November 13, 2017      4 min read

Despite being an industry that is seemingly ever-powerful and not likely to run out of favour anytime soon, coffee production remains a sector that is tormented by massive challenges that can be difficult to overcome. Often, these challenges are weathered by those who are the most vulnerable and the least profitable yet the piles to the industry’s success. Here is a snapshot of the coffee supply chain and obstacles met along the way.

Location, location, location

The global locations where coffee is grown predispose the industry to significant troubles from the start. Coffee is predominantly grown in extremely fertile but extensively poor and under-developed nations in parts of South America, Africa and even Asia, such as Vietnam. Challenges faced with coffee plantations existing in poorer nations is the transport and shipping to processing plants and retailers which are predominantly located in developed countries. In addition to this, the coffee growers and workers often put in the hard yards and see the least of the profit as working conditions are less stringently monitored in such nations with conditions remaining dire.

Social awareness and consumer fluctuations

The unfavourable state of work conditions for coffee plantation employees is the driver behind social enterprises and campaigns such as Fairtrade. However, to fund proper work conditions, financial help is required which falls into the hands of the consumer. As impressionable as our society is towards social justice and change, it remains that sometimes people just do not want to pay the extra few dollars. This can be a massive challenge to Fairtrade suppliers who are trying to combat exploitation of poorer people and economies. For this, price and advertising need to be balanced and optimised to instigate a Fairtrade culture amongst the socially-aware consumer. Now of course, to optimise price both for the consumer and profits for the coffee plantation staff, the costs of transportation, processing and logistics need to be minimised. This is perhaps an opportunity to utilise inventory management software which can tidy up all the loose ends in the supply chain thereby reducing futile costs and maximising profits.

Coffee companies such as Campos Coffee have begun to include social responsibility as part of their business model. Read more about the great work they’re doing here!

The ugly truth

Climate change. We hear the phrase time and again and but rarely does the true weight of it impress upon consumers. Climate change is estimated to ensure a 50% loss of viable coffee-growing land and a 10-20% loss of yield worldwide by 2050. The vicious cycle continues as coffee plantations would be forced further up hillsides presenting more issues including further deforestation. There are research groups tasked with extensive investigations into alternative options to deal with the increasing threat of climate change with proposed actions including adapting and diversifying crops and developing more resilient production systems.

Arabica is thought to be the best quality coffee boasting aromatic flavours and comprising approximately twice the volume of the international coffee market. However, Arabica is a sensitive plant and is particularly vulnerable to the increase in temperatures predicted to arrive with climate change.

Protecting the bean

Coffee beans are sensitive and requires protection at all points in the supply chain. One of the greatest existing threats to coffee growth are pests, diseases or fungi. Specifically, coffee leaf rust (or la roya) has been known to dramatically affect crops and jeopardise yields. This was particularly the case in 2012 during an epidemic which sparked the decision by growers to plant more resilient but less lucrative varieties. La roya was found to be less profitable in cooler temperatures from higher altitudes, which provided a logical method of controlling their numbers: plant the crops higher up. However, a big challenge of recent times has been the adaption of pests to survive in cooler climates and thereby still attack higher-altitude crops.

Declining labour market

The managing director of Moplaco in Ethiopia identifies labour shortages as another significant challenge faced by the coffee industry. Coffee growing and roasting are such labour-intensive processes and it is becoming more and more difficult to entice staff to the coffee cherry trees. In part this is due to the seasonal nature of the work which contributes to an inconsistent income but also means workers must pick in tough conditions on mountain-sides for example, with comparatively low pay. With the increase in development, staff are finding easier and more lucrative work in the cities creating a labour crisis in the coffee sector.

Accepting the supply chain challenge

A viable and even productive supply chain is required and is within reach for the global coffee market. Its realisation hinges however on a few fundamental principles and actions. With 9 billion kilograms of coffee having been drunk worldwide in 2016, it is worth getting this process right. Although Fairtrade is admirable and has benefited many a grower, it is not the solution for all. Instead it is suggested that roasters connect directly with farmers and growers, which not only simplifies the supply chain by removing the money-hungry middle man, but also empowers the grower and ensures the roasters have access to a larger range of authentic, quality coffee beans. Of course, with the model, the supply chain must be managed by the roaster or farmer themselves who may not possess particular skills in this area. This is where inventory management and logistics software can prove to be an excellent tool and one to certainly consider.

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