Commodity Profile: Coffee

Coffee is the most popular drink in many countries and the most widely traded tropical product in the world. The world produces almost 11m tonnes of coffee per year and consumes about the same.

The global coffee trade accounts for 2.5% of the world’s agricultural commodity trade by value – but less than 0.6% of its trade by weight.

In total, the global coffee trade is worth about $31bn per year. More than 60% of that value comes from the trade of green, or unroasted, coffee beans and nearly 40% is generated by the trading of roasted beans.

Several of the top importers of green coffee – such as the US, Germany and Italy – are also among the top exporters of roasted coffee beans.

Coffee is grown across wide swathes of the tropics, with the area bounded by the tropics of capricorn and cancer sometimes called “the bean belt” or “the coffee belt”. The two most important varieties are arabica and robusta.

Although it is grown in the tropics, coffee is most consumed in more northerly locales, with Finland, Norway and Iceland comprising the top three countries in terms of consumption per capita. The US is the largest coffee-consuming country by total volume.

Coffee is also an important crop for smallholder farmers around the globe. Around 60% of coffee worldwide is produced on farms covering less than five hectares.

The environmental footprint of coffee varies widely from country to country and from farm to farm. Some countries have a relatively large amount of coffee-related deforestation, while others have little. One 2020 review paper found that switching to sustainable coffee-growing could reduce the crop’s carbon footprint by more than 75%.

Coffee requires a delicate balance of temperature, water, sun, shade, nutrients and soil quality in order to thrive. Around the world, extreme weather events are already jeopardising coffee crops and driving up consumer costs. And these trends are anticipated to continue as the world continues to warm.

How is it grown?

History

The words “cappuccino” and “latte” might be ubiquitous now, but “coffee” itself is thought to originate from the Arabic qahwah, which etymologists connect to “wine”.

Another theory is that the word comes from the Kaffa region of Ethiopia, where the wild coffee plant (Coffea arabica) was first discovered in 850 AD. In Kaffa, coffee is called būno, borrowed from the Arabic or Amharic word for raw coffee, while qishr is the Arabic word for a drink made from coffee husks.

Coffee was being consumed as a beverage in Constantinople (now known as Istanbul) as early as 1475, after which it was introduced to Europe. The first reference to coffee as a drink probably came from the Dutch koffie, which is thought to have filtered down from the Turkish kahveh.

Mocha, now another name for chocolate-flavoured coffee, comes from the Red Sea port of Mocha, from where beans were first shipped to Europe by Venetian merchants in 1615.

The term “coffee shop” was officially recognised as an English phrase in 1838. The first coffee house in Mecca, however, dates back to the early 1500s and it was from Yemen that coffee spread to other parts of the Islamic world.

The coffee trade was thought to be zealously guarded, with stories of coffee beans being steeped before they were shipped to reduce their germinating power. Another rumour suggests that an Indian trader called Baba Budan “smuggled seven seeds of green coffee” from Mocha to Mysore in South India, although it is more likely that coffee arrived on the subcontinent much later, with the English.

By 1675, as coffee displaced beer as England’s main breakfast beverage, coffee houses became so popular that King Charles II issued a proclamation against them for being “hotbeds of sedition”. Later, colonialism made tea the cheaper drink of choice – although a tax on tea kept coffee popular in colonial America, especially in Boston.

The Dutch took the coffee plant to the Indonesian island of Java in about 1690 and the island has since become synonymous with coffee. From Java, the Dutch took a single coffee plant back to Amsterdam, where it was grown in the Amsterdam Botanical Garden.

An offspring of the plant was gifted to France’s Louis XIV and one of those plants was subsequently taken to the Dutch colony of Suriname in the Caribbean. The French brought their plant descendants to Martinique and Saint-Domingue, which marked its introduction and spread to the Americas, with its production reliant on African slave labour.

Climatic conditions

The so-called “bean belt”, which stretches across the equator between the tropics of cancer and capricorn, encompasses more than 40 coffee-growing countries.

Latin America produces more than 55% of the world’s coffee, with Brazil leading the way as the world’s largest coffee producer.

Other top coffee producers include Vietnam, Colombia, Indonesia and India. The International Coffee Organization (ICO) estimates that more than 10m tonnes of coffee were produced in the 2020-21 growing year, with around 125 million people depending on coffee for their livelihood.

While there are more than 100 species of coffee plant, the arabica and robusta varieties dominate the market. Arabica coffee accounts for 60% of global coffee production, and robusta coffee makes up the remaining 40%. Brazil, Colombia and Ethiopia are the world’s largest producers of arabica, while robusta’s top producers are Vietnam, Indonesia, Uganda and India.

The two varieties differ in taste and caffeine content – arabica tends to be sweeter and less-caffeinated, while robusta has a harsher taste and a higher amount of caffeine. They also require different growing conditions.

Arabica coffee typically grows best at higher elevations, with temperatures between 15-24C, and requires between 1,500-2,000 millimetres (mm) of water per year.

