The Economics of Coffee in One Chart - Omri Wallach (Visual Capitalist)

AGRICULTURE

The Economics of Coffee in One Chart

Visual Capitalist, October 24, 2020

By Omri Wallach

Breaking Down the Economics of Coffee

What goes into your morning cup of coffee, and what makes it possible?

The obvious answer might be coffee beans, but when you start to account for additional costs, the scope of a massive $200+ billion coffee supply chain becomes clear.

From the labor of growing, exporting, and roasting the coffee plants to the materials like packaging, cups, and even stir sticks, there are many underlying costs that factor into every cup of coffee consumed.

The above graphic breaks down the costs incurred by retail coffee production for one pound of coffee, equivalent to about 15 cups of 16 ounce brewed coffee.

The Difficulty of Pricing Coffee

Measuring and averaging out a global industry is a complicated ordeal.

Not only do global coffee prices constantly fluctuate, but each country also has differences in availability, relative costs, and the final price of a finished product.

That’s why a cup of 16 oz brewed coffee in the U.S. doesn’t cost the same in the U.K., or Japan, or anywhere else in the world. Even within countries, the differences of a company’s access to wholesale beans will dictate the final price.

To counteract these discrepancies, today’s infographic above uses figures sourced from the Specialty Coffee Association which are illustrative but based on the organization’s Benchmarking Report and Coffee Price Report.

What they end up with is an estimated set price of $2.80 for a brewed cup of coffee at a specialty coffee store. Each store and indeed each country will see a different price, but that gives us the foundation to start backtracking and breaking down the total costs.

From Growing Beans to Exporting Bags

To make coffee, you must have the right conditions to grow it.

The two major types of coffee, Arabica and Robusta, are produced primarily in subequatorial countries. The plants originated in Ethiopia, were first grown in Yemen in the 1600s, then spread around the world by way of European colonialism.

Today, Brazil is far and away the largest producer and exporter of coffee, with Vietnam the only other country accounting for a double-digit percentage of global production.

Country	Coffee Production (60kg bags)	Share of Global Coffee Production
Brazil	64,875,000	37.5%
Vietnam	30,024,000	17.4%
Colombia	13,858,000	8.0%
Indonesia	9,618,000	5.6%
Ethiopia	7,541,000	4.4%
Honduras	7,328,000	4.2%
India	6,002,000	3.5%
Uganda	4,704,000	2.7%
Peru	4,263,000	2.5%
Other	24,629,000	14.2%

How much money do growers make on green coffee beans? With prices constantly fluctuating each year, they can range from below $0.50/lb in 2001 to above $2.10/lb in 2011.

But if you’re looking for the money in coffee, you won’t find it at the source. Fairtrade estimates that 125 million people worldwide depend on coffee for their livelihoods, but many of them are unable to earn a reliable living from it.

Instead, one of the biggest profit margins is made by the companies exporting the coffee. In 2018 the ICO Composite price (which tracks both Arabica and Robusta coffee prices) averaged $1.09/lb, while the SCA lists exporters as charging a price of $3.24/lb for green coffee.

Roasting Economics

Roasters might be charged $3.24/lb for green coffee beans from exporters, but that’s far from the final price they pay.

First, beans have to be imported, adding shipping and importer fees that add $0.31/lb. Once the actual roasting begins, the cost of labor and certification and the inevitable losses along the way add an additional $1.86/lb before general business expenses.

By the end of it, roasters see a total illustrated cost of $8.73/lb.

Roaster Economics	($/lb)
Sales Price	$9.40
Total Cost	$8.73
Pre-tax Profit	$0.67
Taxes	$0.23
Net Profit	$0.44
Net Profit (%)	7.1%

When it comes time for their profit margin, roasters quote a selling price of around $9.40/lb. After taxes, roasters see a net profit of roughly $0.44/lb or 7.1%.

Retail Margins

For consumers purchasing quality, roasted coffee beans directly through distributors, seeing a 1lb bag of roasted whole coffee for $14.99 and higher is standard. Retailers, however, are able to access coffee closer to the stated wholesale prices and add their own costs to the equation.

