Who earns what along the chain

What a value share is#

A coffee passes through many hands between the tree and the cup. A coffee science textbook describes the value chain as all the people and organisations that carry a product from its start to its end.¹ The actors are described in The coffee value chain.

A value share says how much of one final price each group of actors receives. The final price might be a supermarket pack, a capsule or a café drink. Each study chooses one product, one country and one year. Its numbers hold only for that choice.

A share is revenue, not profit. A roaster’s share must also pay for roasting, packing, staff and rent. A producer’s share must pay for farm work, inputs and processing. A share therefore says who receives the money, not who keeps it.

What the studies found#

The studies consulted for this entry measure different things. They agree that most of the final price of coffee sold in consuming countries is earned after the coffee leaves the producing country.^3,4,7

A long series, 1971–1995. A 1997 study divided the total income of the coffee chain between producing and consuming countries. Until the late 1980s, growers and producing states kept over a third of that income.² The study links the later fall to the breakdown of the export quota regime in 1989.² The quota regime is explained in The International Coffee Agreements.

Supermarket coffee, mid-1990s. A 2001 value-chain analysis found that about 40% of the supermarket price accrued in developing countries.³ Its chain figure is labelled 1994 (the text says 1995) and names no country or coffee type.³ The same study shows a growing share of income going to actors in importing countries after 1985.³

France, 2017. A research cooperative, commissioned by fair-trade organisations, followed coffee from Peru, Colombia and Ethiopia to French shops, using 2017 data.⁴ According to its study, producers received only a small part of the retail price of a ground-coffee packet, and Fairtrade certification raised that part for the 250 g packs studied.⁴ The study is not peer-reviewed, and no independent source consulted for this entry reports the same figures, so its percentages are not given here.

The French study’s producer shares count only producers. The 2001 analysis counts every actor in the producing country, including exporters and the state, so its share is not comparable with the French one.^3,4

Pack, capsule and café cup#

In the studies consulted here, the product sold to the consumer changes the split strongly. The more processing, packing and service a product carries, the smaller the coffee’s part of its price.^3,4

Packs and capsules. According to the French study, producers received a much smaller part of the retail price of portioned coffee than of a ground-coffee packet.⁴ For capsules, the same study reports that most of the final price goes to roasters and distributors.⁴

Instant coffee. Exports of soluble coffee come from more regions than exports of roasted coffee. In 2018, Europe and North America accounted for more than 96% of roasted coffee exports but 53% of soluble coffee exports.⁶ The remaining 47% of soluble exports came from other regions (our calculation). No study consulted for this entry measured how the retail price of instant coffee is split.

The café cup. In out-of-home coffee markets, the coffee in a cappuccino made up less than 4% of its cost, according to the 2001 analysis.³ The authors argue that these markets sell the setting and the experience, not the coffee itself.³ A worked example of the green-coffee cost in one cup is in How a coffee price is made.

What growers are paid#

The farm-gate price is the price a grower receives at or near the farm. It is set in local currency and depends on the form sold: cherry, parchment or green coffee. It is the first number in any value chain.

The International Coffee Organization (ICO) collects average prices paid to growers in exporting countries.⁹ Its 2005 market overview lists them for 2001–2004 in US cents per lb.⁹ Among the 13 country series in the chart, the 2004 averages ranged from 27.99 in Vietnam (robusta) to 71.01 in Kenya.⁹ The ICO composite indicator price averaged 62.15 cents that year.⁹

The chart shows price levels, not shares. The ICO table does not say whether its grower prices refer to cherry, parchment or green coffee.⁹ No ICO dataset consulted for this entry gives the farm-gate price as a share of the export price by country for a recent year.

Why the split matters for producers#

A coffee trading textbook chapter states that growers have struggled for decades to increase their share of the total value added.¹¹ It names a lack of scale, capital and knowledge, and says roasters increased their share as the industry matured.¹¹

Market reforms changed how world prices reach growers. Many producing countries reformed their coffee sectors in the late 1980s and early 1990s. A 2004 World Bank study found that afterwards the long-run producer share of world prices rose substantially in most of them.¹⁰ The same reforms coincided with a falling share of total chain income for producing countries.^2,3 The two findings need not conflict: growers can gain within the producing country while the producing country loses ground against consuming countries.

In the French study, Fairtrade certification raised the producers’ share of a 250 g pack; for capsules, the study reports that this gain is greatly diminished.^4,5 Certifications and labels explains how the labels themselves work. A share on its own does not show whether a household can live from coffee; Living income takes up that question.