Supply & Demand in Coffee

Coffee. Science. Guru.

Host Josh and Dr. Adam Carr explore the complex coffee supply chain, tracing the journey from farm to cup while examining how global disruptions impact

Key takeaways

• Dr. Adam Carr explains the coffee supply chain spans six main stages: cultivation, processing, shipping, roasting, distribution, and consumption, taking 8-16 weeks from harvest to wholesale roaster.
• Brazil produces roughly 40% of global coffee, but agricultural damage from frosts causes sharp price volatility due to coffee's highly supply-driven market dynamics.

Main topics

• Coffee supply chain logistics
• Brazilian agricultural impacts and market speculation

Notable quotes

"coffee is entirely dominated. It's very much a supply-driven."

Conclusion

The episode provides a data-backed look at how agricultural shocks, co

Transcript preview

Speaker 2 (0:00) Welcome to Coffee, Science and Speaker 1 (0:01) Guru with your host Josh and the ever-knowledgeable Dr. Adam Carr. Speaker 2 (0:05) Hello. How are you, Adam? Good. Sometimes I feel like, you know, I should talk a little bit more like, um, do you remember that show that, oh, The Trap Door? Had you ever watched that? Speaker 1 (0:15) Trap Door? No, I think I was all about the Adams family. Speaker 2 (0:18) Burke, the over, the overworked, underpaid servant and the... Speaker 1 (0:21) Ah, okay, yeah. Speaker 2 (0:24) Yeah, never mind. No, it's all right. Don't worry about it. It's a reference from my childhood that probably is irrelevant. Speaker 1 (0:32) I love it. That's gold. What a way to start. It was so good. Adam, today we have discussed about talking about this particular topic. It does often come up in my training sessions. And when people sit down with the training session, they walk away from the theory part. So quite often they'll sit down in my training session for about 45 minutes or so. And I'll blast as fast as I can through what is coffee and how does it get to be coffee. what it is in our hands. Speaker 2 (1:02) And Speaker 1 (1:03) quite often the response I get from my trainees is like, I had no idea that so much was happening in the background and sort of just blows my mind. So I thought, hey, Adam, let's talk about this coffee conversation about supply and demand and look a little bit more into it Speaker 2 (1:17) and Speaker 1 (1:18) see the current effects of what's happening in the world today and how it does have an impact on this supply coffee chain. So again, you have experience in this area and you've definitely headed up the green bean buying for quite some time in the Seven Miles Coffee Roaster organization. So I Speaker 2 (1:35) have Speaker 1 (1:36) questions. And so I'm definitely looking into it. But I thought, first of all, we'd enlighten everyone to what is the basic coffee chain. So Adam, would you be able to explain for us actually what is the coffee chain? What is coffee? How does it begin? And how does it get to us in our hand as what we call green bean? Speaker 2 (1:56) Oh, mate, look, I'll share this with you. I mean, you're the educator. I mean, you know, you know this in many ways as well. But I mean, look, I mean, overall, the supply chain, when you're talking about coffee, I mean, you just, you know, you're talking about straight from the farm to cup. If you talk about the supply chain right from there, you're going from, you know, your farmer to a cooperative, to a mill, to, you know, export, shipping, import, and then, of course, you know, clearance and eventually. straight through to your roaster for roasting distribution, roasting packing distribution and then consumption. Yeah. Not to mention like the extraction stage. But, you know, I mean, when I did a life cycle analysis, I treated the coffee supply chain in terms of six parts. Speaker 1 (2:34) Okay. We're Speaker 2 (2:35) looking at, I've got to try and remember off the top of my head now because I don't have that thing in front of me, but it was, we're looking at, you know, cultivation, shipping, roasting. I think I missed another part about processing, consumption and something else. Did I say consumption twice? Speaker 1 (2:49) No, no, that's the one. Speaker 2 (2:51) Okay, I Speaker 1 (2:51) got Speaker 2 (2:51) five out of the six. Either way, it's there on the website. It's on the blog in terms of how I broadly define it for the life cycle analysis. I mean, you know, it's kind of a, you know, coffee changes hands so many times, you Speaker 1 (3:01) know, Speaker 2 (3:01) and the number of times probably differs based on the country that's there. But, you know, it must be at least a dozen. What's the Speaker 1 (3:05) general timeframe between coffee being ripe on the tree and landing in our hands as the wholesale roaster? What's