What’s the real cost of a cup of coffee? More than you think. And a lot of that cost comes not from the roasting or the producing and processing, but from the exporting – especially in my home country of Brazil.
As a coffee trader, we are the black sheep of the coffee industry. We’re seen as middle men and women, taking profits from producers and adding costs. But we want our farmers to get their fair share for their hard work. We know that if we pay them good prices, they will continue to work with coffee year in and year out.
Unfortunately, the cost of exporting makes that harder. Let me tell you exactly how much exporting coffee costs – and how that affects producers’ incomes.
Spanish Version: ¿Cuál es el Costo Exportar Café?
Container ready to be filled with coffee bags. Credit: Julio Guevara
Long Distances Drive Up Export Costs
We all know that Brazil is big, but sometimes we don’t realise exactly how big. This one country is 8.5 million km2. Only China, the US, Russia, and Canada are bigger than it – in fact, you could fit over 80% of Europe inside of this one country.
From the coffee-growing region of Cerrado to the nearest port, the Port of Santos, it’s over 750 km. It’s 400 km if you’re going from the South of Minas Region, and 500 km from the Alta Mogiana region.
And poor infrastructure can make these distances even larger obstacles for coffee exporting.
According to a report compiled by the US Embassy on Export.gov in 2016, “Roads and ports need to be upgraded. Trucks hauling cargo on roads are the most used method of transportation. Despite the existence of several rivers, waterways are rarely used, except in the Amazon region, where rivers are usually the only way to access many isolated points. Railroads are few and uncompetitive.”
The costs of this have to either be paid by the consumer, the exporter, or the producer.
Coffee warehouse. Credit: Julio Guevara
The Real Costs of Transporting Coffee
It should be easier to get coffee from the farm to the port than from one country to another. Yet in Brazil, that’s not necessarily the case.
While costs will depend on the location of the coffee farm, and the exchange rate at the time, often there is little difference between the two journeys. And sometimes, in-country costs can be even more than international shipping. This is despite the fact that most of Brazil’s coffee regions are relatively close to a port.
For example, I was recently quoted US $1,250 per coffee container (320 60-kilo bags) to be delivered from the Port of Santos, Sao Paulo to the Port of Aqaba in Jordan. For that same container of coffee, two shipping companies quoted me US $1,219.04 for transport from Varginha, Minas Gerais to the Port of Santos – just US $30 less.
To put that into perspective, Port of Santos to Port of Aqaba is a 14,825 km journey. Varginha to Port of Santos is 400 km.
Bags of Brazilian coffee. Credit: Julio Guevara
How Does This Affect Coffee Prices?
From the coffee farm to a local cooperative, the cost of a simple freight truck will work out to – in my experience – at least US $2 per bag of unprocessed coffee.
A median quote from the warehouse we use to the Port of Santos by any major freight company in our region of Brazil would cost around US $4 per bag of processed coffee. (The quotes above, the ones that I compared to the cost of international shipping, worked out at US $3.80.)
When the coffee is in the cooperative, it will be processed and sorted, which will then affect the size and weight of the coffee. One bag of coffee going from the coffee farm to the cooperative is not the same as one bag going from the cooperative to the port. This means that we cannot simply add US $2 and US $4 together to quote US $6 of internal shipping costs per bag of coffee.
What we can say, however, is that it costs more than US $6 per bag. Since coffee decreases in weight during processing, one bag of green beans is equal to more than one bag of unprocessed coffee.
US $6 is 19 Brazilian real. For a small farmer (by Brazilian standards) producing 500 bags, that is 9,500 real total – something that is only slightly less than the annual salary of a full-time worker on minimum wage (ISEAL Alliance, 2016).
And these costs might be paid by the exporter, but they will eventually reach the producers, because it is a competitive market. If we want coffee to be better paid, we need to improve infrastructure for exporting – or pay better prices. It only makes sense to do so.
Perfect Daily Grind
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