Download coffee 01

Coffee
Good to the last drop
http://www.youtube.com/watch?v=t-Xilsyd7Xo
Coffee Facts
• Over 2.25 billion cups of coffee are
consumed in the world every day
• Globally coffee sales exceed $80 billion
• Approximately $5 billion goes to nations
that produce coffee
• Over 90% of coffee production is in
semi-periphery/periphery countries
• consumption is mainly in the core
• 60 varieties of coffee exist
• Most important for trade are Arabica
(74% most widely cultivated) and
Robusta (26%)
• Coffee is cultivated in 70 countries (out
of 195 countries in the world - 36%)
Coffee and Tea In Canada
Coffee was consumed in
North America in 1668.
With 14 billion cups
consumed in Canada every
year, coffee is the most
popular hot beverage which
was valued at $1.5 billion in
2008.
In 2008, 112 establishments
(plants) in the tea and coffee
industry shipped $917 million
worth of product and
employed 2240 people.
Coffee and Tea In Canada
Canadian tea and coffee exports totalled
$251.2 million in 2008
Canadian Tea and Coffee imports
totalled $785.2 million.
Canadian companies create products for
the "mainstream" market, as well as for
value-added short-run (blending coffee
beans from different regions).
• Since 2006, with several plant closures and
consolidation in the coffee industry and a
tightening economy overall, employment has
declined.
• Improvement in labour productivity has
maintained production levels.
Good Coffee Growing Conditions
Grown in tropical and subtropical regions (between 23°N and 25°S)
Must receive considerable sunshine and excessive rainfall
(2,500+ mm in a year). There is a need for good soil
Ideal conditions have temperatures that rarely exceed 35°C.
Minimum temperatures fall no lower than about 22 °C
Ideal conditions would provide night time cloud cover which
restricts heat loss.
Needs direct sunlight, but only for a few hours a day
Coffee Facts
• best coffee grows at an altitude between
3,900 and 5,200 feet high
• Altitude is very important: the weather,
the amount of light, the temperature,
there is less oxygen, all that makes the
beans ripen very slowly, and that allows
the flavour to concentrate and also they
are harder
Coffee Facts
• Higher altitudes beans are more
expensive because of its labour intensive
harvest and slow growing process
COFFEE STAKEHOLDERS
Growers
• grown mostly by small farmers as a
cash crop
• farmers are poor, and they do not have
any reserves of money to support
them when their crops fail or when
coffee prices are low
Growers
• farmers have to sell their beans when
they are ready to be harvested & take
whatever price the coffee buyers offer
• governments of many coffeegrowing countries have very large
external debts & need to export in
order to get the hard currency to
repay the debts
Growers
• coffee-growing countries are forced
into competition with each other each trying to get a bigger share of
the market
Growers
• they all produce more and more
coffee
• there is too much coffee on the
world market and the price falls
• each country has to try to sell more
coffee to make the same amount of
money
Top Coffee Producing Nations
The top coffee producing nations
are shown in yellow
COFFEE BUYERS
• Buyers provide a vital link between
growers, processors & exporters
• Buyers - middlemen between the
processors/factories and farmers who
sell their coffee directly to them
• Sometimes governments act as buyers
processors
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ripened fruits of the coffee shrubs are processed
to separate the coffee seeds from their covering
and from the pulp
Two different techniques are in use: a wet
process and a dry process
exporters
exporters
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Work with importers and traders
Act as middlemen between the processors and
roasters
Sometimes governments play this role
Countries who import coffee also act as exporters
Importers/traders
• play a vital role in getting coffee from producing
countries to consuming countries
1. Purchase and store coffee from many different
origins in bonded warehouses
2. Provide marketing information to roasters
(developments in producing countries) and
producers (developments in consuming countries
and the markets),
Importers/traders
3. Provide financing to both producers and roasters
4. Take on most of the price risks involved in the
coffee trade
5. Traders contribute to market liquidity by
purchasing coffee when roasters are not buying
and selling coffee when exporters are not
shipping.