that? time frame there. Sterling Speaker 2 (3:16) depends on a bunch, but I would say anywhere between eight and 16 weeks. Speaker 1 (3:20) Eight and 16 weeks. So in the minimum of about two months, that coffee could have been sitting happy on a tree. The next thing you know, it's turned into a beautiful espresso for a customer. Speaker 2 (3:30) Yeah. Well, I mean, look, I mean, coffee obviously, the coffee itself takes about nine months to ripen Speaker 1 (3:34) on Speaker 2 (3:35) the vine. So it's not an annual crop. It's semi, I wouldn't call it semi-annual, but, you know, nine months, it means every three years you're going to have, hold on, Speaker 1 (3:42) let me get it right. Speaker 2 (3:43) I've got to think of the exact fraction, Josh. What's the common denominator? Anyway, yeah, every nine months you have it, which means the crop moves back in terms of its seasonality, if that makes sense. So you may very well get like you can in the same year have two crops. Speaker 1 (3:55) Yeah. Yeah, Brazil definitely has had a couple of bumper crops in 2016 and some, you know, years after the fact. Yeah, and some Speaker 2 (4:03) countries have produced a fly crop as well. So that's an out-of-season sort of, you know. rooting period i suppose yeah Speaker 1 (4:10) i understand indonesia also like they quite often farmers will simply you know harvest a crop and process it and go to market with it when they need an injection of cash i've certainly heard one roaster described to me that quite often indonesian smallholders will approach their harvesting in that method so they can pretty much produce coffee all year round has that been the same in your experience in your or Speaker 2 (4:32) at least or at least selling coffee all year round yeah i mean when you think about it look when you think about it You know, most coffee is grown in equatorial regions, right? So in summer, winter, spring, you know, autumn, the seasons, while they'll have some kind of minor effects, they're pretty consistent. Again, that's partly why equatorial coffee growing is present. There's a whole lot of other reasons, by the way, why coffee is grown around the equator. But, yeah, I mean, people will buy and sell their coffee at times in the year as and when they need it. I mean, I think. Coffee, when it's in the green, when it's out of the fruit and it's been properly milled and processed, it's pretty shelf-stable, right? So it can last for years. I mean, many people would argue that. Just Speaker 1 (5:08) in its green state, yeah. Speaker 2 (5:09) Yeah, exactly. Or at least in its dried green state, you know, out of the parchment, et cetera. Speaker 1 (5:14) Well, I mean, at that point you've got it down to, I think I was talking to Mike about it, and I think his ideal numbers that he's looking for as far as moisture economy. content inside a green bean is something that sits anywhere between 8.5 % to about 30.5 % of moisture content in the green bean. And he goes, at that point, it's pretty stable. Like you're not going to see massive fluctuations. Exactly. Exactly. Speaker 2 (5:37) Because I mean, water facilitates microbial growth. So I mean, basically you'll get coffee that spoils through an unwanted natural process, so to speak, in the coffee. So, yeah, absolutely. He's, you know, I shouldn't say he's bang on. He'd know probably more than I would on that level. But yeah. Speaker 1 (5:52) Yeah, that's great. So when coffee comes, I mean, does it come in massive containers? Does it come in small bags? What's the general way the coffee makes it to market? Like do they put it in hessian sacks? Speaker 2 (6:05) Yeah, it can come a variety of ways. Most of the time they're shipped in containers, large containers of about, you Speaker 1 (6:10) know, Speaker 2 (6:10) between 18 and 20 tons. Again, depending on how they pack the bags and yada, yada, yada. But thereabouts. And that's... you know, 99.999 % of coffee will arrive that way. Some coffee can arrive in like 32 kilo bags, air freighted, if you really care about it. You know, there are some people that care about that quality a little bit, you know, in terms of, there is a change within the first few weeks of green coffee. It's not enough to really, it's not like tea, right? In some senses, it's, you know, again, partly I think because of the way it's processed at origin and shipped coffees. mostly you know it's roasted you Speaker 1 (6:40) know in Speaker 2 (6:40) the location of which it's going to be consumed so it's a bit different but yeah no the shelf life it does change a bit in that first month or two so some people may want that fresh crop shipped direct but i mean that's a very unusual obviously i've spent more time talking about than i need to but um yeah i've given it more