Coffee is one of the most important commodities in global trade, subject to the forces of supply and demand. This article explores the marketing channels and systems in producing countries, along with information on transport, import, and export conditions.
1.1. Coffee - an important agricultural commodity
1.2. Marketing in the country of origin
1.3. Marketing systems and channels
1.4. Impact of international and national policies on coffee prices
1.5. Production countries and domestic consumption
1.6. Coffee exports
1.7. Quantities and composition of exports
1.8. Coffee as a transport commodity
1.9. Importing countries and their demands
1.10. Taxes and import duties
1.1. Coffee – an Important Agricultural Commodity
Coffee is grown in over 70 countries and holds a special place among plantation crops. These include perennial tropical trees and shrubs such as cacao, tea, rubber, bananas, jute, palm oil, coconut oil, sugar, and copra. They are cultivated on both large estates and smallholder farms.
Although plantation crops cover only around 130 million hectares—roughly 8% of the world’s total agricultural land of 1.532 billion hectares—they are crucial export commodities for many producing countries and generate numerous jobs. Developing countries are especially reliant on these exports. Except for sugar, they account for over 90% of global exports of the other crops.
Coffee alone is grown on more than 10.5 million hectares. Cultivation is labor-intensive, supporting the livelihoods of an estimated 20–25 million people in producing countries. For many families, coffee farming is a key source of income and an engine of local economic development. In regions dominated by subsistence farming, coffee often provides cash income while other crops are primarily grown for personal use. It also helps anchor people in rural areas, reducing migration to cities. Globally, around 100 million people depend directly or indirectly on coffee.
Exports of coffee generate significant foreign exchange for producing countries, enabling them to import consumer and capital goods or service debts. However, in only a few countries do coffee exports contribute more than 25% of total export earnings. Economic diversification and fluctuating global prices have reduced revenues for many nations.
About 95% of coffee is exported as green beans, with only around 5% processed into products like roasted or instant coffee. Roughly three-quarters of total production is exported, and price volatility significantly affects the balance of payments in producing countries.
Historically, coffee has been one of the world’s most lucrative commodities. For example, in 1986, global export revenues exceeded US$14 billion. Between 1985 and 1992, annual earnings averaged US$8.5 billion—more than double the combined exports of tea and cocoa. In 1993, revenues dropped below US$6 billion, pushing coffee from second to eighth place among the most important exports of producing countries. Prices later recovered, but fluctuations continued, with earnings around US$4.9 billion in 2001/2002.
To improve the coffee market, the International Coffee Organization (ICO) introduced the Quality Improvement Programme (Resolution 407) in October 2002. The goal is to enhance green coffee quality by excluding low-grade beans below a defined standard from export. In the long term, this is intended to stabilize world market prices and increase foreign exchange earnings for producing countries. Some countries have already implemented these measures, though participation is voluntary.
1.2. Marketing in the Country of Origin
Coffee marketing varies widely across producing countries. How coffee moves from the farm to the roastery or export market depends on social, historical, political, and geographical factors.
In some regions, large estates sell directly to international buyers, while in others, smallholder farms dominate. Over time, these different structures have led to complex marketing systems.
Key players in coffee marketing include growers, cooperatives, processors, exporters, and traders. Depending on circumstances, one party may take on multiple roles. For example, a grower might handle cultivation, processing, and export themselves, or an exporter may process beans if they have the necessary facilities.
Marketing channels tend to be longer in smallholder systems. Historically, coffee was primarily supplied by large estates directly to traders. As small farms increased and coffee became vital for rural development and foreign exchange, marketing systems grew more complex.
1.3. Marketing Systems and Channels
The marketing of coffee depends on the type of coffee, the size and structure of the farms, and the processing method—whether the beans are processed dry or wet. These factors lead to very different marketing channels.
In principle, the following actors are involved in coffee marketing: cooperatives, growers, processors, exporters, and traders. Depending on the circumstances, these groups may take on one or more functions. For example, a grower might carry out all steps up to export, or an exporter might also handle processing if they have the necessary facilities.
General rule: the smaller the production structures, the longer the marketing channels usually are. Historically, coffee mainly came from large estates that sold directly to international traders. As the number of smallholder farms increased, and as coffee became important for stabilizing rural communities and generating foreign exchange, marketing systems became increasingly complex.
1.3.1. Free Marketing
Free marketing has largely prevailed over controlled marketing. In this system, producers decide when, what, in which quantities, and to whom they want to sell their coffee.
Growers, cooperatives, traders, and mill operators are responsible for processing and bundling coffee into exportable quantities. Government or semi-government institutions mainly play an advisory and coordinating role, offering encouragement and limited oversight rather than direct control.
