The price of green coffee

The traditional coffee value chain

To understand the value of our morning cup of coffee, we must first trace the entire value chain that coffee beans travel through, from producer to cup. In the illustration below (in English), we can see that the traditional chain is punctuated by several intermediaries. The most important, generally speaking, are the exporter, the importer, and of course, the roaster. Furthermore, depending on the circumstances, this chain can expand, as other intermediaries may be involved between the roaster and the end consumer: a distributor, a packer, a grocery store, etc.

How is money distributed in the value chain?

According to a recent study by the International Trade Centre, producers receive only 10% of the final selling price. The rest is shared by other intermediaries, and often it is the end seller who receives the most of the final selling price. Why?

Simply because he's the one taking the most risk and investing the most money to sell quality coffee. In the case of a roaster as the end seller, the following expenses might be included:

• Trips to the source to select green coffee
• Laboratory taste tests
• Cooking tests
• The development of recipes
• Rent, labor, and training

In addition to this, there are risks involved and additional expenses depending on the circumstances:

• Barista and roaster training
• The purchase of new technology (oven, 100% compostable bag, 100% compostable pods)
• Creation of unique products requiring R&D expenditure (Nitro Cold Brew for example).

Does that mean we should be content with paying producers very little?

Obviously, the answer is NO. Without the producers, we couldn't exist. That's why it's important to build close relationships with them. Field trips allow us to meet and select the best coffees, but they also have the advantage of enabling us to make green coffee purchases that satisfy both parties: the producer and the roaster. This can also be done through specific programs, such as Fairtrade, which allow us to ensure that producers receive a mandatory minimum price for their coffee. This amount guarantees them a quality of life that is often much higher than that of producers not affiliated with Fairtrade. Here's how coffee is traded on the global market:

The market value of coffee is falling, why aren't prices falling?

Indeed, the price of green coffee is at an all-time low, largely due to a flood of Brazilian producers on the coffee market. Unfortunately, this drop has had very little impact on the coffee we drink every day, for several reasons:

• General expenses for coffee roasters have increased (labor, rent and other expenses).
• For Canadian roasters, exchange rates are against us, as the Canadian dollar is too weak.
• Specialty coffees are more expensive than before. For example, in Costa Rica, despite a relatively small market, premiums on mid-range and high-end coffees are rising sharply. As demand for these quality coffees has exploded in recent years, premiums have climbed accordingly.
• In neighborhood cafes or espresso bars, the value of the coffee in the cup constitutes a smaller proportion than labor and rent.

Ultimately, this drop in global green coffee prices translates primarily into lower prices for lower-quality coffees. Worse still, it only further weakens the position of coffee producers, who end up turning to other types of agriculture .