One pound of roasted coffee beans will translate into about 15 cups of 16 ounce (475 ml) brewed coffee for a store. At a price of $2.80/cup, that translates into a yield of $42.00/lb of coffee.

That doesn’t sound half bad until you start to factor in the costs. Material costs include the coffee itself, the cups and lids (often charged separately), the stir sticks and even the condiments. After all, containers of half-and-half and ground cinnamon don’t pay for themselves.

Factoring them all together equals a retail material cost of $13.00/lb. That still leaves a healthy gross profit of $29.00/lb, but running a retail store is an expensive business. Add to that the costs of operations, including labor, leasing, marketing, and administrative costs, and the total costs quickly ramp up to $35.47/lb.

In fact, when accounting for additional costs for interest and taxes, the SCA figures give retailers a net profit of $2.90/lb or 6.9%, slightly less than that of roasters.

A Massive Global Industry

Coffee production is a big industry for one reason: coffee consumption is truly a universal affair with 2.3 million cups of coffee consumed globally every minute. By total volume sales, coffee is the fourth most-consumed beverage in the world.

That makes the retail side of the market a major factor. Dominated by companies like Nestlé and Jacobs Douwe Egberts, global retail coffee sales in 2017 reached $83 billion, with an average yearly expenditure of $11 per capita globally.

Of course, some countries are bigger coffee drinkers than others. The largest global consumers by tonnage are the U.S. and Brazil (despite also being the largest producer and exporter), but per capita consumption is significantly higher in European countries like Norway and Switzerland.

The next time you sip your coffee, consider the multilayered and vast global supply chain that makes it all possible.

 

O cafe foi o combustivel da guerra civil americana - Jon Grinspan (NYT)

O autor fala apenas do consumo de café, não da sua oferta. Muito desse café já era proveniente do Brasil.

Paulo Roberto de Almeida 

DISUNION

How Coffee Fueled the Civil War

By JON GRINSPAN

 

The New York Times, JULY 9, 2014 July 10, 2014 10:10 am

It was the greatest coffee run in American history. The Ohio boys had been fighting since morning, trapped in the raging battle of Antietam, in September 1862. Suddenly, a 19-year-old William McKinley appeared, under heavy fire, hauling vats of hot coffee. The men held out tin cups, gulped the brew and started firing again. “It was like putting a new regiment in the fight,” their officer recalled. Three decades later, McKinley ran for president in part on this singular act of caffeinated heroism.

At the time, no one found McKinley’s act all that strange. For Union soldiers, and the lucky Confederates who could scrounge some, coffee fueled the war. Soldiers drank it before marches, after marches, on patrol, during combat. In their diaries, “coffee” appears more frequently than the words “rifle,” “cannon” or “bullet.” Ragged veterans and tired nurses agreed with one diarist: “Nobody can ‘soldier’ without coffee.”

Union troops made their coffee everywhere, and with everything: with water from canteens and puddles, brackish bays and Mississippi mud, liquid their horses would not drink. They cooked it over fires of plundered fence rails, or heated mugs in scalding steam-vents on naval gunboats. When times were good, coffee accompanied beefsteaks and oysters; when they were bad it washed down raw salt-pork and maggoty hardtack. Coffee was often the last comfort troops enjoyed before entering battle, and the first sign of safety for those who survived.

Photo

A sketch of exchanged Union prisoners receiving rations aboard the ship New YorkCreditLibrary of Congress

The Union Army encouraged this love, issuing soldiers roughly 36 pounds of coffee each year. Men ground the beans themselves (some carbines even had built-in grinders) and brewed it in little pots called muckets. They spent much of their downtime discussing the quality of that morning’s brew. Reading their diaries, one can sense the delight (and addiction) as troops gushed about a “delicious cup of black,” or fumed about “wishy-washy coffee.” Escaped slaves who joined Union Army camps could always find work as cooks if they were good at “settling” the coffee – getting the grounds to sink to the bottom of the unfiltered muckets.

For much of the war, the massive Union Army of the Potomac made up the second-largest population center in the Confederacy, and each morning this sprawling city became a coffee factory. First, as another diarist noted, “little campfires, rapidly increasing to hundreds in number, would shoot up along the hills and plains.” Then the encampment buzzed with the sound of thousands of grinders simultaneously crushing beans. Soon tens of thousands of muckets gurgled with fresh brew.