1.3.2. Controlled Marketing
From the late 1980s and early 1990s onwards, most producing countries liberalized coffee marketing. State or semi-state institutions had increasingly proven inefficient, costly, and uncompetitive.
Previously, these institutions:
- Fixed purchase prices for raw coffee,
- Often acted as sole buyers or exporters,
- Regulated distribution and transport costs up to the point of shipment.
For example, Marketing Boards controlled the process in English-speaking African producing countries, paying farmers based on average sales revenues. In French-speaking African countries, the Caisse de Stabilisation (Stabilization Fund) set the prices for farmers and regulated distribution and transport costs until export.
In Central and South America, semi-governmental plantation institutions organized the purchase of raw coffee. They could establish minimum purchase prices for planters, while further price adjustments were left to market forces. Farmers were free to sell to private institutions or to the respective government body.
These organizations also offered numerous services, including:
- Quality assurance
- Technical advice
- Loans
- Research
- Storage facilities
- Replanting and development programs
Today, only in Colombia does the Federación Nacional de Cafeteros still participate in this way, although its influence is gradually declining.
The theoretical approach of all systems with minimum purchase prices was to serve a buffer function: to balance highly volatile world market prices with stable, reasonable producer prices. This was achieved either through levies or subsidies.
1.4. Impact of International and National Policies on Coffee Prices
Coffee remains one of the most important export commodities for developing countries. The coffee industry creates jobs, secures incomes, and helps retain people in rural areas. Any change in coffee prices directly affects export revenues and, consequently, has a direct impact on the socio-economic development of producing countries.
These interconnections mean that political actors regularly attempt to influence pricing and the flow of goods. Coffee cultivation and exports are often unstable, and overproduction repeatedly leads to price declines. Early attempts were made to stabilize prices by intervening in supply and demand. From the idea of artificially restricting supply, not only national programs for coffee production and marketing emerged, but also producer cartels and international coffee agreements between producing and consuming countries.
1.4.1. National Coffee Policy in Producing Countries
A producing country's national coffee policy can influence production volumes, for example, by controlling investments. Technical assistance, government storage, financial resources, and marketing services are sometimes provided to smallholder farmers. Promoting quality has become increasingly important, shifting the focus from quantity to quality. Minimum purchase prices have largely been abolished.
Export taxes are an important source of revenue for producing countries. These funds are used for economic development, debt servicing, financing agricultural individualization programs, and expanding infrastructure for an efficient coffee industry. Income taxes from individuals in the coffee sector, as well as other levies in production and distribution, also contribute to the state budget.
National coffee policy cannot ignore international agreements or structural influences. Historically, international coffee agreements with quotas and price mechanisms required corresponding national regulations.
1.4.2. International Coffee Organization (ICO)/International Coffee Agreements (ICA)
From the late 1950s, importing and exporting countries began negotiating joint price support measures. In 1958, a study group was established to prepare the framework for an International Coffee Agreement (ICA). Negotiations at UN Headquarters concluded successfully in 1962, and the first agreement was signed in 1963. Remarkably, both producing and consuming countries were equally involved in drafting and implementing the agreement.
Following the first 1963 agreement, subsequent agreements were signed in 1968, 1976, 1983, and 1994. By March 10, 2004, the International Coffee Convention of 2001 (valid until 2007) counted 58 member countries: 42 exporters and 16 importers. At times, ICO membership covered 99% of global coffee production and 90% of global demand.
The goals of these agreements included:
- Balancing supply and demand
- Preventing sharp price and quantity fluctuations
- Securing employment and income in producing countries
- Ensuring stable foreign exchange earnings
- Promoting global coffee consumption
- Strengthening international cooperation
Until the 1983 agreement, export quotas were the cornerstone of these treaties. Member countries’ export volumes were regulated to keep coffee prices within a desired range. Practically, if prices were too low, exports were reduced until scarcity drove prices up; if prices were too high, supply was increased, which lowered prices again. Suspending the quota system, however, led to very high prices.
The agreements’ impact varied regionally. While they sometimes contributed to price stabilization, financial benefits were questionable for many producing countries. The failure of the 1983 commodity agreement in 1989 led to distortions and tensions caused by the rigid quota system:
- Production did not match market demand
- High-quality coffees were overpriced, while lower-quality coffees were abundant and cheap
- Separation into members and non-members caused price differences, as non-members could purchase cheaper coffee
After 1989, attempts to establish a new agreement with interventions such as export quotas failed. In 1993, these efforts were abandoned. Subsequently, producing countries founded the Association of Coffee Producing Countries (ACPC) to maintain the ICO as a forum for dialogue and strengthen cooperation among members. New agreements were adopted in 1994 and 2001, this time without export quotas.