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5 large companies control this trade
Neumann (Germany)
Volcafé (Germany)
Cargill (recently sold to ECOM – Barzil)
Decotrade (trading arm of Sara Lee/Douwe
Egberts)
5. Taloca (owned by Philip Morris/Kraft based
in Switzerland)
roasters
• process green coffee beans into a variety of endproducts
• Almost 45% of the green coffee imports is
purchased by the five largest roasters
• sell their processed coffees in the European,
American and Japanese markets
Companies
Affiliated companies and
brands
Philip Morris
Kraft Foods, Jacob
Suchard, Maxwell House,
Splendid, Grand Mere,
Carte Noir, Lyons, Birds,
Brim, Gevalia, Maxim
Nestle
Taster's choice, Nescafé,
Hills Brothers, Lite, Sarks,
MGB
Sara Lee
Douwe Egberts, Merrild, La
Maison du Café, Café do
Ponte, Caboclo, Café Pilao,
Seleto, Uniao, Marcilla,
Soley
Proctor & GAMBLE
Folgers, Millstone,
Highpoint
TCHIBO
Eduscho, Tchibo
Privatkaffee
roasters
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NESTLE 13%
KRAFT 13%
TCHIBO 4% (SELLS TO GERMANY)
PROCTOR & GAMBLE 4% (SELLS TO US)
SARA LEE/DOUWE EGBERTS 10% (EUROPEAN
AND BRAZILIAN MARKETS)
retailers
• supermarkets, coffee shops, fast food outlets,
restaurants and others companies who sell coffee
to the final consumer
• They secure manufactured coffee, both roast and
ground and instant, as well as in prepared drinks,
sweets, etc and sell to consumers
Top 10 Retailers (2008)
• Controls 67.19% of total market
Company
Sales (in millions)
Folgers
$419 (21.6% of market)
Maxwell House
$287.3 (14.63% of market)
Starbucks
$189.2 (9.75% of market)
Folgers Coffeehouse
(gourmet brands branch)
$127.9 (6.59% of market)
Maxwell House Master
Blend
$77.5 (3.99% of market)
Chock full o’Nuts
$44.1 (2.27% of market)
Millstone
$43.5 (2.24% of market)
Seattle’s Best (subsidiary of
Starbucks)
$42.8 (2.21% of market)
Eight O’Clock
$38.5 (1.98% of market)
Yuban
$37.4 (1.93% of market)
Consumers
Fair trade coffee
• Coffee importers agree to purchase from the small
farmers included in the International Fair Trade
Coffee Register
• Fair trade coffee growers are guaranteed a
minimum "fair trade price" of $1.26/pound FOB for
their coffee (just over $2.52 per Kg)
• If world coffee price rises above this floor price, fair
trade coffee farmers will be paid a small
($0.05/pound) premium above market price.
Fair trade coffee
• Coffee importers provide a certain amount of credit
to farmers against future sales, helping farmers
stay out of debt to local coffee "coyotes" or
middlemen
• Coffee importers and roasters agree to develop
direct, long-term trade relationships with fair trade
coffee distributors, thereby cutting out middlemen
and bringing greater commercial stability to an
extremely unstable market.
Fair trade coffee
• By the time farmers pay Fair Trade cooperative
fees, government taxes and farming expenses
they are left with just over $1.00 per Kg.
Since March 2010
• Green coffee prices have increased by nearly
90%,
• productivity per hectare over the last ten years has
decreased by at least 20-30%,
• Global demand is up by 2% and still rising
• imbalance between supply and demand -- > to a
“feeding frenzy” by speculators (buying up
supplies & driving price up higher)
.
Since March 2010
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high market prices exceed what a farmer would be paid by
his coop
Fair Trade small producer coops are now unable to prevent
many of their members from selling their coffee to
mainstream multinationals and are unable to honour
existing contracts and repay debt
existential crisis for the small producer coops that are the
foundation of the Fair Trade system
Due to those same high prices, many small Fair Trade
coffee roasters will soon be facing an equivalent existential
crisis.
International Coffee Agreement (19621989)
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The ICA established a target range for the member market
price (a weighted average of different types of coffee)
fixed a global export quota to achieve the desired price
Each exporting country received a percentage of the global
export quota
When prices fell below the target range ($1.20 per lb), the
quota was cut
If prices rose above the ceiling price ($1.40 per lb) for more
than 45 days, quotas were suspended until prices returned
to the target range
International Coffee Agreement (19621989)
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In 1989 - ICO failed to reach an agreement on new export
quotas, causing the 1983 ICA to break down
Without an agreement producing countries lost most of
their influence on the international market
ICO's average indicator price for the last five years fell from
US$1.34 per pound, to US$0.77 per pound for the first five
years after
New agreement focus on promotion of consumption,
quality, training and growing practices
The top coffee producing nations
are shown in yellow
Coffee Crisis - Ethiopia
http://www.youtube.com/watch?v=dW7rShq4rqk
Global 3000 | Coffee crisis: Nicaragua's coffee
farmers (Fair Trade)
http://www.youtube.com/watch?v=NWCeTtmFJ30
&feature=related
Black Gold Interview with the directors
http://www.youtube.com/watch?v=UbUr9RLCeAY
http://www.blackgoldmovie.com/CoffeeCalculator