Why coffee is valuable

What to do when your first thought of the day is, “Life is a drag”? Why bother getting up only to face what promises to be a challenging day? I suppose it’s mornings like these that led to the invention of the most crucial machine mankind has ever created. With the coffee machine patiently waiting, you finally summon the strength to leave the comfort of your cozy bed.

Just a few meditative movements are all it takes to kickstart the process that changes the world: as well-tempered water pours over the dark-brownish powder, a bracing smell is boarding your nose. Breathe in, breathe out. Crafting morning coffee is akin to olfactory yoga. Suddenly, life is good.

The first sip of the day holds a special place. Whether it’s Ristretto, Espresso, Cappuccino, Latte, or Filter — regardless of its form, coffee engages the brain and body, uplifts the spirit, and prepares you for the day ahead. Here you stand, revived and dopamine-fueled by that brown elixir, quietly expressing a sincere “Thank you” to the cup in your hand.

More than just caffeine

Used as a pick-me-up or lifestyle product, considerations about the coffee’s origin or manufacturing conditions often take a back seat. Form follows function, so to speak. Fair enough. However, behind the key feature named caffeine, there is a momentous nexus worth pondering.

To start with, coffee beans boast more than 1.000 ingredients. Among them are fats, proteins, acids, mineral nutrients, and carbohydrates (rest assured, it’s still a low-carb delight). With over 800 aromas, coffee surpasses the ingredient richness of, for example, red wine.

Like wine, today’s coffee is the product of a cultivated plant. Despite the existence of around 100 different Coffea species, a dominant duo, Coffea Arabica and Coffea Robusta (Canephora), claims a staggering 98% to 99% share in global coffee trading and production. They outshine lesser-known varieties like Liberica and Excelsa. To be fair, within Arabica, there’s a vast array of types to choose from. Yet, in the pursuit of money making, monocropping stands as the weapon of choice.

Bean-Drain

Speaking of value, coffee is a commodity primarily driven by quantity. For the first time since 2018, more than 170 million bags (à 60 kilograms) were harvested. The global average coffee harvest has maintained at this level. While one-quarter remains in the country of cultivation, three-quarters are exported to countries beyond the coffee belt — meaning the coffee-growing countries. The four major importers of raw coffee beans include the USA, Germany, Italy, and Japan.

This instance highlights a significant reallocation, not just in terms of the agricultural commodity but particularly within the economic value chain. Exporting raw beans does generate export receipts, but the (largely low) world price, fluctuating between 1.60 and 1.90 US dollars per pound (454 grams), translates into minimal returns for coffee farmers.

Profit distribution

Approximately 100 million people worldwide depend on coffee cropping, including farmers, their family members, farm laborers, and seasonal workers. On average, they receive only 5% of the price paid for a manufactured coffee in a typical grocery store (e.g., 30 cents on a $6 purchase). Planters earn slightly more (8%), as do the marketers and roasters (18%). However, taxes, tolls, and transportation costs account for 45% of the retail price, with national fiscal authorities and transportation agencies claiming the lion’s share. The remaining 24% is divided among retailers, and other players in the food industry, reflecting the fact that the most valuable stages of the supply chain occur in the importing countries.

“Give it to us raw”

In contrast to the much-touted concept of “free markets,” the coffee industry exemplifies how countries safeguard their domestic processing sectors. While raw coffee beans can often be imported with low or no tariffs, charges, sometimes as high as 9% in countries like Germany, are imposed on roasted or processed beans. Profits are primarily derived from manufacturing processes within the importing countries, ensuring that the gains remain local. This disparity in profit distribution reflects the historical power imbalance between countries supplying primary products and those importing them — a legacy of colonial times that persists in economic dependencies and inequalities. Smallholder families, especially those not affiliated with cooperatives, find themselves in a weak negotiating position against marketers or companies. The dominance of just five multinational enterprises in the global coffee market further accentuates this asymmetry.

Trading places

Last but not least, coffee is traded on stock exchanges, primarily in New York and London. As commodity forward transactions, there’s a speculative element in coffee trading that directly impacts the world price. Predictions of reduced crop yields, political turmoil, or currency depreciation can either decrease or raise the price. Traders stand to make significant profits through speculation, while companies typically have insurance to mitigate miscalculations. Once again, the brunt of these impacts is felt at the very beginning of the production line, where farmers, faced with a short-life food product, often must sell their coffee beans at whatever price is available.

Certainly, various approaches aim to enhance the economic situation for coffee farmers, with fair trade initiatives leading the way. These initiatives offer prices designed to ensure the livelihood of coffee farmers and laborers, reaching a level where practices like child labour become less likely (e.g., a minimum purchase price of $1.80 per pound). But the challenges intensify with increasing costs in farming and household management, propelled by economic crises and climate change.

Why does it matter

Finally finding yourself at the very end of the production line, pondering the nexus of coffee, you might ask, “Why does this matter to me?”. After all, you’re not responsible for the system dictating how coffee is produced. Why allow it to intrude on your daily habit? You may even wield the Camus-hammer, suggesting, there is freedom in not feeling responsible. (By the way, I’m quite certain this nailing thought occurred to Albert Camus while sipping an espresso doppio.)

Indeed, profound thoughts on a matter can be accompanied by a pleasure-braking dose of disillusionment. Shake it off, take a sip, and feel free. However, there’s also enlightenment in the mix, especially when thoughts lead to understanding, ultimately fostering awareness and prompting reflection on our own behaviour and the processes that envelop us, often without our notice.

It’s remarkable that a daily product like coffee can serve as a tool for reflection. Coffee is more than a basic commodity; the lifesaving morning ritual is just the tip of the iceberg. It’s a symbol and representative of how the world operates, of how people are interconnected. From politics and the economy to geography, history, biology, social and cultural studies — there’s no subject, the world of coffee cannot be connected to.

Yes, these thoughts alone may not directly assist for example a small coffee farmer in the Gia Lai province in Vietnam. But when these reflections are translated into actions, affecting daily habits such as wasting less coffee or opting for products from farm cooperatives with direct trade to smaller roasteries rather than supporting big players, they acquire significance. This is precisely why these thoughts matter.

This is why coffee is valuable.

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