspan=\"4\"\u003e \u003cp\u003ePreparation and planting\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eSeeds collection and selection\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eSeedbed \u0026amp; Germinator\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eNursery\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eLand preparation and planting\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c2\" morerows=\"2\" rowspan=\"3\"\u003e \u003cp\u003eVegetative Growth\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eWeeding\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eWatering\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eFertilization\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c1\" morerows=\"4\" rowspan=\"5\"\u003e \u003cp\u003eMaintenance\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c2\" morerows=\"4\" rowspan=\"5\"\u003e \u003cp\u003eEstablished Plantation\u003c/p\u003e \u003cp\u003e(Stages: Young, mature\u003c/p\u003e \u003cp\u003eand old coffee trees)\u003c/p\u003e \u003c/td\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eWeeding\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eFertilization\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eShade management\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eHarvest\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003ctr\u003e \u003ctd align=\"left\" colname=\"c3\"\u003e \u003cp\u003eDry processing\u003c/p\u003e \u003c/td\u003e \u003c/tr\u003e \u003c/tbody\u003e \u003c/colgroup\u003e \u003c/table\u003e\u003c/div\u003e \u003c/p\u003e \u003cp\u003eSeedbed is defined as the location where coffee seeds are sown to induce germination. Seedling is the name for the young plants that have grown in the seedbed. Nursery bed is the name for the place to which seedlings are transplanted. Shade management activities include pruning shade trees and cutting down trees. No wet processing was considered for Ethiopian farmers. Many African coffee cherries and beans are processed in a dry place either on hard and very clean ground, plastic, or on planks\u003csup\u003e\u003cspan citationid=\"CR69\" class=\"CitationRef\"\u003e69\u003c/span\u003e\u003c/sup\u003e. Maintenance activities also include coffee tree management, pruning, and removal.\u003c/p\u003e \u003cp\u003eOur cost analysis has two distinctive methodological aspects compared to similar studies. First, all hours of labor reported by the smallholders were valued at the hourly payment for own-account coffee workers in rural Ethiopia\u003csup\u003e\u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e70\u003c/span\u003e\u003c/sup\u003e, regardless of whether that effort came from hired or unpaid household labor. Labor has traditionally been underestimated in the literature when omitting family or unpaid labor\u003csup\u003e\u003cspan additionalcitationids=\"CR72\" citationid=\"CR71\" class=\"CitationRef\"\u003e71\u003c/span\u003e\u0026ndash;\u003cspan citationid=\"CR73\" class=\"CitationRef\"\u003e73\u003c/span\u003e\u003c/sup\u003e. For that reason, a detailed estimation of hours provides a better approach to the real cost to farmers\u003csup\u003e\u003cspan citationid=\"CR42\" class=\"CitationRef\"\u003e42\u003c/span\u003e,\u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e74\u003c/span\u003e\u003c/sup\u003e. This opportunity cost approach is important when a farmer decides whether or not to invest their effort in coffee production. Opportunity costs were also calculated for land and physical capital that otherwise would receive an alternative return or rent (estimated at 4%). Smallholders\u0026rsquo; profitability is not limited to a cash flow or a thorough accounting of their physical assets or materials. The second distinctive aspect of our cost analysis is a detailed record of farmers\u0026rsquo; activities, hours, materials, and equipment during the coffee production cycle. This level of specificity allows the identification of detailed input needs and gaps at the farm level, and it was established through extensive fieldwork and consultation with coffee farmers around the globe\u003csup\u003e\u003cspan citationid=\"CR48\" class=\"CitationRef\"\u003e48\u003c/span\u003e\u003c/sup\u003e.