The production of coffee is projected to register a CAGR of 4.0% during the forecast period (2022-2027).



The COVID-19 pandemic has impacted the coffee trade worldwide. Europe and other developed nations could not import due to the trade restrictions worldwide.Vietnam’s coffee exports and consumption in 2019-2020 took a hit due to the impact of COVID-19. Vietnam is the second-largest coffee producer in the world. According to the Vietnam Coffee - Cocoa Association, export turnover of processed coffee products also dropped by 8.7% in 2020.



The coffee industry has various issues from farms to markets, such as poor labor practices, unfair wages, deforestation, air pollution from roasting plants, and irregular pricing of coffee. Nestle, Unilever, and Danone implemented a combined platform called SAI (Sustainable Agriculture Information) to support the development and implementation of sustainable agriculture practices involving different stakeholders along the food chain.



Coffee Value Chain Market Trends



Analyzing Farmers and Cooperatives in the Value Chain



As per the data cited by CONAB (Companhia Nacional de Abastecimento, National Company for Food Supply), Brazil accounted for 2.1 million ha of coffee plantations in 2019. The country witnessed a dip in the cultivation area Y-o-Y in the past decade. However, improved methods of cultivation technology and supply chains elevated the production levels over the years, giving the country an edge over all the coffee-producing nations in the world. In Brazil, 20.0% of Arabica coffee production is supplied through cooperatives and grower associations. The rest is procured by local traders that further sell the coffee bags to exporters and local roasters. There is a significant opportunity for grower associations to add value to coffee and supply directly to exporters through proper market access.



Price Markups in the Value Chain



The expenses in the value chain include labor, fertilizer, inspections, certifications (Organic, Rainforest Alliance, Fair Trade), transportation, and membership fees (if the producer is part of any cooperative organization). While the costs incurred by farmers are relatively easy to identify, they can vary based on the size and location of the farm and the type of coffee being produced. Once the coffee has been harvested, processed, and transferred to exporters that send it to importers, it goes to the roaster. Roasters take on the actual cost of coffee, the agreed-upon purchase price per pound negotiated with the contract holder, and other price addition such as import and export charges and transportation. Cafes are the final destination on the value chain. Most of these coffees are reasonably priced premium coffees, which have become increasingly scarce and expensive.



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