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Comment by grecy | Hacker News Reader

It's a shame an article like this doesn't tell the economic enslavement story. Ethiopia and other poor countries are unable to reap profits from the coffee they grow thanks to extremely restrictive WTO tariffs that essentially prevent them from processing it before they export it. This means they're forced to export raw beans for pennies, and they'll never really make much money doing so.

It turns out coffee growing countries only receive about 8% of the total coffee revenue annually and Germany is actually the fourth largest exporter of coffee in the world, despite never growing a single bean.

Schoolyard bullying, on a global scale.

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> Ethiopia and other poor countries are unable to reap profits from the coffee they grow thanks to extremely restrictive WTO tariffs that essentially prevent them from processing it before they export it. This means they're forced to export raw beans for pennies, and they'll never really make much money doing so.

As someone who has roasted my own coffee for 20 years, I'm confused about what you're saying. What are these "raw beans" that the Ethopians are forced to export?

I do buy green coffee beans from Ethopia, and have about 25 pounds of Ethopian at home right now. Are these the raw beans you're talking about? I certainly wouldn't want to buy coffee that was roasted in Ethopia; it would be awfully stale by the time it gets here.

I mostly buy dry process beans, occasionally wet process. I've just never heard the term "raw beans". Are you talking about raw unprocessed coffee cherry? I didn't know anyone exports those as is. I thought they would go bad in shipping, and no one would buy them. And the sheer bulk and weight of raw coffee cherry should make it more economical to do a dry process or wet process at the source, to separate the valuable beans from the husk.

I do buy a lot of my green beans from Sweet Maria's. They have a Farm Gate program where they work directly with coffee growers to make sure they get a fair price - generally more than the "Fair Trade" pricing.

If you can help educate me on what I'm missing here, I would appreciate it - thanks!

> I certainly wouldn't want to buy coffee that was roasted in Ethopia; it would be awfully stale by the time it gets here.

But if Germany is the 4th largest exporter in the world as the parent comment said, apparently plenty of people have no problem buying stale coffee from them.

I see that note in the comment, but I don't understand how Germany can be a coffee exporter when they don't grow coffee there. They can only export as much coffee as they import.

This sounds like a warehousing and shipping operation to me. Calling Germany an exporter seems like calling an Amazon fulfillment center a "manufacturer" of the products they ship to customers. Or calling Sweet Maria's or Coffee Bean Corral or Happy Mug coffee "growers".

But maybe I don't understand the terminology, and I am definitely out of the loop on mass market coffee.

Actually, Tom of Sweet Maria's did try to grow his own coffee here in California, with hilarious results. Behold, Finca West Oakland:

https://legacy.sweetmarias.com/library/finca-west-oakland-gr...

Germany is a roasted coffee exporter. They import green coffee beans from developing countries and process them into various coffee products (roasted beans, ground coffee, soluble crystals). Because they are transforming a raw material through an industrial process, they end up with a new product which they sell to the world (export).

What might be confusing is Germany also re-exports green beans to other countries, at a markup. This is a much smaller % compared to the coffee products they export.

Does this clarify things?

That does, thank you very much for the detailed explanation. I was only looking at part of the picture.

The comment I was referring to was pretty explicit in saying they don't grow beans, meaning they've likely got a big chunk of their coffee economy involved in selling "stale" coffee. It's probably relatively fresh within the EU, but I've definitely seen more than my fair share of European roasted coffee thousands of miles and many shipping weeks away from the roaster.

Companies in Germany, like Switzerland, Netherlands, US etc import green coffee from around the world, roast it, mix various types and origins and qualities to produce commercial recipes that have a stable taste, then grind it and pack it in air sealed packs (as soon as possible after roasting). Being an import hub for green coffee allows the mixing, essential for commercial coffee. Coffee producing countries usually put duties on imports of green coffee to protect local production. They could import roasted coffee to then mix with local production, but that would have to be air/sealed in bulk, which i imagine is quite costly. And I suspect the market for single origin coffee is still too small to allow economically viable operations. Once roasted and sealed from the effect of air oxidation and humidity, coffee can last quite a while, certainly enough to be exported throughout the world.

