Supply Chain Obstacles of Coffee

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Kaffee. Kofi. Caffe. Ca Phe. Kaffii’. Ga Feh. Coffee. No matter what language you say coffee in, the drink you are served is universally loved. People’s affinity for coffee is centuries old and its global popularity ceases to slow down. As the appreciation for coffee seems widespread, it’s worth paying attention to how it gets to us. The supply chain for coffee is laden with logistics around the globe. Various big businesses and small farming communities must overlap in this interwoven interest of coffee beans. There are so many facets constantly changing within the coffee supply chain that it means there are a multitude of obstacles that it faces.

Logistic challenges

For the majority of coffee drinkers, coffee beans don’t grow in our backyards. They are farmed in humid climates, often in developing countries. Farmers and labourers harvest the beans when they are ripe and ready to be picked. Distributors and wholesalers need to retrieve the beans from the farms and pass them onto roasters. The roasters then deliver a more final bean product to coffee shops and grocery stores. In a coffee shop, the beans fall into the hands of the barista who artfully brews a coffee that lands into your hands. The journey is long and it doesn’t come without issues.

Coffee prices have been increasing recently, yet green coffee prices on the commodity market are fluctuating. Large portions of the coffee producers in the world are stuck in a commodity trap. This trap means they have little say or leverage on the price of coffee. In recent years, people and brands have gravitated towards supporting small farmers who farmed coffee ethically. However, despite farmers’ attempts to grow coffee in a sustainable manner, most of the profit from this effort lands in the pockets of cafes and stores, not the farmer.

What is the ordering cost of your coffee?

The ordering cost of coffee is volatile throughout the supply chain. The inconsistencies of the ordering cost mean that the people at the start of the supply chain, the farmers and labourers, have the least control. Ironically, without these farmers and labourers, the coffee industry would not exist. If a cafe can increase its ordering cost for the product that farmers produced, it would make sense that some of the profit would pass down to the farmers as well.

Unfortunately, that is only one of the obstacles currently facing the supply chain of coffee. Another challenge is the severe impact of climate change. It has the power to alter the industry. Climate change has seen increases in temperatures and humidity in South America. With these weather changes, there has been outbreaks of coffee rust. This is a type of fungus that has the power to wipe out up to 70% of coffee bean production across South America. Issues like coffee rust not only plague the coffee industry, but have a direct impact of the farmers and labourers first hand. Their livelihoods depend on the coffee bean and if climate change threatens the growth, then it threatens their family.

Take time to appreciate where your coffee has come from and be aware that there are many ongoing obstacles faced by the coffee supply chain.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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