Confederates were not so lucky. The Union blockade kept most coffee out of seceded territory. One British observer noted that the loss of coffee “afflicts the Confederates even more than the loss of spirits,” while an Alabama nurse joked that the fierce craving for caffeine would, somehow, be the Union’s “means of subjugating us.” When coffee was available, captured or smuggled or traded with Union troops during casual cease-fires, Confederates wrote rhapsodically about their first sip.

The problem spilled over to the Union invaders. When Gen. William T. Sherman’s Union troops decided to live off plunder and forage as they cut their way through Georgia and South Carolina, soldiers complained that while food was plentiful, there were no beans to be found. “Coffee is only got from Uncle Sam,” an Ohio officer grumbled, and his men “could scarce get along without it.”

Confederate soldiers and civilians would not go without. Many cooked up coffee substitutes, roasting corn or rye or chopped beets, grinding them finely and brewing up something warm and brown. It contained no caffeine, but desperate soldiers claimed to love it. Gen. George Pickett, famous for that failed charge at Gettysburg, thanked his wife for the delicious “coffee” she had sent, gushing: “No Mocha or Java ever tasted half so good as this rye-sweet-potato blend!”

Did the fact that Union troops were near jittery from coffee, while rebels survived on impotent brown water, have an impact on the outcome of the conflict? Union soldiers certainly thought so. Though they rarely used the word “caffeine,” in their letters and diaries they raved about that “wonderful stimulant in a cup of coffee,” considering it a “nerve tonic.” One depressed soldier wrote home that he was surprised that he was still living, and reasoned: “what keeps me alive must be the coffee.”

RELATED

Civil War Timeline

An unfolding history of the Civil War with photos and articles from the Times archive and ongoing commentary from Disunion contributors.

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Others went further, considering coffee a weapon of war. Gen. Benjamin Butler ordered his men to carry coffee in their canteens, and planned attacks based on when his men would be most caffeinated. He assured another general, before a fight in October 1864, that “if your men get their coffee early in the morning you can hold.”

Coffee did not win the war – Union material resources and manpower played a much, much bigger role than the quality of its Java – but it might say something about the victors. From one perspective, coffee was emblematic of the new Northern order of fast-paced wage labor, a hurried, business-minded, industrializing nation of strivers. For years, Northern bosses had urged their workers to switch from liquor to coffee, dreaming of sober, caffeinated, untiring employees. Southerners drank coffee too – in New Orleans especially – but the way Union soldiers gulped the stuff at every meal pointed ahead toward the world the war made, a civilization that lives on today in every office breakroom.

But more than that, coffee was simply delicious, soothing – “the soldier’s chiefest bodily consolation” – for men and women pushed beyond their limits. Caffeine was secondary. Soldiers often brewed coffee at the end of long marches, deep in the night while other men assembled tents. These grunts were too tired for caffeine to make a difference; they just wanted to share a warm cup – of Brazilian beans or scorched rye – before passing out.

This explains their fierce love. When one captured Union soldier was finally freed from a prison camp, he meditated on his experiences. Over his first cup of coffee in more than a year, he wondered if he could ever forgive “those Confederate thieves for robbing me of so many precious doses.” Getting worked up, he fumed, “Just think of it, in three hundred days there was lost to me, forever, so many hundred pots of good old Government Java.”

So when William McKinley braved enemy fire to bring his comrades a warm cup – an act memorialized in a stone monument at Antietam today – he knew what it meant to them.

Follow Disunion attwitter.com/NYTcivilwar or join us on Facebook.

Jon Grinspan is a National Endowment for the Humanities fellow at the Massachusetts Historical Society.

Onde alguns veem excelencia, eu vejo atraso, apenas isso, sobretudo mental...

