case study : coffee
Photos courtesy of RGC Coffee
Coffee is traded on a futures market , much like other agricultural products such as corn and soybeans . Buying and selling coffee this way promotes the creation of a hedge against price swings in the market , as well as securing a much more consistent supply .
Importing coffee from several different origins is typical of Canadian importers like RGC as it allows a more consistent supply of coffee for the huge and demanding Canadian market .
Some origins , like Colombia and Nicaragua , have two crops . Peak crop is the main , longer harvest of the year , whereas the fly crop is shorter in duration . Having the ability to harvest more than once per year helps to keep the crop yields and market supply ( and therefore , the price ) steady , especially if one crop has been affected by disease or inclement weather . Other origins like Ethiopia and India have only one main harvest per year , making them more easily affected by weather and pests .
“ This year ’ s fly crop out of Colombia ( harvested April to June ) was seriously affected by El Niño , which was a lack of rain . It was not good ; it affected the country ’ s ability to export coffee this year . Anyone expecting coffee out of Colombia knows that it is very delayed . But now , we ’ re coming into the peak crop in Colombia ( harvested October to February ) and it ’ s going to be really good ,” said Bernstein .
THE COFFEE SUPPLY CHAIN
The Colombian coffee supply chain will be used as a reference in this section , as it is Canada ’ s largest origin of coffee .
Coffee is a fruit that is grown on small trees . Coffee trees can grow up to 20 feet but are pruned between eight and 11 feet . Coffee fruit is made up of five different layers : the cherry , the mucilage or pulp , the parchment skin , the silver skin and the beans . There are two coffee beans inside every individual cherry .
The supply chain of coffee is a lengthy one . The coffee cherry is harvested when it is a deep red colour , indicating its ripeness , and is picked by hand from the tree by the coffee farmer .
Left : This schedule indicates the different harvest times for each of RGC Coffee ’ s origins throughout the year
Above : Inspector grading the beans at the coffee purchasing point in Planadas , South Tolima , Colombia at the Cafisur Purchasing Point
The cherries are tossed into a large tub or bucket that the farmer wears fastened around their waist .
Once the tub is full of cherries , they are dumped into fermentation tanks – large , bathtub-like containers filled with water that allow the cherries to ferment . Once fermented , the farmer puts the cherries into a pulping machine that separates the beans from the surrounding cherry .
The beans must then dry for several days – between 15 and 20 – on either cement patios or raised drying beds made of bamboo . Once dry , the farmer puts the beans into sacks to be taken to and sold at the local purchasing point . Each sack can weigh between 150 to 200 kilograms ( 330 to 440 pounds ). Since Colombian coffee is grown on mountains , some farmers must carry their coffee sacks down the mountain by horse or mule . Other farmers have Jeeps to drive several sacks down the mountain at a time .
When the farmer arrives at the purchase point with his coffee , a coffee grader will take some beans from one of the sacks , remove the parchment from around the beans and then weigh and grade them . This , too , is done by hand . The farmer is then paid for his beans at the rate the coffee is trading on that particular day . The farmer then returns to his farm .
The beans , however , are just getting started on their journey . In Colombia , coffee purchase points are , for the most part , run by cooperatives . The cooperatives are responsible for bringing the beans from the purchase point to a dry milling facility , where the beans are put through huge machines that remove the parchment from the bean and then sort the beans by size . The cooperative then bags the coffee in burlap sacks and marks them .
Then the cooperative sells the coffee through an export arm that is authorized by the government to export it out of the country . For their Colombian beans , RGC exports through one of the main suppliers , the Colombian Coffee Growers Federation , or FNC , recognized worldwide by their famous Juan Valdez logo .
16 • SUPPLYCHAINCANADA . CA • SCMA