Robusta coffee is much more heat tolerant. The plant’s optimal growing temperatures are between 22-26C. It needs more water than arabica coffee – requiring around 2,000mm of water per year – and grows best at lower elevations, between 600-1300m above sea level. It also requires a shorter growing period in comparison to arabica.

Robusta coffee has a higher resistance to weather shocks and diseases and produces a higher yield per tree. Arabica is generally twice the price of robusta.

Liberica excelsa is another variety native to Central Africa that is assuming increasing importance because of its resistance to pests and heat.

Coffee plantations have a typical lifespan of about 30 years. Once planted, the plants take four to five years to bear their fruit, which are referred to as coffee cherries. After a labour-intensive harvest, farmers process coffee cherries using either the “wet” or “dry” method, the former reliant on water-intensive machinery and the latter used in water-scarce regions.

How and where is it consumed?

While most coffee production occurs in the global south, most coffee consumption takes place in the global north.

Approximately 2bn cups of coffee are consumed around the world every day, out of which 400m cups are drank by Americans alone. From October 2021 to September 2022, Europe consumed 3.3m tonnes of coffee, while North America consumed 1.9m tonnes.

Out of the top coffee-producing countries, Brazil consumes the most coffee – it drank 1.3m tonnes in the 2020-21 coffee year. Other coffee-exporting countries consume significantly less.

Explore the flows of the global coffee trade

More than 90% of coffee beans are exported as “green”, or unroasted, coffee. Usually, the final stages of the supply chain – when coffee beans are roasted and ground – take place in Europe and North America. The US imports most of its coffee from Brazil and Colombia, while Europe imports most of its coffee from Africa and Asia.

Once roasted and ground, coffee is brewed with hot water to create a caffeinated beverage. Other parts of the coffee plant are used in some cultures. The leaves are used as a medicine in Indigenous communities in Indonesia, while the cherry husks are used to make a traditional beverage known as cáscara.

Instant coffee – which is also known as soluble coffee – is a freeze-dried, powdered form of coffee that is easier to store and prepare than ground coffee. In 2021, instant coffee made up around 9% of the coffee trade – the highest share of total trade on record. Exports of instant coffee increased by 6% in 2021 compared to the previous year.

Coffee is a growing market, even with prices fluctuating over time. In February 2023, the average price of coffee was $1.72 per pound, but in 2018, the price of coffee dropped below $1 per pound, the lowest price point in 12 years.

This volatility is, in part, due to the fact that the crop is highly susceptible to changes in rainfall and temperature. Diseases such as coffee rust and pests such as the coffee berry borer can also disrupt the coffee supply chain. Labour shortages can also affect the availability and price of coffee.

Demand for coffee is growing. Between 2010 and 2018, global coffee production increased by 24%. According to Conservation International, coffee producers will have to triple their production to meet demand by 2050. The industry is valued at more than $200bn.

Exports of coffee from Asia and Oceania are on the rise – increasing by 13% last year. Vietnam, in particular, is seeing an increase in exports. Trade of robusta coffee is on the rise as a whole, increasing by 25% over 2020-21.

What impact does climate change have on coffee?

According to the Intergovernmental Panel on Climate Change (IPCC) sixth assessment report on climate change impacts, adaptation and vulnerability, perennial crops such as coffee are “particularly vulnerable” to impacts such as climate variability and pest emergence, as they are exposed year-round.

The report points out that farmers cannot adjust the planting of perennial crops to avoid climate extremes or pests, as they might be able to do for a crop that is planted annually.

The impacts of climate change on coffee are “mostly negative”, according to a 2019 review paper. For example, increasing temperatures and decreasing rainfall can negatively impact both the yield of beans and the quality of those beans.

Several studies have found that, given coffee’s sensitivity to climatic changes, many of the current areas used to grow the crop may become unsuitable as early as 2050.

One such study, published last year, finds that changes in climate – particularly increasing average annual temperatures – will drive major changes in the suitable growing regions of coffee in the world’s biggest coffee-producing countries. Under a moderate warming scenario, the researchers project that the world’s largest coffee producer, Brazil, could lose up to 80% of its best-suited coffee-growing land.

At the same time, areas at higher latitudes or higher altitudes may become suitable habitats for coffee-growing as the planet warms. But upslope land may not have deep or rich enough soil to support coffee plantations, or that land may already be in use for growing higher-demand crops or providing valuable ecosystem services, as the 2019 review paper points out. It states:

“Therefore, the feasibility of offsetting losses from areas with declining suitability by expansion or shifts to ‘new’ coffee-optimal areas needs additional investigation.”

Agroforestry – planting other trees among and between the coffee crops – has been shown to ameliorate the effects of increasing temperatures by providing shade for the fragile coffee beans. Agroforestry systems can also provide important carbon sinks. But, at the same time, these interspersed crops can compete with coffee trees for water in times of drought, leading the IPCC to conclude that “balancing the synergies and trade-offs…is necessary based on local context”.

