How You Make Coffee a Billion-Dollar Business

Alex Hillsberg
Alex Hillsberg
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11 Comments

thumbnailYour morning caffeine fix is but a drop in the global bucket that makes coffee one of most traded commodities in the world along with petroleum. But with 100 million Americans like you drinking coffee every day, the bucket easily overflows to make the US the world’s top coffee consumer, according to the International Coffee Organization data used in the infographic. That’s enough to perk up a big chunk of our economy, or to be precise, $18 B spent for coffee last year. And it’s all because you love coffee.

But how far down the supply funnel does your coffee dollar go? Follow how coffee is made from your favorite house specialty blend to the farmer in a developing country struggling to make both ends meet. It’s a journey across social classes, lifestyles and cultures that will make you see coffee in a different light. It’s big businesses that run coffee in America. But it’s the small farmer in a developing country who starts it all.

Should you care for the farmer who grows your favorite coffee? Would you care even if you don’t know him?

Check this infographic and see how the two of you are connected in this multi-billion business:

coffee-infographic

OTHER COFFEE RELATED ARTICLES YOU MIGHT FIND INTERESTING:

  • There’s still a lot of people out there who ask “what is Fairtrade?” and they wonder why it should matter to them. Read our article and find out how Fairtrade works and what you can do to help.
  • Do you ever wonder what’s the origin of the coffee cup you drink every morning? In this article we embark on the complex yet fascinating journey through the world of coffee economics.
  • Do you want to learn how to make coffee like a pro? Our coffee infographic will teach you how to do that and share some cool tips, tricks and trivia for good measure.

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Submitted by
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Alex Hillsberg

Alex has a keen interest in the stock market, small and medium enterprises and personal finance, pursuing news, stories and issues around these topics for nearly twenty years now. He has written for various financial websites helping average Americans to pursue their financial goals.

Category: Fairtrade, Ideas Worth Spreading, Infographics

11 Comments »

  • Lex Summers says:

    I think this is a common thread in the commodities market? It just becomes obscenely unfair for coffee farmers because coffee retails at premium prices. Will Fair Trade really help everyone?

  • Michael says:

    Some of your stats/illustrations are not made very clear, but overall the points are probably accurate and unless something changes we will continue to see more farmers leaving the industry. There is an economic sustainability problem that the current supply chain cannot solve, which is why we started Thrive Farmers. I would love to see this infographic clarify just a few things to help tell this story a bit more clearly…such as the number of bags imported by Coffee Houses about which no size is provided (and did you mean 24M bags?) and then Canada does not produce any coffee so the illustration showing them alongside Brazil, Columbia, Vietnam, etc, is not accurate/clear. Your approach to the root problem, however, is spot on and more people need to understand these dynamics. Thanks!

  • Yazmin says:

    I’ve been at an social involvement expedition at Guatemala and have seen the situation of farmers and growers there. Thanks for the effort in spreading the message. It’s not that hard to but Fair Trade produce

  • Agustin says:

    Long live Fair Trade! I hope this adds more consciousness among consumers

  • Rob Tobin says:

    Beautifully done infographic. However the one thing not made clear is why the supply/demand equation isn’t working here. If the coffee retailers like Starbucks and Coffee Bean depend on the coffee growers, why aren’t the coffee growers simply demanding whatever price they need to get in order to make a decent living? That needs to be made clearer, i think.

    • Alex says:

      @rob, thanks for liking it. Surely it’s a long chain from the coffee house companies (Starbucks et.al.)to the farmers. The farmers are at the mercy of the traders and millers, usually the local businessmen. You have to understand that these farmers can be dirt poor that they do business on credit provided by, often, the trader and miller. In short, they’re tied to the price fixed by the businessmen (the traders). Starbucks and other coffee house companies can only deal with these businessmen because they order processed green beans and by the bulk. Of course, this is not always the case. The infographic is just saying it is in other cases and fair trade can address such occasion. The way I see it, the real problem happens between the farmer and the coyote/miller. :)

  • Javajedi says:

    Fully supportive of the movement to ensure the producers of our dear cup of joe get paid well enough to support their families and provide schooling, clean water and health care. Everyone deserves that (in the US as well).

