A Story About Supply Chains and A Good Cup of Coffee

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Today is International Coffee Day. It’s the first of what will likely be a yearly tradition of celebrating and promoting coffee as a beverage.

Events around the world are now occurring around with this goal in mind with this past Tuesday having been the National Coffee Day for Canada, Mexico, and the United States.

Aside from free coffee and discounts on coffee products, this day will also be used to promote fair trade coffee to raise awareness about other important global concerns such as the plight of some coffee growers. International Coffee Day is currently trending on Facebook and Twitter feeds with many interesting pieces of information and pictures related to our favourite early morning drink.

For this first celebration of just about everyone’s not-so-secret drink, we thought it best to go into a bit of the intricate logistical webs that are required for the humble coffee bean (which if you didn’t know, is in fact a berry pit!) to the coffee in your hand.

From Bean to Cup

Supply chains for coffee are often complex and intricate. Depending on the countries involved, a coffee supply chain can include up to 7 different parties before the finished product ever enters your hands. These different groups include growers, intermediaries, processors, government agencies, exporters, dealers/brokers, roasters, and then finally retailers.

Did you know?

  • Oil is the most widely used product in the world, coffee is next in line.
  • Coffee is second only to oil as the world’s most valuable commodity.
  • Humans drink a lot of coffee: Annual global consumption is about 12 billion pounds.

The Coffee Cycle

Unlike many non-agriculture products, coffee is highly susceptible to changes in climate and weather. What many people don’t know is that to produce coffee, a long-term commitment is needed from those involved as it takes over four years before a coffee tree attains full productivity. The long-term perspective needed to be involved in the coffee industry is also present in the trading firms and business agreements with some trading firms being passed down through generations within a family.

Unfortunately, this means that coffee as a product is less able to meet changes in demand as the supply is erratic due to environment, meaning there is often problems with fluctuating prices. These price fluctuations lead to a cyclical structure which have real consequences for farmers according to this webpage on the subject on the Duke University website,

There is a significant delay between changes in price and subsequent changes in production. The significant investment that a farmer makes in a coffee plantation will cause him to try and survive periods of low prices rather than switch to other crops. Conversely, when prices are high, supply cannot immediately respond because it takes nearly five years for a new plantation to reach full production capacity.

Thankfully, there are efforts being made to help farmers and their communities improve their situations. The growing popularity Fair Trade Coffee and its history is an example of this.

Starbucks’ partnering with Conservation International to draft the Coffee and Farmer Equity Practices (CA.F.E) is a good case study of what CSI can do as this 2011 Guatemalan case study from 2010 concludes ” Farmers participating in C.A.F.E. Practices were more likely to invest in the conservation of biodiversity and water quality in addition to improvements in coffee production and quality”.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

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