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THE COFFEE GLOBAL SUPPLY CHAIN AND COVID STRESSES { Some Excerpts from the ICO Coffee Development Report } ROCKY RHODES | CEO, INTERNATIONAL COFFEE CONSULTING
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couple of decades ago, the concept of ‘direct trade’ was a fantasy and a business fallacy for most small to medium-sized roasters. There was just no cost-effective way to meet the farmer, shake hands, make a deal and move the coffee effectively. It is still hard, but according to the ICO report, we are making a difference and moving the needle for producers and their quality of life. Let’s define the Coffee Global Value Chain. In a C-GVC there are transformative functions that happen in multiple countries, acted upon with high-efficiency operations, and manipulated with business relationships that benefit all with the transfer of knowledge and technology. In other words; from the people that grow coffee to the people that consume it, there is an agreement that each party does what they are best at and enhance the other parties, so the whole chain thrives. The growing, exporting, importing, roasting and retailing of coffee is
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2021 | WINTER ISSUE
centuries old. Doing it on purpose for the benefit of all is rather new. Small roasters doing direct trade projects and really building a solid relationship upon which to do business is the current emerging model.
benefits from production.” It then proceeds to define three types of upgrading: PRODUCT, FUNTIONAL, and PROCESS upgrading.
‘What is coffee worth?’ is a question at the core of building an effective C-GVC. The old model based everything on the commodities market pricing for Arabica and Robusta. A good C-GVC attempts to use a more thoughtful pricing model that starts with, ‘How much does it cost to produce?’ From there one can determine what is needed to make a reasonable profit and a sustainable life for the farmer.
Much of what we as roasters do falls into the PRODUCT upgrade category. Once we have decided upon our trading partners, we will offer technical support to build on the quality of coffee being produced. We help with education on best practices in growing, harvesting and varietal selection. We work together to explore different processing methods that might yield better flavors. We also help advise on social and environmental marks that would increase the value for the final customers in the C-GVC.
Using production cost as a jumpoff point then exploring all the intermediary steps will create a model where value can be increased through ’upgrading’. As stated in the report, “Upgrading can be defined as producers or firms moving to higher value activities to increase the added value, capabilities, and
To do this requires investment. It takes time and money to bring about change. That is why, at the core of the C-GVC is the relationships of the participants. People want to do business with those they know, like, and trust. There is a realization that a win for one will be a win for all and that the chain will only be as strong as the weakest link. COFFEETALK MAGAZINE