\u003c/p\u003e"},{"header":"Declarations","content":"\u003ch2\u003eAuthor Contribution\u003c/h2\u003e\u003cp\u003eThis manuscript has not been published previously and is not being considered concurrently by another publication. This article results from a novel research study and collaboration between an interdisciplinary group of scholars from Yale University(1), Columbia University(2), the Alliance of Bioversity International and CIAT(3), the International Livestock Research Institute in Ethiopia4 and Kenya(5), the Ethiopian Institute of Agricultural Research(6), and the Ethiopian Institute of Resilience to Climate Change (EIRCC), Jimma University in Ethiopia(7). The co-authors are J. Nicolas Hernandez-Aguilera(1,2), Amanda Grossi(2,3), Nick Pelaccio(2), Ryan Kopper(2), Gebermedihin Ambaw(4), Tufa Dinku(2), John W. Recha(5), Tesfaye Shimber Gessese(6), Kefelegn Getahun(7), Christine Ibrahim Puri(1), Cynthia J. Miles(1), and Dawit Solomon(5). J.N.H.A, A.G., N.P., and R.K. designed the study and performed the data analysis; J.N.H.A., A.G., N.P., R.K., and T.S.G. all contributed to survey design. G.A. with support from T.S.G. and J.W.R. led the field work and data collection. A.G. and D.S. led coordination between the research teams based in the U.S.A. and Ethiopia. All authors were involved in the interpretation of results and contributed actively to writing and revision of the manuscript.\u003c/p\u003e\u003ch2\u003eData Availability\u003c/h2\u003e\u003cp\u003eData is provided within the manuscript or supplementary information files\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\n\u003cli\u003eLacoste, M. \u003cem\u003eet al.\u003c/em\u003e On-Farm Experimentation to transform global agriculture. \u003cem\u003eNat. Food\u003c/em\u003e \u003cstrong\u003e3\u003c/strong\u003e, 11\u0026ndash;18 (2022).\u003c/li\u003e\n\u003cli\u003eKuma, T., Dereje, M., Hirvonen, K. \u0026amp; Minten, B. Cash Crops and Food Security: Evidence from Ethiopian Smallholder Coffee Producers. \u003cem\u003eJ. Dev. 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Interact.\u003c/em\u003e \u003cstrong\u003e2\u003c/strong\u003e, 1\u0026ndash;26 (2018).\u003c/li\u003e\n\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"adaptation, costs, climate services, coffee, Ethiopia, price premium","lastPublishedDoi":"10.21203/rs.3.rs-6786282/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6786282/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eA broad spectrum of climate models predict substantial changes in coffee landscape configurations that will disproportionately affect 25\u0026nbsp;million smallholder coffee farmers in the Global South. Most studies and modeling, however, do not inform farmers who struggle with low yields, insufficient market instruments, and climate vulnerability, nor stakeholders -i.e., importers, retailers, and consumers- interested in supporting smallholders who provide around 70% of the coffee supply. Smallholders' input is rarely part of climate risk assessments, and general conclusions and scenarios overlook local context, farmers' capabilities, and their contributions to identifying solutions\u003csup\u003e\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e1\u003c/span\u003e\u003c/sup\u003e. To better connect farmers' needs with research, we go back to the basics of cost analysis and incorporate their knowledge and reported climate adaptation strategies. In particular, and in collaboration with 202 Ethiopian smallholder coffee farmers, we assessed farmers' capacity to adapt to perceived higher temperatures across all stages of coffee production based on the real costs they face, the practices they implement, and the associated profitability. Limitations in farmers' economic ability to increase short-term productivity suggest that a 35-cent price premium may compensate for the extra costs borne by farmers due to higher temperatures. This premium is comparable with other voluntary sustainability standards supporting social and conservation goals. Our research advances the integration of smallholder coffee growers' knowledge for grounded climate action, suggesting actionable and context-based strategies.\u003c/p\u003e","manuscriptTitle":"Translating the Adaptation of Ethiopian Coffee Farmers to Higher Temperatures into Economic Costs and Price Premiums: A Community-Based Breakeven Cost Approach","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-06-12 12:33:34","doi":"10.21203/rs.3.rs-6786282/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"d7eb6d21-831e-4a08-ad77-a5490d9b38ab","owner":[],"postedDate":"June 12th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":49850490,"name":"Earth and environmental sciences/Environmental social sciences/Climate change adaptation"},{"id":49850491,"name":"Earth and environmental sciences/Environmental social sciences/Socioeconomic scenarios"},{"id":49850492,"name":"Earth and environmental sciences/Environmental social sciences/Sustainability"}],"tags":[],"updatedAt":"2025-08-05T04:53:16+00:00","versionOfRecord":[],"versionCreatedAt":"2025-06-12 12:33:34","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-6786282","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6786282","identity":"rs-6786282","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}