    However, your article, and moreover the infographic) is a poor attempt at simplifying an extremely complex issue. First, if you wnt to look at where the money goes why not use actual dollars and cents scenarios. You add these figures in when it emphasizes your point, but why leave out the costs associated with offloading the coffee in an American port. Dockworkers are unionized and earn alot more than the farmer who spent an entire year on the product. You should show the costs involved in actually importing the coffee; bank charges, insurance, freight costs etc.

    Some of the statistics you show are just blatantly misleading and I am not sure if it is out of your own misinterpretation of your research or if it is done intentionally. Thika Mills does have the CAPACITY to mill 52% of Kenyas crop, but so do other mills in Kenya. The country as a whole has 7x the milling capacity as it does production.

    Finally it would be beneficial to the readers if you maintained a single supply chain scenario throughout the info graphic. You talk about Kenya coffees and then you show “coyotes”. These two things do not exist in the same worlds. Kenyan producers all either belong to a Farmer Cooperative Society, or are an Estate owner. There are enough Cooperative Societies with their own wet mills around the country that individual small holder members are able to deliver their coffee directly to the mill. “Coyotes” more often exist in Latin America. Different scenario… Farmers in Kenya have there own issues, but coyotes are not one of them.

    At the end of the day I hope people come across your infographic and feel more inclined to ask their local coffee shop about their sourcing procedures so they can make an informed decision. In a capitalist market place we vote with our dollars. Information is key to making educated decisions. That is why I just wish you did a better job of telling the whole story.

    A difficult task, I give you…

  • Global awareness about the plight of the local farmer in the production chain of coffee production has increased significantly over the past decades. This info-graphic is a great way to explain that we have not come far enough. Organic Fairtrade coffee was not even on the menu 2 decades ago. As we work to educate the populations about what it is that they really are drinking we all can work to help make the world a better place.

  • Cynthia says:

    Have anyone tried drinking healthy coffee, Coffee is no going anywhere so why not drink healthy, wants makes Organo Gold coffee so helathy is one ingredient ganoderma.

  • Meretchi says:

    Great info, surely true. Who you forget are the harvest helpers on the farm, the Farmer does not pick those cherries alone, and they are the ones that end up being paid nearly nothing (After all, the farmer needs to make a living too)
    What I see here in Central America where I live is that even fair trade farmers do not necessarily pay their pickers decent wages, there are just too many people looking for that kind of work who will do it for the offered price, often even children… The Farmers don’t like having children work on the farms, it’s no legal, it’s not good for the kids, but there is little they can do if a hired man brings his sons to help and tells the farmer otherwise he cannot feed them…
    Fair trade is a good start, but it does not help these people as much as they’d need…

  • John Frater says:

    I firmly believe that any certified products coffee included is basically used to pacify the end user, very few really care what the Farmer gets for his products, the inbalance in the profits shared from the grower to the price made for a cup of coffee is insanely unbalanced, totally controlled along the supply chain.

    I do fined it quite amazing were the farmer is told what he can get for his product, and the cafe owner decides himself. I know for a fact many farmers are finded it very hard to make ends meet in this present market, the sad thing is that it is the coffee quality that will ultimately be at risk.

    There are few that do work with the farmer which I, highly commend, unfortunately in the large scale of things this represents a very small percentage.

    I for one have decided that the only way forward is to roast and export my coffee direct to the end user, wereas by workers will become shareholders in profits. I believe that we all need to be responsible for the way we treat others and not rely on International money making organisations to do this for us, and who cannot in there best endeavours police very farm on this planet.

    Certification has been totally missused and missunderstood and does not ensure quality and will never ensure peace of mined for the enduser, this starts from the heart and in my case my passion for coffee.

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