Facts About Coffee
- Coffee is the most popular beverage in the world next to tap water.
- Over 400 billion cups of coffee are consumed every year, making coffee the 2nd
largest commodity industry in the world, with revenues that exceed 10 billion
dollars per year.
- Every cup of coffee consumed destroys roughly three square centimeters of
rainforest, making coffee a leading cause of rainforest destruction.
- Coffee ranks as one of top three most heavily pesticide sprayed crops in the world.
- Coffee processing is a major cause of water contamination in many producing countries.
- Supply chain imbalances exploit millions of small subsistence farmers.
- Small farmers produce the highest quality coffee.
- Over 95% of all coffee consumed is stale.
Changes in the Industry in the 20thCentury
The coffee industry changed in three ways in the 20th Century: 1) coffee roasting
companies consolidated, centralized and mechanized roasting and distribution; 2)
coffee producers industrialized growing and processing; and 3) monopolies emerged
creating "unfair" distribution of wealth along the supply chain.
In 1900, fresh roasted coffee was commonplace in North America; either sold by local
roasters like bread from a bakery or roasted at home on the stove. During the 1920s,
technology provided a means for business to access the mass market. Roasting,
packaging and distribution was consolidated into centralized facilities designed for
mass production and national distribution. By the 1950s, a handful of companies
supplied (and still supply) 80% of North America with roasted coffee via grocery
stores. Metal canisters, vacuum bricks, and one-way valves were introduced to solve
the packaging problems related to fresh roasted coffee gases. Coffee quality was
sacrificed to low price point.
- Average distribution times to consumers increased from days to weeks to months.
- Brand name roast & ground coffee, and instant coffee, were mass marketed to
consumers as both "convenient" to use and guaranteed "fresh" due to advanced
packaging and processing.
- Manufacturers adapted equipment (i.e. drip makers) to make the best of low quality coffee.
In mid 1900, industry began to modernize growing and processing. Technology from the
manufacturing sector was adapted to farming to increase crop yields and lower costs.
Robusta and "sun" coffees replaced arabica coffee as the primary commercial variety,
as they grow at lower altitudes, are resilient to the stress of high yield production,
and resistant to "leaf rust" fungal disease. Rainforests were cleared to create a
sun-drenched environment for monoagricultural production and machine harvesting.
Centralized milling facilities were constructed and mechanized to process coffee in
volume. Quality of taste was sacrificed to low price point.
- Natural methods of pest control and soil regeneration yielded to the mass
application of chemical pesticides and fertilizers. Chemicals fertilizers provide
4 of 16 nutrients essential to coffee quality. Certain pesticides and herbicides
are known poisons to wildlife and farmers.
- Technified farms support 95% fewer species of wildlife, and over time, experience
reduced productivity due to soil depletion, erosion and acidification.
- In countries using the wet method for processing: 1) indiscriminate dumping of
cherry pulp into lakes, rivers and streams contaminate fresh water sources; and
(2) introduction of wood burning dryers in place of patio drying contribute to
rainforest destruction - now equal to 3 square centimeters of rainforest per cup
of coffee.
The chart below depicts the current supply chain for coffee; flow of coffee from
producer to consumer. The chain begins with (1) traditional small farmers and (2)
large plantation owners. Typically, small farmers sell cherries or parchment (an
unfinished product) to a mill for processing. Large plantations often own the mills.
The green beans (a finished product) are then sold by the mill via agents and brokers
to traders, importers and/or coffee roasters. The trading price for coffee is set by
two commodity exchanges: (1) New York Coffee Sugar Cocoa Exchange for Arbica beans;
and (2) London Coffee Exchange for Robusta beans. A single bag may change ownership up
to 15+ times before it reaches the roaster. Each time it changes hands the price
increases without adding value to the product. The trading price for coffee is paid to
the plantation owner, mill, agent or broker. The farmer may earn up to $0.15/lb. The
roaster and retailer, selling coffee at $5.00/lb. to $20.00/lb., earn margins that
range from 100% to 350% if sold by the pound and more if sold by the cup.
- Coffee is the second largest source of foreign exchange for developing countries
and is particularly important for Latin America and the Caribbean where it is the
leading source of foreign exchange.
- The market competes on low price point. More coffee is currently produced than the
world can consume. The world commodity price for coffee is at an all time low;
- Small farmers cannot compete with the modern plantation or mill. Most small
farmers growing high quality coffee live at a subsistence level.
Shift in the Marketplace
Awareness of the problems associated with coffee has lead to a movement promoting
environmental and social reform within the industry. The core concepts within this
movement are Fair Trade, Organic, and Biodiversity. Each embodies its own set of
criteria and standards aimed at improving the lives of farmers and saving ecosystems
in producing countries.
As consumers, we have the ability to profoundly impact the quality of peoples' lives
and the environment by making conscientious purchasing decisions. Knowledge and
understanding are key to making informed choices about the foods, beverages and
products we buy.
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Current Industry Supply Chain