Today, the International Coffee Organization (ICO) has 77 members: 31 importing countries, 45 exporting countries, and the European Community. The 2007 agreement promotes the global coffee industry and its sustainable development. ICO tasks include compiling statistics, disseminating information, and advising the European Union and the Common Fund for Commodities, an institution providing development aid for raw material projects.
1.4.3. Producer Cooperation as a Means of Price Stabilization
Cooperation among producing countries to reduce coffee exports has existed for over 50 years. In 1945, 14 Latin American countries founded FEDECAME to protect their coffee interests. After failed international negotiations in 1956, seven states signed the Mexico City Agreement, an export quota program. This evolved in 1958 into the Latin American Coffee Agreement (LACA), regulating exports of the 15 most important Latin American countries.
In Africa, the Inter African Coffee Organization (IACO) was established in 1960 to coordinate producers’ interests and promote quality, marketing, and knowledge. The African and Malagasy Coffee Organization (OAMCAF), also founded in 1960, consolidated production and exports and represented member countries in international bodies.
Even in quota-free periods, producer cooperatives formed ad hoc to influence prices. In 1966, producing countries intervened in the New York market; in 1973, 21 countries of the Geneva Agreements withheld nearly 10% of their deliveries. In 1973, four major states developed a Buffer Stock Plan (“Café Mondial”), which was abandoned in 1975 due to frost-induced high prices.
Other initiatives included the 19-member Caracas producers’ cooperative in 1974, the Bogotá Group in 1978, and PANCAFE from 1980 onwards, representing Costa Rica, El Salvador, Guatemala, Brazil, Mexico, Honduras, Colombia, and Venezuela. PANCAFE managed approximately $480 million for purchasing and storing coffee. Attempts to raise prices failed and were discontinued by the end of 1980. Afterwards, a workable agreement was reached within the ICO.
By mid-1989, all attempts to stabilize prices through international coffee agreements initially ended, causing a massive drop in raw coffee prices for several years. After these failures, countries such as Guatemala, Costa Rica, El Salvador, Nicaragua, Brazil, Colombia, Indonesia, and African producers decided in fall 1993 to withhold about 20% of their exports.
The Association of Coffee Producing Countries (ACPC), with 14 members controlling about 75% of global coffee production—Angola, Brazil, Costa Rica, India, Indonesia, Ivory Coast, El Salvador, Kenya, Colombia, Democratic Republic of Congo, Tanzania, Togo, Uganda, and Venezuela—agreed at the governmental level to stabilize raw coffee prices through restraint. The withheld quantities were later released to the market. The ACPC headquarters was in London but closed in 2002, ending its activities.
1.5. Production Countries and Domestic Consumption
Although coffee is primarily an export commodity, it is also consumed domestically in many producing countries. About 24% of global coffee production – roughly 27 million bags – is consumed directly within the producing countries. In the Philippines, coffee is so popular that imports are required in addition to domestic production to meet national demand. In Haiti and Cuba, over 80% of production is consumed domestically.
In countries such as Colombia, Brazil, Venezuela, Mexico, and other Central American nations, coffee holds special cultural significance. It is also a popular beverage in Indonesia, Ethiopia, and India.
In producing countries, the highest-quality coffee is often reserved for domestic consumption because the global market yields significantly higher revenues for premium coffee. At the same time, lower-quality coffee is transformed into a valued, locally typical beverage through individual roasting and preparation in Europe.
Countries have recognized that coffee consumption strongly depends on living standards and the level of industrialization. With increasing economic development, both coffee consumption and quality expectations rise.
1.6. Coffee Exports
Coffee exports from producing countries amounted to just under 78 million bags in 1997/98, rising to 88.6 million bags by 2002/03. Export volumes depend on various factors: harvest yield, price levels, stock availability, export regulations, and consumption patterns in importing countries.
The Arabica share of production, which was 80% in 1960/61, has now fallen to around 60%. Looking back, coffee exports increased sharply after World War II: approximately 40 million bags were exported annually in the 1960s, rising to 60 million bags in the 1970s. Today, about 89 million bags of green coffee are needed annually to meet the consumption demands of importing countries.
1.7. Quantities and Composition of Exports
The largest coffee exporters are Brazil, Vietnam, and Colombia, which together account for up to 57% of global exports. Other major exporters include Indonesia, Guatemala, India, Uganda, Peru, Honduras, Ivory Coast, Mexico, Ethiopia, Costa Rica, El Salvador, and Papua New Guinea. Combined with Brazil, Colombia, and Vietnam, these countries make up roughly 92% of global coffee exports.