O Brasil exporta café desde 250 anos, pelo menos, talvez mais. Em escala mundial, somos dominantes há pelo menos século e meio.
E apenas agora descobrimos que podemos ganhar mais com qualidade? Apenas agora se começa a combater práticas nocivas que são as de colocar paus, pedras, gravetos, sujeira, no café, para aumentar a quantidade "produzida" e "exportada"?
Parbleu, isso é muito atraso mental...
O Brasil é um país essencialmente atrasado que, por acaso, muito por acaso, conseguiu acompanhar a modernidade no mundo, mais por imitação, e comportamento mimético, do que por iniciativa própria.
No campo político, então, continuamos presos a práticas primitivas e toscas de governança...
Paulo Roberto de Almeida 

CAFÉ ESPECIAL

Xico Graziano

O Estado de S.Paulo, 7/022012

Você sabe quanto custa uma saca de café? Provavelmente, não. No mercado atual, que está aquecido, se paga ao redor de R$ 500 por uma saca (60 kg) de grãos secos. Mas o café da fazenda Rainha, vendido no leilão eletrônico da Bolsa de Nova Iorque, valeu R$ 5400, dez vezes acima do preço normal.  Mágica? Não, qualidade.

Ocorre que as 22 sacas oriundas dos cafezais da fazenda Rainha, situada no município de São Sebastião da Grama, ali dentro da Mogiana paulista, venceram o 12º concurso chamado “Cup of Excelence”, promovido pela Associação Brasileira de Cafés Especiais. Outros produtores selecionados compuseram 25 lotes de excelente bebida, todos eles arrematados por elevadíssimos preços no referido leilão (18/01).

Um consórcio asiático comprou o lote campeão, entre vários estrangeiros que disputaram no tapa a primazia de comercializar um café inesquecível. Reconhecer a qualidade e, melhor ainda, pagar um bom diferencial por ela, estimula os cafeicultores a investir em boas práticas agrícolas. Custa mais, porém vale a pena.

Não existe segredo, mas sim trabalho apurado. Um cafezal somente gera produto de qualidade especial se for muito bem cuidado, na adubação das plantas, no controle de pragas e doenças, na colheita do fruto maduro e, por fim, no trato dos grãos durante o processo de pós-colheita, seca e beneficiamento. Esse zelo agronômico, porém, ainda será insuficiente se as condições ambientais não forem propícias.

Café, para dar excelente bebida, precisa estar plantado em terrenos com elevada altitude, acima de 800 metros, no mínimo. Nas encostas da Serra da Mantiqueira, por exemplo, seja do lado paulista ou mineiro, os cafezais encontram excelente clima, onde as noites frias são essenciais. Durante a colheita, normalmente entre julho e outubro, o tempo precisa estar seco, sem chuvas. Senão, o grão de café pode “arder”, perdendo sabor.

Comandada por uma mulher, Ana Cecília, a fazenda Rainha apresenta 280 hectares de cafezais localizados até a altitude de 1300 metros. Possui um sistema de gestão ambiental de última linha, controlando minuciosamente cada gleba de produção, anotando tudo – da tecnologia, do trabalho humano ou dos fenômenos naturais - como se fosse um diário feminino. Esmero no campo.

Nessas condições, seu café adquire características que os degustadores classificam como “bebida mole, adocicada, acidez equilibrada, aromas intensos”. Parece coisa de enólogo. Origem certificada, nome próprio, assim os produtores e distribuidores começam a customizar o apreciador de café, ganhando clientela sofisticada. Caso do Café Orfeu, controlador da fazenda Rainha.

O trabalho de marketing baseado na qualidade da bebida começou a mudar o mercado de café no Brasil desde 1989. Nessa época, 67% dos brasileiros pesquisados pela Associação Brasileira da Indústria do Café (ABIC) acreditavam que café bom era exportado, restando aqui dentro a porcaria. A ABIC criou um selo de qualidade e resolveu enfrentar as costumeiras fraudes na composição do café torrado e moído distribuído no país. Havia de tudo. Grãos de café estragados, misturados com casca, ou pior, acrescido de palha de arroz, até areia colocavam no pó-de-café para aumentar o peso. Sempre muito adoçada, a bebida tradicional escondia tais mazelas.

