An Introduction

Modern society survives by an invisible labor force veiled behind a curtain of globalization fueled by rapidly changing technology and voracious consumerism.  Coffee is no exception. Clocking in at the 7th most traded commodity in the world (and #1 among agricultural products) whose market is valued at almost $500 billion, coffee makes up an enormous industry that impacts the lives of millions, spanning across many unique geopolitical contexts and consumer markets. Some markets value sustainability and equality more than others. Such examples include efforts like Fair Trade or Organic certification programs, price stabilization agreements, or agricultural practices like shade growth and crop diversification. But both the commodity and specialty coffee markets use the same general principles to function. And it’s hard to save a tree when disease is in its roots.

The way value is distributed across the industry is fundamentally lopsided. Coffee's international value is effectively decided by a futures market rate called the "C-price". This figure has fluctuated between 50 cents and $3 per-pound over the last 50 years, losing more than 80% in relative value over that time once adjusted for inflation. Its fluctuation can be correlated with a myriad of environmental, geopolitical, and socioeconomic factors, but its driving force is its relationship between its supply and demand. Unfortunately not only do supply-demand dynamics depend primarily on the whim of the consumer market, they also fail to take into account fixed costs of production, which are invariably rising. For many producers, the market price doesn't even cover costs of production.

If farmers are getting pennies on the dollar from this almost 500 billion dollar annual industry, where is all the money going to?  Unsurprisingly, like many other commodity markets, the coffee market is a pyramid.  Instead of value being distributed to each contributing member in proportion to the work each member contributes to create that value, the market systematically funnels value upwards to retailers and shareholders while stakeholders like farmers are left with scraps. This is neither ethical nor sustainable.  As we look closer at the coffee supply chain and understand its challenges and complexities, one truth becomes clear — coffee producers need to be paid more.

It is said that a rising tide lifts all ships. Our mission, then, is to help raise the tide.  A sustainable future for coffee for everyone depends on collectively shifting our understanding of coffee's value and making choices to redistribute that value more equally across the supply chain.  We have the unique ability to do this as consumers as we can demand transparency and price traceability for the coffees we buy. Together we can slowly change the course of this massive ship that is the coffee industry.

P.S - There are major ongoing industry efforts to drive transparency more unilaterally — see  The Specialty Coffee Transaction Guide. Also, for a deeper dive into the economics of coffee see Karl Weinhold’s invaluable book Cheap Coffee.