Coffee Industry Status
Production volume decreases due to abnormal weather conditions
Coffee, which has the second-largest trade volume after oil, is considered a highly valuable industry among the world's food and beverage industries. The recent improvement in farmers' coffee cultivation skills and the development of various varieties and special farming methods have led to a fairly high level of coffee we drink. Coffee lovers are also more active in the latest information on coffee, and coffee makers, who are suppliers, are more eager to provide information on the special taste of coffee in coffee production and are even trying to convey knowledge of the entire production process to consumers.
There are about 25 million coffee farmers engaged in coffee cultivation, and about 125 million people worldwide are engaged in the coffee industry. 95% of the total coffee production is produced in developing countries, 70% of which are produced on small farms, and 50% of workers working on coffee farms are women, indicating that many of the coffee producing countries produce coffee in poor cultivation environments. Meanwhile, coffee cultivation accounts for 11 million hectares, which accounts for only 0.2% of the total crop cultivation, so there are many opportunities to grow in the future, but some say that the current coffee cultivation will decrease due to the global abnormal climate.
It is time for all coffee industry officials to make efforts for the sustainability of the global coffee industry. World Coffee Research (WCR), a coffee research institute under the Specialty Coffee Association of America (SCAA), says coffee cultivated lands around the world will decrease by about 50% due to abnormal weather conditions by 2050. According to the WCR report, coffee cultivation areas in Latin America such as Brazil and Colombia will decrease significantly, and coffee cultivation areas in Asia will increase relatively. On the other hand, it is argued that the overall reduction and expansion of agricultural land will be fiercely competitive for cultivation with crops other than coffee, making it difficult for coffee to secure an advantage.
Although Africa's potential for coffee production is great, various institutional policies and regulations will serve as obstacles, and farmers generally lack a low education and understanding of business, so they need to commercialize their businesses through education to continue growing and increase coffee cultivation by 20-30%. However, coffee producers differ in their positions on these claims. It is argued that the price paid to farmers in coffee-producing countries is relatively much lower than the distribution price of coffee in consumer countries. It is said that if consumer countries pay for the legitimate labor force, coffee productivity can be increased even under current conditions. Coffee producers argue that because coffee production is a low-wage labor market, farmers have no capacity to increase productivity or even think about increasing it.
In addition, the global spread of coronavirus is having a significant impact on the overall coffee industry regardless of consumer destination. Are most coffee producers safe not only for viruses but also for mountainous farmers who are currently supplying us with coffee? Although the number of confirmed cases is increasing day by day in Latin American countries such as Ethiopia, Costa Rica, Honduras, and Guatemala, it is frustrating to think about various situations in mountainous areas such as whether the last coffee process has been completed safely and whether there is any problem with exports.
Most of the coffee production areas in Latin America are harvested from January to March, and green bean trading begins in April. After a month of sending samples to buyers, negotiating prices, and preparing for shipment, shipments and transportation will take place in earnest from May, and at the moment, there will be no confidence in how logistics around the world will move. Even if it is not the COVID-19 incident, shipments have actually been delayed and canceled frequently over the past five years due to the rapid increase in logistics movement between countries, so it is not reassuring for a moment until coffee arrives safely at its final destination. Currently, commercial coffee prices in the global market have reached their lowest level again since 1999. If many countries in the U.S. and Europe, which are large-scale consumer markets, continue to force or semi-force the food and beverage industry to suspend operations, buyers' coffee purchases are likely to decrease from previous years. Coffee producers may face the biggest financial crisis if global coffee market prices remain at their lowest levels and demand from major consumer markets decreases. The reason is that coffee exports account for a large portion of their economy in most production areas. The term global village is not only an expression that comes from textbooks, but also a country that produces and consumes coffee is affected by the COVID-19 crisis as if it were one body.
Source: Global Coffee Industry Production and Consumption Trend (Hongsungdae)
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