O “selo de pureza” da ABIC pegou. E os consumidores começaram a ficar mais espertos com a qualidade do café que adquiriam, conferindo no rótulo da embalagem a etiqueta de garantia. Nessa mesma época, as modernas máquinas de café expresso começaram a vencer o velho coador nos botecos da cidade. A disputa do expresso na xícara contra o cafezinho no copo contou com a ajuda da medicina, que progressivamente desmistificava a fama de que beber café fazia mal à saúde, dava gastrite. Pelo contrário, pesquisadores médicos passaram a recomendar a bebida no combate ao stress e, inclusive, à depressão humana, graças ao efeito estimulador, não apenas da cafeína, mas também dos polifenóis que contém.

A somatória de fatores positivos resultou, globalmente, no estímulo ao consumo de café, cuja qualidade melhorou, e muito. O mercado, demandando mais, puxou os preços, estimulando os produtores rurais com boa remuneração. Criou-se um círculo virtuoso que agrada a todos. Países que nunca participaram do mundo cafeeiro despertaram para a oportunidade surgida. Assim, o longínquo Vietnan se tornou o segundo maior produtor mundial de café. Quem diria!

Robusta se chama a espécie de café plantada pelos vietnamitas. Poucos sabem, mas existem duas espécies básicas: o Coffea arábica e o Coffea canephora, esta conhecida como café robusta. A primeira, mais delicada, se originou na Etiópia; a segunda, mais rústica, surgiu na costa atlântica da África. O arábica sempre predominou, pois sua bebida é mais expressiva, com paladar marcante. Já o robusta, embora apresente teor mais elevado de cafeína, oferece uma bebida meio sem graça. Figurava na segunda linha da cafeicultura mundial.

Tudo mudou, todavia, com a chegada do café expresso. Sabem o por quê? Acontece que aquela espuma da xícara, apreciada pelos consumidores, somente se consegue misturando um pouco do robusta no pó do arábica, técnica que gera o blend característico das marcas de expresso. Foi a sorte dos capixabas. No Espírito Santo, os pesquisadores agrícolas investiram, há anos, na lavoura do café robusta, fazendo-o ganhar produtividade. Dominam hoje esse veio do mercado.

Anda animada a cafeicultura nacional. Investe na qualidade, faz bons negócios e dorme alimentando um sonho: ver cada chinês tomando uma xícara de café expresso. Café, e agricultores, especiais.

Como afundar alegremente a producao de cafe de um pais, e ainda pretender fazer mais

Os plantadores, torrefadores e exportadores de café da Colômbia, do Brasil, do Vietnã, de todos os demais países produtores e exportadores, deveriam erguer uma estátua a Hugo Chávez. Não sem razão: a Venezuela, que já foi uma forte concorrente do Brasil na exportação de café, hoje necessita importar.
Adivinhem por qual razão?
Deixo aqui a historinha...

Chávez le da la razón a Friedman
por Mary Anastasia O'Grady
The Wall Street Journal, 3 de mayo de 2010

Mary Anastasia O’Grady es editora de la columna de las Américas del Wall Street Journal.

El fallecido Milton Friedman bromeó en una ocasión que "si se pusiera al gobierno a cargo del desierto del Sahara, en cinco años habría escasez de arena".

Friedman recurrió a la hipérbole para llamar la atención sobre la planificación central. Al menos eso era yo lo que pensaba hasta que Hugo Chávez se puso a cargo del sector cafetero de Venezuela. El año pasado, por el primer período prolongado en la historia del país, Venezuela no produjo suficientes granos de café para satisfacer la demanda interna. Ahora se ha vuelto un importador de café y hace frente a una grave escasez.

No es de extrañar que la reciente expropiación por parte de Chávez de algunos depósitos y tierras pertenecientes al gigante de los alimentos y conglomerado de bebidas Polar ponga nerviosos a los venezolanos. Chávez ha dicho que si el presidente de Polar, Lorenzo Mendoza, no mantiene su boca cerrada acerca de las expropiaciones, podría haber más. Los consumidores venezolanos saben que la gestión chavista de Polar probablemente no será más exitosa que sus aventuras con el café.

