The coffee bush likes tropical climates and elevation, and grows in a belt around the equator.
It is the cherries of the plant, which turns bright red when ripe, that are used to make the hot drink. They’re gathered, stripped, dried, roasted and finally ground and ready to use.
Sounds like hard work, doesn’t it? Well, it is. The uneven and elevated terrain the plant grows in makes mechanization difficult. Unlike most common agricultural crops, coffee has a long growing cycle, taking three to four years to mature.
That means farmers aren’t able to quickly switch crops, or plant more coffee, to respond to changes in demand.
Brazil is the world’s biggest coffee producer, followed by Vietnam and Colombia. The coffee is often harvested by small farm owners, or hired hands.
The farmers will bring in their beans to middle men who have most of the bargaining power. They sell those on to larger businesses, and so the coffee moves through the supply chain until it reaches the consumer-facing companies that European consumers are most familiar with.
Historically, it’s been an area ripe for exploitation, said Miguel Gamboa of the Rainforest Alliance.
He is based in Guatemala and has been working in coffee certification for over 20 years, helping to make sure coffee supply chain abide by environmental and social standards.
Nowadays, producers are more aware of what is going on in their supply chain: “This has been like the switch when we started to say, ‘Okay, do you know where your coffee is coming from? Do you know what is happening?’”
In theory farmers benefit from rising prices. But it’s not always that simple, said Monika Firl, a senior coffee advisor at Fairtrade International.
Many farmers rely on loans to finance investments that go into growing the year’s crop, repaying them once it’s sold. That puts them one wrong investment away from bankruptcy.
“These kind of dramatic jumps up and down over such a short period of time are bad for business for everybody, but the farmers are the ones who are the most vulnerable,” said Firl.
The outlook
The good news is that, in the medium term at least, prices are expected to moderate, said Rabobank’s Oran van Dort. Farmers are being incentivized to bring more supply onto the market.
And coffee production is forecast to be in surplus next year, which should help alleviate the supply constraints.
So don’t worry, you might be able to continue your coffee habit for a while yet. And if not, you’ll be pleased to know the price of tea has come down.
