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Jared walks us through the green coffee supply chain. Transcript below.
Topic: Green Coffee Supply Chain
Coffee Smarter Expert: Jared Hales, Hacea Coffee Source
Connect: www.haceacoffee.com • @haceacoffeesource on Instagram
Editor’s note: This is the first of our in-depth examinations of green coffee. These monthly columns will drop on the last Wednesday of every month. See you again in July!
KEY TAKEAWAYS
There are a lot of hands that touch coffee before it ever gets to your favorite roaster.
Understanding the supply chain shines a light on the challenges of getting green coffee from producer to roaster, which helps justify pricing to the roaster and eventually the consumer as costs to brew a cup of coffee continue to increase.
Increased labor costs are a big portion of the increase in the costs of green coffee.
Coffee plants take two to four years from planting to being viable coffee fruit/cherry producers. Producers need to plan ahead!
Processing centers are called different things in different countries.
Fermenting and Drying at the processing plant—which may be at the original production farm—is reflected in the coffee description by descriptors like washed, natural,
There is so much transportation and manual labor involved.
Expenses are impacted by energy costs, wages, climate, travel conditions, etc
Importers and sellers of green coffee need to keep detailed records. Hacea Coffee Source uses Cropster.
Creating consistent tasting/cupping systems enables a green coffee importer to account for variables that may otherwise impact the flavor of a coffee from its original farm flavor to the PSS to the arrival sample to ensure quality control for their clients.
Financial institutions aren’t getting their hands dirty unloading containers, but they are monitoring the supply chain every step of the way to ensure any loans or investments are accounted for.
INTERVIEW*
*This transcription has been edited for length and clarity.
R!WC: I'm ready. I mean, we're both ready. So we might as well just go for it. I would say hello, Jared. Welcome to this first edition of the Green Coffee column, presented by Hacea Coffee Source.
You are, in fact, the founder and CEO of Hacea Coffee Source. You can tell me if I'm wrong about that.
Jared: Don't let my brother hear that (laughs).
R!WC: Well, I appreciate you chatting with us about green coffee. It's like the more mysterious side of the coffee in our cup for most of us that are out here. But maybe, you know, people who are in the industry or are getting in getting into the industry, this may still be a place where there's a lot of learning to do.
So I'm asking you, this is your column. What am I learning today?
Jared: Yeah, thank you for the introduction, Ryan. As you mentioned, I'm Jared from Hacea Coffee Source. I've been working with green coffee since 2013, and we started Hacea Coffee Source back in 2020— peak pandemic. And here we are, still here.
Today, I just kind of wanted to spend some time giving a pretty crash course intro to the entire supply chain of green coffee from farm to roaster. There are a lot of hands that touch each coffee.
And by understanding each piece of that chain. It helps us to really know the challenges of what those individual actors are facing and kind of give some price justification right now when we are looking at the increasing cost of green coffee. Labor is a huge part of that.
R!WC: And I'd add the increasing cost of green coffee then translates into the increasing cost of roasted coffee.
Jared: Exactly! Yes. Obviously, green coffee is the starting point for the roaster. So not only is it the starting point, it's probably their largest cost of goods when it comes to the roasted and packaged coffee that they're selling. The pricing is pretty sensitive for roasters and has a big impact on the viability of what markets roasters can reach.
But jumping into it basically, I'll just start where the coffee starts right, usually at the farm. The coffee plant is planted on the farm. It usually takes about—depending on the type of plant—two to four years for a variety to produce coffee cherries.
R!WC: Wow!
Jared: Yeah, it's quite an investment to buy plants, right? So producers are thinking really far ahead when they're changing varieties, or planting new plants on an expansion of the farm, or whatever. The cherries, which are not actually cherries, you know. The more technical term would probably be coffee fruits, which grow on the plant, and are picked by hand, usually, with Brazil being the primary exception.
