The glorious middle man

How does coffee trade work?


I have always wanted to know how this process works.

Everything I read about trade when I was first getting into roasting was like ‘the coffee was grown by a farmer, we tasted it, then it arrived in our warehouse and we roasted it’

WHAT HAPPENED IN BETWEEN?

 

I know the topic of moving coffee from point A to point B could get a little dry, I promise to keep everything in laymen's terms and fun (because that is all I can understand myself).

Also, for me, understanding how coffee got from ‘in country’ to Australia made me appreciate how much work goes into the coffee in your hand.

From the ground to you.

So, coffee is grown.

It grows on a tree that produces fruit year round, however in order to produce fruit the tree must first flower. Flowering comes after rainfall.

After being picked, the skin of the fruit is removed and the sticky sugars washed away. This process is usually done on the farm, or the pulping equipment is shared by a bunch of farms (called a co-op). After processing the coffee gets dried.

When the coffee is dry it is sent to a mill where the papery husk is removed and the coffee is sorted into grades, either by size or weight, sometimes both.

At the milling stage the coffee is often still owned by the farmer, the milling is a service that the farmer must pay for. Sometimes the coffee is sold to the mill who could blend it with a bunch of other coffees and sold at auction.

Now, the farmer can take the coffee to auction, or they might already have a relationship direct with an exporter. Either way the coffee is sold to the exporter. The farmer gets their money to invest back into the farm for a year, pay employees and draw a wage. An exporter needs to have a license to export out of their country.


The coffee is usually trucked to the exporter's warehouse whilst the exporter tries to find a buyer. The exporter will take samples and send them overseas to importers. This is called a ‘pre shipment sample’.


The exporter plays an important role, they manage relationships with importers. They look for trends or preferences in flavor and price and make sure that the coffee is connected with the right customer.

Next the exporter finds an importer who wants the coffee.
The importer pays a deposit and the coffee is trucked down to the port where it is packed into a container, sealed and loaded onto a ship. The exporter will often hire a logistics company to make sure the right coffee gets packed into the right container and put on the right ship.

The exporter will file paperwork with their port authority to say that the coffee has been exported. They need to prove this with documentations from the logistics company.  Then the coffee is put on the ship.

NOW, the coffee is on a ship. It is now the property of the importer, who has to wait for it to sail to Australia. For insurance purposes, liability is transferred completely to the buyer. Obviously, the importer needs insurance on the coffee. If the container falls off the ship, you want to be covered.

When the coffee arrives in Australia it must pass through our ridiculously low customs regulations (customs check to make sure the container holds what the paperwork says it holds.) This is done via x-ray. Only 1 in 10 containers are actually opened up and checked. Naturally, this process can take a while. Frustrating to think your precious coffee is just hanging out in a holding yard, waiting for customs.

The importer needs to pay fees for having the container checked and x-rayed.

When the coffee is cleared by customs it can be picked up by the importer and trucked to their warehouse.

The importer will taste the coffee and compare it to the pre-shipment sample they received. They will need to ensure that it's the same coffee they ordered. 

The importer then needs to sell the coffee to a roaster.
Usually the pre-shipment would have also been sent to coffee roasters who may be interested in purchasing some or all of the coffee from the importer. The importer will try to pre-sell as much of the coffee before it arrives in Australia.

A roaster will select a coffee they like either by tasting the pre-shipment sample and agreeing to purchase it before it arrives in country, or by “SPOT” which is purchasing coffee already available in country. The roaster will select a coffee based how it tastes and it’s price.

The importer will engage a logistics company to move the coffee out of their warehouse, put it on a truck and deliver it to the roasting warehouse.

When the coffee is paid for it becomes the property of the roaster.

There are so many steps, so much paperwork, so much logistical organisation that contributes towards getting your coffee from point A to point B. There are many steps where the coffee could get lost, be sent to the wrong location, or even stolen.
The people who fill out the required forms, organise the trucks, and send the samples play a pivotal role in the coffee industry.

Next time you're enjoying your morning coffee, try and visualise the mounds of paperwork, the manual handling, and miles travelled that ensured the coffee made it into you cup!

Ryan Toleman