Coffee: a global pattern of production and consumption

Pattern: production is concentrated in a tropical band, and within that band it is concentrated in a few countries. Brazil, Vietnam, Colombia and Indonesia alone supply about 60% of world output, and Brazil supplies about a third on its own. Almost all of the crop comes from low- and middle-income countries, while the main markets are high-income countries in temperate latitudes. It is a north-south trade pattern: tropical producers, temperate consumers.

Physical factor - climate and relief. Coffee needs reliable warmth without frost, roughly 1,500-2,000 mm of rainfall, and a dry spell for ripening. Arabica, the higher-quality species, yields best at 600-2,000 m, where cooler nights slow ripening and improve flavour. Brazil has the plateau and the rainfall; Vietnam has the heat and irrigation for robusta at lower altitude. New Zealand's frosts and cool summers rule it out at commercial scale.

Human factor - labour and land cost. Coffee is hand-picked on steep smallholdings, so it is labour-intensive. Countries with abundant, low-cost rural labour and small farms can produce it cheaply. Colonial plantation systems also left exporting infrastructure and land tenure patterns that still shape who grows what. High-income countries import and process the beans, capturing the roasting and branding value.

The value is added after the farm gate, and most of the cost sits downstream.

• Processing and transport. Cherries must be pulped, fermented, dried and hulled before export, then shipped in containers. Green beans are bulky and low-value per tonne, so freight is a significant share.
• Roasting, packaging and branding. Roasting loses 15-20% of weight and requires capital equipment. Supermarket coffee carries packaging, marketing and retail margin.
• Market structure. A handful of large roasters and retailers buy most of the crop, so they have more bargaining power than millions of smallholders selling individually.
• Price volatility. The farm-gate price tracks a futures market driven by weather in Brazil, currency movements and speculative trading. A frost or a big harvest can move the price by 30% in a season, while retail prices barely change. The grower absorbs the volatility; the retailer does not.

The result is that a farmer may receive around 10% or less of the retail price, and a poor harvest can mean selling more coffee for less money. That is why the pattern is often described as an unequal terms-of-trade relationship rather than simply a supply chain.

Arguments for: certification guarantees a minimum price and a social premium paid to the cooperative, which cushions growers when the market collapses. It also funds community projects such as water and schools, and gives growers a market that values long-term relationships rather than the spot price.

Arguments against treating it as the most effective:

• Coverage is limited. Only a minority of the world crop is sold under certification, and growers must pay for certification and meet standards. Many smallholders, especially in Vietnam and parts of Africa, are outside the system.
• The premium can be small relative to the retail value. If the grower's share of the retail price is roughly 10%, a modest premium moves the grower's income only slightly, while the retailer keeps the rest.
• It does not address oversupply. Certification works inside a market that produces more coffee than it consumes at a profitable price. Without managing supply or diversifying crops, a good price attracts more planting, which pushes prices down again.

Judgement: certification is a genuine but limited improvement, and it is not the most powerful lever available. It is most effective when combined with farmer organisation, crop diversification and better access to processing. A direct-trade or cooperative roasting model, or a supply-management scheme, may shift a larger share of the retail price than a label alone.