I think people also underestimate the efficiency of supply chains. Not quite the same thing because of scale, but one of the best places in the US to get oysters is restaurant in Denver, CO. While Denver is not near water, it is near the center of the US and gets fresh oysters from both coasts.

I'm not sure many people are air-shipping coffee for freshness, but Germany could easily provide 'fresh' roasted coffee for anywhere in Europe.

What’s the restaurant name? I’m in Denver and love oysters

Jax Fish House downtown. I used to think it was just a localish place, but I've mentioned 'good oysters in Denver' to vendors who travel a lot and they all immediately say Jax. Admittedly, I haven't been to Jax in quite a few years since moving to the coast, but people I talk with still say it's great.

https://www.jaxfishhouse.com/lodo/

Cool, thank you! I walk by it all the time, never occurred to me that it might actually be really good.

I also don’t understand where this is going:

> coffee growing countries only receive about 8% of the total coffee revenue

If we look at the price of, for example, white flour from the supermarket, it should be immediately obvious that grain farmers are receiving some tiny fraction of the total net value of all baked-goods / pasta / pizza / etc sold annually.

It’s not immediately obvious that this is bad or unfair.

Yes it's misleading, I suspect purposefully. The cost of green unroasted coffee cannot be compared with "global coffee revenue" ... roasting makes coffee lose 30%, then you add packaging, shipping, labor to distribute ... finally the cost of coffee cup adds in service, rent and more ... you buy a kilo of green arabica for $4 after roasting and shipping you're on $8 ... so sell a cup in a cafe let's say you make 20-100x per kilo yet cafes are still the thinnest margin business and most go bankrupt.

It's equivalent to saying the oil producing companies only get x% of global car sales. Simply, ridiculous statement.

> It's equivalent to saying the oil producing companies only get x% of global car sales.

Cars are not really made of oil, gasoline is. And this was probably not the best of examples. In most oil companies extraction/exploration (raw material) and refining (processed product) actually split the profits pretty evenly, all things considered. Marketing (gas stations) gets pretty much the breadcrumbs and relies for profit more on selling Coke and sandwiches than actual gas.

This is unlike most other cases where the raw materials are worth far less than the processed ones, and the bulk of the profit goes to the final manufacturer rather than the raw material exporter.

> I suspect purposefully

Please don't do that here. This is in the site guidelines: https://news.ycombinator.com/newsguidelines.html. Your comment would be just fine without that bit (and the final bit).

It's funny, if you watch a show about farmers in the US - when they talk about farm product prices you are like - huh, how is this product so CHEAP?

Seriously - the great increase in wheat prices brings it to 8 cents per pound in the US.

And my avocado whole wheat toast still costs $10-15 with taxes and tip.

> I certainly wouldn't want to buy coffee that was roasted in Ethopia; it would be awfully stale by the time it gets here.

Couldn't they process and export instant coffee without any problem?

Assuming they could, who would want to buy that? You do not go for high quality Ethiopian beans to then make instant coffee…

> Assuming they could, who would want to buy that?

People who want instant coffee?

> You do not go for high quality Ethiopian beans to then make instant coffee…

Ok... can you use the lower quality ones?

>I certainly wouldn't want to buy coffee that was roasted in Ethopia; it would be awfully stale by the time it gets here.

This is the play: hide the profound injustice in an offhand quip. If exporting from Germany is not a problem, why not Ethiopia?

Though, I suspect what would happen is that coffee roasted in Ethiopia would be somehow worth less than German-roasted. Ethiopians would recoup some of the profit that they're missing, but other ways would be found to shortchange them. The root of the issue is he undervaluation of Ethiopian labor and resources so as to secure profit and affordability further down the line.