[The cherries are] picked by hand, and within each of these fruits are two seeds, generally. Those two seeds will eventually become two beans, which are not beans either. They are actually seeds of the coffee fruit. These two seeds will become that green coffee that roasters will then roast, and consumers will grind and drink.
So we're all just getting high on caffeine with these two little seeds!
When you look at your morning cup, you can see just how many seeds it takes to grind up. Let's say your 100-gram coffee pot or 20-gram pour over, right. That labor—to pick the coffee—is a huge input into the cost of production. It is probably the largest single thing that influences the price of coffee.
After the coffee gets picked, it has to be fermented and dried. And we usually kind of describe that combination as processing. You'll see a lot of labels out there on roasted coffee bags that might say processing with a one or a couple of words description of what that looks like.
What that's really talking about is the method of fermenting and drying the coffee. They're usually happening simultaneously. After the coffee is picked, it can go to an off-site processing center. In Africa, or in Ethiopia, specifically, we would call those washing stations Kenya calls them factories. In Latin America, we would call it a wet mill. And the wet mill may be on-site at the farm.
Depending on what kind of resources each farm has, it could be a small [processing center]. It could be massive. It really ranges in size. At the wet mill or processing site—we can get into processing in a later conversation. But essentially, the fermentation happens, as well as the drying.
The coffee may take anywhere between 10 days and a month to dry out, depending on the method of fermentation and processing that they're going for. After the coffee is dry, it will be transported to a storage facility which is typically connected to what we call a dry mill.
The dry mill will actually store the coffee for a certain amount of time. Once the coffee is sold to its destination country, let's say the US, the dry mill will then put in an order to hull the coffee.
So this essentially removes any extra layers from that seed to get to that final green being in the center.
R!WC: Did you say hole like h-o-l-e or w-h-o-l-e?
Jared: H-u-l-l, like you hull it.
R!WC: Hull? Okay. Yeah, I got it hull. It's the headphones and the internet.
Jared: Yep. So, again, I think that getting into the layers of the coffee fruit, you know, is really a conversation around processing. Conversation continued below…
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R!WC: Exactly, and for today we're focused on the [supply chain] steps. We've already had farmer to processor to storage facility, from storage facility to where?
Jared: To the mill, which may be the same place, and let's not forget there's transportation involved there from the processor to storage or mill.
I bring that up because there's a lot of transportation [in the supply chain] as well. We'll keep hitting on that as we go. [Transportation] adds to the cost, right. So when the coffee is ordered, it will be hulled and sorted. During sorting, the coffee will be sorted by size—bean size. It will be sorted by density. Usually, there's a cleaning element there to remove sticks or stones like a foreign material screen. And then finally, the coffee is put into the jute bags, or whatever packaging it's going to be shipped in, which we kind of recognize here as roasters.
At this point, there will be a pre-shipment sample (PSS) sent to the buyer. This is essentially a chance for whoever is buying the coffee at the country of destination to give final approval or rejection on the coffee. You know, it's actually what the coffee is going to taste like when it's prepared, it's in the bag, it's ready to go.
So once that, let's say that the pre-shipment sample, which we usually call PSS, is approved, then the shipment gets booked with an ocean freight liner, and the coffee gets stuffed into a container, again—manually, usually. The container is transported from that dry mill to the port. From there, it gets loaded onto the ship, and the ship takes it port to port.
So in our (Hacea's) case, we usually go to Port of Long Beach or Los Angeles. That might be coming from Ethiopia, let's say, or Colombia. So it could take between two weeks and two months for that container on the ship to get from port to port. Once the coffee is in the port, it goes through all of the inspections. Sometimes there are random red flags, you know, where customs will just randomly select containers to inspect further, kind of like when you're going through TSA. That can slow down the delivery of the coffee as well and obviously add more fees.
Once the coffee has been cleared with customs and everything, then another transportation actor will have to pick up the coffee from the port and transport it to the warehouses. The most common warehouses are third-party. There are warehouses that just specialize in holding green coffee all year.
