Class discussion on the Coffee supply chain ..

This morning at Alliance University, Bangalore, we had a great discussion about the coffee supply chain in the MBA sem 2, Supply Chain class. I took up this very useful, interesting and beneficial
case discussion as I had discussed this case with earlier batches and wanted the students to know how cash crops supply chain is different and important.

The class discussion, was on the challenges faced by Suresh, the GM of Super Coffee, the protagonist of the case, in his company. Coffee is grown in the temperate zones of the world between the tropic of Cancer and Capricorn at altitudes of 500 m and above. It grows along with other cash crops like tea, cardamom, pepper etc.. (for a copy of the case mail me). Even though the costs for the Robusta (and Arabica) Coffee beans is around Rs 122 per kg ( a variability of -8% in costs since January of 2019), the ground coffee powder varies in costs ranging from Rs 120 for 200 grams to almost Rs 500 for 200 grams for the top end variety.

Finest coffee beans ..

One exciting thing about coffee is that the altitude where it is grown determines the taste, flavour and aroma of coffee to a large extent. 

Different Heights Produce Different Flavors
Elevation doesn’t just have a generic positive effect on a coffee’s quality. Allowing for variances from region to region and lot to lot, certain general flavors are associated with different elevations. Coffee grown:

• below 2,500 feet (762 meters) will be soft, mild, simple, and bland
• around 3,000 feet (914 meters) will be sweet and smooth
• around 4,000 feet (~1,200 meters) may have citrus, vanilla, chocolate, or nutty notes
• above 5,000 feet (~1,500 meters) might be spicy, floral, or fruity

                                                                                        - www.driftaway.coffee

The most exciting, tastiest and expensive variety of coffee, Kopi Luwaki, is got when the Indonesian palm civet cat eats the berries and from the excreta of the cat, the beans are picked up, roasted and ground. Only about 5000 pounds are produced in the world annually.

The discussion hovered around the different aspects regarding cultivation, plucking of the coffee berries, drying, grinding process and final sale.

A coffee plantation in South India..

Among the challenges faced by Suresh, the class was of the opinion that the following were critical

1. Climate change - it is the biggest challenge faced by coffee growers, causing maximum disruption to the process. The varying temperature and the uncertainty of rain and cold was affecting the quality and quantity of the output (yield).

2. Presence of pests and diseases - it is another aspect, which necessitated frequently chemical treatment of the coffee plants. This is usually done in tea plantations very frequently, lowering the taste and health benefits of tea, necessitating the birth of another stream of tea leaves called organic tea.

3. Absence of skilled  manpower - on the coffee plantations was listed as the second biggest challenge Suresh was facing. Due to the better educational facilities available in the south of the country where coffee plantations are more, the women employees prefer to be at home teaching and looking after kids than coming to the plantations for plucking the coffee berries.

4. Limited number of coffee tasters - is another problem in the industry as the available ones go for better options in big companies and the small estates are left with no quality check on the beans collected.

5. Price volatility - due to varying output the prices become very volatile in national and global markets.

6. Small average land holdings : Since coffee bean processing is not as technology intensive as tea leaf processing,  we see smaller land holdings with farmers. A close acquaintance of mine in Kottayam Kerala also has an area less than three acre with coffee trees. She plucks the berries, dries the beans and grinds for home use. Any extra is sold to the nearest provision store who pays her at market rates.

The climate change discussion took us to the recent rains and landslides in Kerala. The ext3ent of granite quarrying and the resultant environmental damage it creates was highlighted in the class well. Upon interest of the students the next class we are having a discussion on a writeup of mine on the Prof. Gadgil and Kasturi Rangan committee studying the Western Ghats preservation.

The aim of discussing the case was to create an awareness among the students of the importance of cash crops supply chain as against the food crops like rice, wheat etc. Since the coming years there will be great stress on availability of food and cash crops, an awareness of it is beneficial for students in the long run.

george..