> Though, I suspect what would happen is that coffee roasted in Ethiopia would be somehow worth less than German-roasted

If it was ever done, it would cost 5x or 10x more, thanks to the heavy sanctions placed on processed coffee exported from Ethiopia, but not from Germany.

As another example, I saw endless fields of palm and cocoa plantations all through West Africa. Famously Japan allows imports of raw cocoa with a 0\% tax, though they tax finished chocolate products at over 280\%. This means Africa will never be able to sell processed cocoa products there, and are forced to be content selling raw beans for a tiny fraction of what they could be sold for if processed.

Even without sanctions, even with equal infrastructure. They always find a way, not just to protect European profits, but to punish African ambition.

>> I certainly wouldn't want to buy coffee that was roasted in Ethopia; it would be awfully stale by the time it gets here.

What do you mean? Coffee gets vacuum packed and shipped all over the world already. I must have some coffee at home that was roasted and ground months ago - how is that a problem? It's just coffee.

It’s not a problem for you because you’re not a coffee snob.

You must be able to see how someone who roasts their own beans and has a preferred sourcing vendor and someone who says "it's just coffee" are basically not even interacting with the same thing at that point, right? That's right up there with "it's just a car" and "it's just a computer". It's either your thing or it isn't.

Fair enough. But I feel like 90% of coffee drinkers wouldn't see or know the difference(just looking at the packs of ground coffee at the supermarket, most of them have been roasted 4+ weeks ago or more, so I can't believe a regular customer would care). Therefore the transportation of ground coffee and its possible staleness from Ethiopia cannot be the issue, it must be something else.

Generally I agree. I don't know enough to really weigh in, but I suspect some combination of shipping logistics and trade agreements are the cause.

If you can help educate me on what I'm missing here, I would appreciate it - thanks!

Most coffee consumers are not relying on locally/home roasted beans. They buy instant, or pre-ground for use in a drip. Ethiopia is missing out on that part of the market.

Apart from the need of roasting coffee close to where the demand is to ensure "freshness", the other main reason that most large roasting operations are in Europe and US is "mixing". Most commercial coffees that you buy at a supermarket or even at coffee shops are a mix of various varieties. The provenance and ratios in the final mix change continuously to adapt to different taste (that may vary from harvest to harvest in the same estate), yields and prices, with the aim of maintaining a stable taste year on year and a stable cost. So even large coffee producing countries can not produce the right mix, and usually choose to penalise coffee imports (with duties) to protect local farmers.

Ironically single-origin coffees (or chocolates, etc.) are vastly more interesting to most people because they are so unique and can change unpredictably. There are ones with tasting notes resembling oranges, tomatoes, etc.

True. But that unpredictable change in tasting notes is the enemy of commercial packaged coffee: your box of illy, carte noir, maxwell house, nescafe, nespresso MUST taste the same every time, and MUST have a stable cost of raw material (apart from baseline coffee prices fluctuations). The same happens for chocolate and tea (lipton's and twining's teabags can be a mix of 20-30 tea varieties that change continuously)

Just to add to gpresot's comment, every large brand has this issue. McDonald's products need to taste exactly the same around the world and most of their brand's value lies in the ability to create a stable, unchanging product that is still attractive to their market segments.

Buying single-origin, and accepting the instability that comes with it, by necessity requires microbranding.

In my experience, McDonald's burgers taste noticeably different in the US and Canada. So I think it's a per-country thing (especially when, e.g. Canadian McDonald's only uses Canadian beef).

Only good single origin is better, one of the main reason for blending origins is to hide flaws. So only a small selection of coffee/chocolate etc will taste good on its own.

I doubt "most people" want each bag of their coffee brand to taste different.

For the people that think this is a dumb take, he's got a point. There's a roaster in my town that tries to pay a more fair price for the coffee he buys. He has a list of exactly how much he pays for the coffee which everyone can read. He's written a bit on the economics of coffee here https://timwendelboe.no/2012/11/coffee-is-cheap-part-2/?v=c2...