These warehouses are typically where containers are shipped after they arrive at the port of destination. Once the coffee is in the warehouse it is unloaded from the container by hand and stacked up in the warehouses on pallets. Usually, at this point, we would receive an arrival sample, and we would just check that the coffee is consistent between what we tasted from the farm, what we tasted at the pre-shipment sample—the PSS, and then again at arrival.
Once the coffee is all approved, then it's time to actually ship the coffee again from the warehouse to the roaster. So we have transportation almost between every piece of the coffee journey to here.
R!WC: Which means that that cost is also impacted by weather, for the ships in particular, but also the cost of oil, energy costs, and the number of people that are required to operate those vehicles. Depending on which country or state in the United States they're in, there are rules for overnight driving over 24 hours or how many hours they can drive.
So many extra things that are adding a penny here, a penny there for each one of those beans. I want to say before we get to a recap for everyone that you mentioned, there's the tasting at the farm. There's the pre-shipment sample, and then there's the arrival sample, which the acronym for would be a-s...
Jared: We just call it arrival. Yeah.
R!WC: But as the Green Coffee importer and then the person selling it to roasters, you have to have some pretty detailed records to keep track of all of those pieces [of the chain] for all of the different coffees you have.
Jared: Absolutely, yeah. So, we use software that's specifically designed for green coffee, actually. We use Cropster, which has been awesome. I've been using that for about five or six years at least. It saves a lot of time, [and] keeps everything really, really organized, which is critical.
And not to mention, our standards have to be really, really adhered to. Whenever we taste the coffee, we taste it the exact same way every single time. Our water is really controlled. Everything is controlled so that when we're tasting a coffee from what we'd call a offer sample to the PSS into arrival, the only variable is the actual evolution of the coffee. [Its] not our water or our temperature or our recipe or anything like that. That's where cupping comes in. Right? So cupping, ideally, eliminates as many variables as we can other than the coffee itself.
R!WC: That's crazy. So basically, at that point, your coffee is being transported from you to the roaster, which is its final destination, because they're gonna roast it and sell it or brew it or whatever they're going to do with it. But that's kind of the big chunk of it.
As a recap, I think as an outsider, it goes farmer, processor, and then shipped to you warehouse. There's actually all kind of in-between steps in between all of those, kind of exponentially involving transportation and sorting, and all these little extra things that maybe we don't think about. Anything I'm missing there,
Jared: I actually kind of glazed over it, but financial institutions are also a very big piece here, you know, as, as interest rates change globally and currently go up, you know, that also increases the cost of financing to acquire the coffee. So, financial institutions are definitely involved in almost every step here. They are looking at the records, as well, to make sure that they're not going to lose on their loan.
R!WC: Right. I assume they're not making their tellers unload the trucks.
Jared: No, no! Absolutely not. They just look at the paper.
R!WC: Yeah, that's really interesting. They're kind of like this overarching... they're just watching the process and making decisions that impact you.
Jared: Exactly.
R!WC: Well, that is, I think, my big lesson [learned]. However many people you think are touching your coffee, there is actually more and probably a lot more. It's actually pretty incredible that coffee makes it from origin to here, and I can still buy a cup and not take out a loan of my own.
Jared: Right.
R!WC: Although that's a whole 'nother conversation we'll talk about for a future date in this column. And if you'd like to know more about coffee or green coffee, you can go to some of the Coffee Smarter education classes that Jared hosts, and I have a link to [below].
Jared, thank you for coming and chatting with us. And I know there's a lot of information on HaceaCoffee.com. I'm looking forward to chatting with you again. I know we're gonna be having a bunch of these green coffee chats over the next few months.
Jared: Yeah, Ryan, looking forward to it.
MORE HACEA:
Jared has been on the R!WC podcast before. He has often appeared on Coffee Smarter episodes. Way back in March of 2022 he appeared as a guest on the pod to share his coffee journe. Check out the episode if you want to learn more about our green coffee expert.
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