How Two Countries Control the World’s Coffee—and Why That’s a Problem
When you sip your morning coffee, you might not think about where those rich, aromatic beans came from. But the reality is, if you’re like most coffee drinkers, your brew likely started its journey in either Brazil or Vietnam. These two countries dominate global coffee production, accounting for over 60% of the world's supply. While this concentration might seem efficient, it comes with significant risks for sellers, buyers, and end consumers alike. In this post, we’ll explore why this reliance on just two countries is a concern and how a more diversified approach, including direct trade, could benefit everyone involved.
The Dominance of Brazil and Vietnam
Brazil has long been the world’s largest coffee producer, contributing about 40% of the global coffee supply. Its vast plantations and favorable growing conditions have made it a coffee powerhouse. Vietnam, on the other hand, emerged as a major player in the coffee industry relatively recently. Since the 1990s, Vietnam has rapidly increased its coffee production, focusing mainly on Robusta beans, which are used in instant coffee and espresso blends.
This dominance by Brazil and Vietnam is due to a combination of factors: suitable climates, large-scale farming practices, and government support. However, this concentration in the coffee supply chain can lead to several issues.
The Risks of Overdependence
Environmental Vulnerability:
Coffee is a climate-sensitive crop, and the heavy reliance on Brazil and Vietnam makes the global coffee supply vulnerable to environmental changes. Climate change is already causing unpredictable weather patterns, affecting coffee yields. In Brazil, for example, severe droughts and unexpected frosts have led to significant drops in coffee production, causing prices to spike. Vietnam faces similar risks, with changing rainfall patterns threatening its coffee output.Market Volatility:
When so much of the world’s coffee comes from just two countries, any disruption in these regions—whether due to environmental, political, or economic factors—can lead to price volatility. For sellers, this means that their business can be severely impacted by events halfway across the world. For buyers and end consumers, it can mean higher prices and potential shortages.Economic Inequality:
The concentration of coffee production in Brazil and Vietnam also perpetuates economic inequality. Small coffee producers in other countries, like Ethiopia, Guatemala, and Colombia, struggle to compete in a market dominated by these giants. This limits the economic opportunities for farmers in these regions and can lead to the decline of coffee farming as a viable livelihood.
The Benefits of Diversifying Coffee Sources
Diversifying the sources of coffee beyond Brazil and Vietnam can mitigate many of these risks and offer benefits to sellers, buyers, and end consumers.
For Sellers:
Expanding the number of coffee-producing countries helps create a more stable supply chain. When coffee is sourced from a variety of regions, the impact of a poor harvest or environmental disaster in one country is less likely to disrupt the entire market. This stability can lead to more predictable pricing and better business planning for sellers.For Buyers:
Diversification gives buyers access to a wider variety of coffee flavors and qualities. Different regions produce coffee with unique taste profiles, influenced by factors such as soil composition, altitude, and climate. By sourcing from a broader range of countries, buyers can offer their customers a richer and more diverse coffee experience.For End Consumers:
For the coffee drinker, a diversified coffee supply means access to a broader selection of flavors and types of coffee. It also means more stable prices over time, as the coffee market becomes less susceptible to sudden spikes due to environmental or political events in a single country. Additionally, for eco-conscious consumers, buying coffee from a variety of regions can support more sustainable farming practices and contribute to the economic development of small producers.
The Role of Direct Trade
Direct trade is an approach to sourcing coffee that emphasizes building direct relationships between coffee roasters and the farmers who grow the beans. Unlike traditional trade models, where multiple intermediaries handle the coffee before it reaches the consumer, direct trade cuts out these middlemen. This approach has several benefits:
Fairer Prices for Farmers:
In a direct trade model, farmers are often paid a higher price for their coffee. This is because the savings from cutting out intermediaries can be passed on to the producers. This not only improves the livelihoods of coffee farmers but also incentivizes them to invest in quality and sustainability.Transparency and Quality:
Direct trade encourages greater transparency in the coffee supply chain. Buyers can visit the farms, see the conditions under which the coffee is grown, and ensure that sustainable practices are being followed. This transparency often leads to higher quality coffee, as farmers are motivated to produce the best beans possible when they know their work is valued.Support for Small Producers:
By engaging in direct trade, buyers can support small coffee producers in countries that are not traditionally major coffee exporters. This helps diversify the global coffee supply and reduces the overreliance on Brazil and Vietnam. It also promotes economic development in these smaller coffee-producing regions, offering farmers a more sustainable way to make a living.
What Can You Do?
As a coffee consumer, you have the power to influence the industry by making conscious choices. Here are a few tips:
Look for Coffee from Diverse Origins:
When buying coffee, consider exploring options from regions beyond Brazil and Vietnam. Try beans from Ethiopia, Peru, or Papua New Guinea. Not only will you experience new flavors, but you’ll also be supporting a more resilient coffee industry.Support Direct Trade and Fair Trade:
Look for coffee brands that engage in direct trade or are certified fair trade. These certifications ensure that farmers are receiving fair compensation for their work and that sustainable practices are being followed.Educate Yourself:
Learn more about the coffee industry and the impact of your purchasing decisions. By understanding the challenges and opportunities within the coffee supply chain, you can make more informed choices.
Conclusion
While Brazil and Vietnam have become coffee giants, the risks of relying so heavily on just two countries are clear. By diversifying coffee sources and supporting direct trade, we can create a more stable, sustainable, and equitable coffee industry. So, the next time you brew a cup of coffee, take a moment to consider where it came from—and how your choices can make a difference.
In reference to Ilena Peng and Tarso Veloso's article, "The World’s Coffee Mostly Comes From Two Countries. That’s a Problem," published on Bloomberg on August 29, 2024.