How are they supposed to "process" it? Every business customer (cafe, chain, large company for their office coffee makers) who knows what they are doing, buys these raw beans. In Italy, at least in proper places, coffee is roasted SAME day as it is served, or previous evening worst case. You suggest doing it months in advance, then ship roasted beans from Ethiopia? Who's going to drink what results?

I would bet money that the vast majority of coffee consumed globally is purchased from another entity and already roasted more than 1 week before.

That's totally true! That's the main reason why most coffee we drink is such a trash. But, roasting it months in advance vs days in advance will bring a whole new dimension to that.

That’s interesting. The rule of thumb in Australia for speciality coffee is to rest it for a few days (around 2-4) in a bag or container with a one way valve, so it can degas before using it.

Here's a comprehensive analysis of coffee as a product: https://bridgeit.me/coffee. The value chain section is interesting, but the tie-in to the refugee crisis is what got me:

"I became friends with an Oromo family that had to flee from Ethiopia. They were from a region close to the city Jimma in southwestern Ethiopia, the cradle of coffee. Their land and coffee plantations were taken from them and the husband and his friends were jailed when they protested[...] But of course, the coffee we consume everyday and without which ‘we can’t survive’ has to be produced somewhere…"

I don't understand - according to this article, the tariffs are non-existent for the US & Canada [0], and according to this report from the USDA, the Ethiopian government controls the coffee market and exports [1].

Further, 8% of what, exactly? I bet tree farms get only a small percentage of the revenue of printer paper or cardboard boxes. Without this being defined, your comment kinda becomes meaningless. With a definition, it would clarify your comment for many.

[0] - http://www.intracen.org/coffee-guide/the-markets-for-coffee/...

[1] - https://apps.fas.usda.gov/newgainapi/api/report/downloadrepo...

This reminds me of the scene from War Machine. The general is asking some consultant why they can't grow corn or wheat since they have loads of fertile land. The guys said the exact thing you did. The WTO disallows them from doing so by entering into the export market and competing with American farmers.

So they grow heroin instead haha!

The EU and several different countries levy tariffs on processed (roasted or soluble) coffee.

The US and Canada do not. (I was really expecting to see that the US and Canada did) As a result, I'm able to buy custom roasted and custom packaged at the farm beans and get them on the shelf in the US in a few days. Local roasters have zero real advantage, other than appeal to the enthusiast and perhaps some "secret process" that gives a unique taste to their product.

Source: http://www.intracen.org/coffee-guide/the-markets-for-coffee/...

[citation needed] on the tarriffs. The EU duty on imported roasted non-decaf coffee (code 0901 21) is 7.5%: https://ec.europa.eu/taxation_customs/dds2/taric/measures.js...

That's not zero, but it doesn't sound extremely restrictive either.

Don't countries like ethopia skim the foreign currency sales of things like coffee in various ways (ie, low official exchange rate, then elites can resell at higher black market rate and give farmers the less valuable local currency).

This is a common issue in a lot of developing countries - and also makes investment harder because it can be very difficult to get your foreign currency profits out (elites only want to buy at fake low rate - if they had to sell at it they'd lose their profit).

> It's a shame an article ...

It's an article: that is not its purpose. How much can you say on the multi-century history of a topic in a few hundred words?

Maybe try the book referenced, or the may dozens of other hundred books written on the topic.

That’s disingenuous - the article’s title makes it clear to be attempt to summarise coffee history.

It's coffee history summarized to under one thousand words.

>economic enslavement story

This is enraging.

Please do share any articles/data/documentaries so that people can know what really is going on with this multi-billion dollar industry.

Checkout this book [1]. It contains myriad of sources and footnotes about how the developed world, WTO, World Bank etc function when you live outside. I.e. Undeveloped countries are slaves to keep the rich countries rich.

[1] https://www.amazon.com/Aid-Other-Dirty-Business-Intentions/d...

It's true but it's always interesting how we bring this up in farmer trades often, but not often in the tech space, when a large majority of us on this site have made a lot of money off the backs of cheap labor.

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