El colapso de la industria del café es emblemático de la catástrofe económica más amplia que se está gestando en el país. Durante más de una década, Chávez ha empleado controles de precios y de capital y la hiperregulación en un intento de alcanzar sus objetivos socialistas. Cuando ha surgido la predecible escasez, el gobierno ha respondido utilizando la táctica del salame para la nacionalización, al rebanar parte del sector privado poco a poco y tomarla para el Estado.

Ahora, la economía está colapsando. El Fondo Monetario Internacional proyecta que mientras el crecimiento del Producto Interno Bruto se elevará en la mayoría de los países de América Latina este año, se contraerá 2,6% en Venezuela. La inflación subyacente ha subido más de 30% por dos años.

Para entender cómo la situación llegó a este extremo, es útil ver el ejemplo del café. Solía ser abundante en Venezuela, pero en 2003, cuando la inflación amenazaba con dañar la popularidad de Chávez, el gobierno impuso controles de precios. Eso redujo el incentivo de sembrar café y aumentó el de exportar lo que fuera cultivado a Colombia. El resultado fue menos café para la venta en Venezuela.

Chávez es lo suficientemente inteligente para comprender que la escasez de café lo perjudica en las encuestas. Pero en lugar de dejar que el precio fluctúe, declaró al café como una materia prima insignia y lanzó un plan de $300 millones para revivir al sector. Se iba a aumentar las zonas de cultivo cafetero, plantar árboles y construir carreteras hacia los sembradíos de café.

Cuatro años después, los venezolanos recibieron esta noticia: ninguna de las promesas se habían materializado y continuaba la escasez del café. Chávez necesitaba a alguien a quién culpar y, en agosto de 2009, se dirigió a la empresa tostadora más antigua del país, Fama de América. Los militares invadieron las fábricas de Fama en Caracas y Valencia luego de que Chávez acusara a la compañía en televisión de ser una culpable clave en la crisis de escasez. Los funcionarios del Estado anunciaron una investigación de 90 días para determinar si Fama había infringido las leyes.

Al cabo de los 90 días, Chávez confiscó las instalaciones tostadoras de Fama. La medida fue justificada usando cuatro criterios. Primero, el gobierno tiene la obligación de asegurar suministros de alimentos para la población. Segundo, el café es una tradición venezolana. Tercero, era una escasez causada en parte por el tráfico ilegal a Colombia. Cuarto, Fama tenía 30% del mercado venezolano. El gobierno ha ofrecido pagarle a la empresa 10% de su tasación oficial.

Controlar las tostadoras, por supuesto, no hizo que los cultivos de café fueran más productivos. En abril, el diario venezolano El Universal informó que la cosecha de 2009-2010 cayó 16,6% frente al mismo período del año anterior. La publicación también reportó que Fama y otra tostadora importante, Café Madrid —ambas ahora controladas por el Estado— operaban un 30% por debajo de su capacidad debido a la escasez de granos. Añadió que las fábricas sólo tenían suficiente café para el próximo mes o los próximos dos y que, sin un incremento de las importaciones, las operaciones podrían colapsar en entre 30 y 60 días.

La semana pasada, Alberto Ramos, un analista de Goldman Sachs, señaló que "el gobierno ahora tiene una gran participación de la actividad económica" y que "está reaccionando a cualquier conflicto en el sector privado, real o percibido, con inmediatas amenazas de nacionalización. Este es un gran impedimento para la muy necesitada inversión nacional y extranjera". También es un impedimento para la producción ya que los chavistas no parecen ser muy buenos a la hora de dirigir empresas.

Para los detractores de Chávez podría ser reconfortante que algunos de sus partidarios estén saltando del tren "bolivariano" debido a todo esto. Pero es demasiado prematuro para celebrar. A medida que crecen las deserciones, Chávez se está volviendo más militante. Su alianza con Irán, las provocaciones contra Colombia, la carrera armamentista y el uso de personal militar cubano son pruebas de sus inseguridades, pero también de su desesperación. Hace poco anunció que niños tan jóvenes como de 12 años están siendo reclutados para trabajar como propagandistas para el Estado y ahora está encarcelando a más opositores políticos. Las confiscaciones de propiedades están en aumento.

La revolución de Chávez está en ruinas. De eso no cabe duda. Sin embargo, nadie debe concluir que él aceptará la derrota de forma pacífica.