The emergence and spread of pests and crop disease is another major concern for growers in a warmer world.

The fungus Hemileia vastatrix, which causes coffee rust disease, was first reported in eastern Africa in the 1860s. It rose to prominence in Sri Lanka in 1869, when it destroyed much of the island’s crop and devastated its coffee industry. Since then, it has spread across the world and is now endemic in every coffee-producing country. One 2017 study called it “one of the most well-known diseases in the history of plant pathology”.

There is conflicting evidence about the impact of climate change on the spread of coffee rust. One 2015 paper found that epidemics in the early 2010s in Central America and Colombia “were enhanced by weather conditions consistent with climate change”, while a 2016 study found “no evidence for an overall trend in disease risk in coffee-growing regions of Colombia from 1990 to 2015” and, therefore, “reject[s] the climate change hypothesis” as an explanation for the spread of the fungus.

The influence of climate change on the coffee berry borer, a small beetle that causes more than $500m in damages to coffee crops annually, is more clear cut. A 2015 study found that:

“The rise in temperatures and infestation of coffee berry borers may already be affecting Ethiopian coffee crops.”

It noted that while surveys of the country’s coffee growers in 1967 “did not show any evidence of coffee berry borers”, the beetles were widespread in the south-western part of the country by 2003.

A 2009 study that carried out physiological experiments on the coffee borer found that the optimal reproductive temperature for the beetle is between 25-27C, with the pests able to survive temperatures ranging from 15-32C. It stated that increasing temperatures in places where average daily temperatures are below 26.7C “may profoundly influence the pest population dynamics”. It added that the increased dispersal of the insect “could have devastating effects in coffee growing areas” with rainfall throughout the year, such as Colombia.

What impacts does coffee have on the climate and environment?

Coffee has a significant climate footprint, which depends on how and where it’s grown, packaged, transported, brewed and consumed – and how much of it is wasted throughout the supply chain.

Of all these phases, coffee-growing is the most greenhouse-gas-intensive phase of its lifecycle, accounting for 40-80% of its total emissions.

Coffee grown in monoculture plantations exposed to the sun, reliant on irrigation and energy (for fertilisers, pesticides and operating machinery) has a very different footprint from coffee grown under shade in biodiverse, water-rich, complex agroforests.

According to a 2008 assessment by Tchibo, the world’s fourth-largest coffee-producing company, cultivation and on-farm processing account for over half the carbon footprint of coffee production, with 30% owed to consumption, and the rest from transport, processing and waste disposal.

One 2020 review paper estimated the average carbon footprint of Arabica coffee from Brazil and Vietnam exported to the UK as ranging between 15.33kg of CO2e for every kilogram of green coffee produced conventionally to as little as 3.51kgCO2e per kilogram of coffee grown sustainably. These differences are due to the method of transportation – by air versus by cargo ship – and the use of fossil fuel-derived fertilisers in conventional coffee production.

Coffee is also a beverage of convenience: many of its lifecycle emissions depend on how coffee is brewed and consumed.

Lattes have a higher footprint than espressos, even if the coffee was grown sustainably, owing to the additional greenhouse gas footprint of milk. Heating water on a gas stove has a higher climate cost than using an electric kettle. And using more coffee than is necessary – even if coffee grounds are composted – increases waste.

A recent analysis published in the Conversation by researchers at the University of Quebec outlines that at the consumer level, “avoiding wasting coffee and water is the most-effective way to reduce the carbon footprint of traditional, brewed and soluble coffees”.

Their analysis, for instance, shows that pod-capsules – which are often criticised for their reliance on single-use packaging – actually minimise coffee and water wastage and, thus, have a lower carbon footprint than traditional filter coffee. However, the researchers also warn that the convenience of making coffee this way might spur coffee drinkers to consume more of it.

Coffee also has a significant water footprint: one study from theUNESCO-IHE Institute for Water Education estimated that a single standard-sized (125 millilitre) cup made from seven grams of coffee needs about 130 litres of water. For comparison, a cup of tea, made from three grams of black tea, has a water footprint of 27 litres per cup.

One 2006 study estimated that the production of 1,000kg of green coffee in Brazil requires nearly 11,400kg of water, 94kg of diesel, 900kg of total fertilisers, 620kg of correctives such as lime (which is used to balance soil pH after fertiliser application), 10kg of pesticides and 0.05 hectares of annual land use.

Since the carbon and environmental footprint of coffee is so variable, consumer choices can have a major effect on its emissions. Other emissions-mitigation measures include shifting growing choices and technology transfer to allow producing countries to roast domestically.

While coffees described as fairtrade, organic and eco-friendly occupy a niche market, that market is expanding. Advocates say it can offer benefits for millions of small-scale farmers, ecosystems and the entire industry – but such certifications cannot “single-handedly” alleviate poverty.