Coffee is predominantly exported in raw form. About 6% of total exports are instant coffee, and only 0.1% is roasted coffee. Finished products are calculated based on their green coffee content:
- 1 part roasted coffee = 1.19 parts green coffee
- 1 part instant coffee = 2.60 parts green coffee
The largest producers of instant coffee are Brazil (approx. 50% of exports), followed by India, Colombia, Mexico, and Ivory Coast. Brazil also leads in roasted coffee with over 50%, followed by Mexico, Costa Rica, Colombia, and Vietnam.
In addition to exports from producing countries, there are re-exports from importing countries, totaling around 20 million bags annually – over two-thirds of which are within Europe.
Producing countries mainly export green coffee because they cannot compete with the advanced coffee industries in consuming countries. They lack market-ready products, modern technology, and efficient marketing strategies. High investment in roasting and packaging technology, as well as logistical challenges, limits market access. Roasted coffees often consist of blends from multiple countries, meaning producing countries would have to import green coffee to meet comparable standards.
Opportunities exist especially for single-origin products, high-quality specialty coffees from a specific country, organic coffees, or fair-trade coffees, which enjoy an excellent reputation worldwide.
1.8. Coffee as a Transport Commodity
Before coffee reaches the roasting machines of the processing industry, it travels thousands of kilometers from the producing countries.
Originally, coffee was transported in wooden barrels, later in sacks stacked on ships for weeks-long journeys. Over 25 years ago, containerization became widespread: coffee was shipped in containers that had previously been filled with export goods for transport to the producing countries.
For about ten years, coffee has increasingly been delivered as loose bulk goods in containers. Special bulk containers with filling openings or standard containers with polyethylene "big bags" were tested, yielding positive results:
- Better utilization of container volume
- Significantly more cost-effective handling
- Reduced use of sacks and environmental impact
Bulk shipping has proven economically viable: producing countries adapted their infrastructure for container loading, and roasters in consuming countries have the necessary equipment for handling loose goods. Nevertheless, the bulk container is now considered outdated due to high cost and inflexibility.
Quality assurance remains crucial: the packer in the producing country must ensure the goods are in perfect condition, as recipients in consuming countries usually do not open the containers.
1.9. Importing Countries and Their Demands
Global coffee consumption currently stands at nearly 108 million bags per year. Importing countries require approximately 80 million bags as the basis for roasted and instant coffee. Domestic consumption in producing countries exceeds 27 million bags.
The main consumption areas are Europe, North America, and Asia. Japan continues to see growth in coffee consumption, while Europe shows only slight increases. In the USA, consumption growth has returned after years of decline.
Consumption habits and levels vary greatly among importing countries. Neighboring countries often show similar consumption patterns. Differences exist in blends, roasting levels, and preparation methods. Historical relationships between consuming and producing countries, sometimes dating back to the colonial era, remain a key factor.
- Western and Southwestern Europe prefer Robusta
- Scandinavia and Italy rely heavily on Brazilian coffees
- Central Europe uses both washed and unwashed Arabica beans
Innovative roasting methods and the internationalization of taste have increased the importance of Robusta. In Central and Eastern Europe, inexpensive, hard Robusta varieties dominate.
Coffee consumed domestically in producing countries often does not meet the quality standards of the export market, as it usually consists of products that could not be sold internationally.
1.10. Taxes and Import Duties
Government levies, such as customs duties and taxes on coffee, have historically decreased significantly in consumer countries. Apart from sales or value-added tax (VAT), many countries do not impose further levies. Some countries impose import duties, and a few also levy additional consumption taxes.
Import Duty
- Germany has abolished duties on raw caffeinated coffee.
- Within the EU, no customs duties have applied to caffeinated raw coffee since July 1, 2000.
- Canada, the USA, Japan, and New Zealand also do not levy import duties on this product.
Indirect Taxes
Special excise taxes on coffee exist only in a few industrialized countries. Historically, they date back to the colonial era when coffee was considered a luxury item. In Europe, coffee taxes are levied only in Germany, Denmark, and Belgium.
- Germany: 1 kg roasted coffee €2.19, 1 kg instant coffee €4.78
- Coffee-containing products are taxed proportionally based on dry coffee content, potentially creating competitive distortions between domestic and foreign producers.
Value-Added Tax (VAT)
- Europe: Denmark 25%, Norway 24%, Austria & Italy 20%, Finland 17%
- Germany: 7%, Great Britain & Ireland: no VAT
- In Germany, approximately one-third of the final consumer price for coffee is accounted for by government taxes
