INTRODUCTION OF COFFEE TO THE CARIBBEAN AND CENTRAL AMERICA

Transcription

1 INTRODUCTION OF COFFEE TO THE CARIBBEAN AND CENTRAL AMERICA

2 The adventurous coffee tree reached the Caribbean island of Martinique in 1714, delicately cared for by the French naval officer, Gabriel Mathieu de Clieu, who introduced coffee cultivation to the French colony. The plant was an offspring from a coffee plant that the Dutch had given to the French government who reproduced it in the Jardin de Plantes, in Paris. After a perilous transatlantic voyage during which De Clieu s ship escaped capture by a corsair, survived a tempest and was left in windless doldrums for over a month during which time the Frenchman protected his beloved plant sharing with it his limited supply of water they arrived in Martinique. From that single Arabica coffee plant much of the world s current coffee supply probably derives.

3 In the Caribbean coffee firstly became very important in the Dominican Republic to the extent that by 1788 as much as half of the world s coffee was supplied by Santo Domingo. Coffee cultivation was introduced by mid XVIII Century to the Spanish colonies of Central America who became independent in In their search for economic growth the governments of the new nations passed laws to foster coffee cultivation. In fact, the frequent traffic of goods and people through the ports on the Central American Pacific coastline created the conditions for coffee produced in the region to become commercially connected to the growing consuming market of California, where gold was struck in 1842, and to the traditional destinations of Europe and the Northeastern ports of the United States.

4 The Central American countries developed their coffee production at different times, responding to the varying conditions of their individual political situations and to the development of their infrastructure. Costa Rica, Guatemala and El Salvador performed a slow but steady growth since the mid 1800s; Nicaragua followed but has remained a producer of modest volumes since the early 1900 s and Honduras has shown a fast and increasing production since the mid 1900s with a more vigorous growth since the 1970s. Presently, in accordance to their production during 2002/03 their rankings are as follow:

5 Guatemala Honduras Costa Rica El Salvador Nicaragua 1st place produced 3.3 mm bags/60 kgs each 7WW 2nd place produced 2.5 mm bags/60 kgs. each 11WW 3rd place produced 2.0 mm bags/60 kgs. each 13WW 4th place produced 1.4 mm bags/60 kgs. each 14WW 5th place produced 0.9 mm bags/60 kgs. each 17WW * Neither Panama nor the Dominican Republic rank among the first 20 coffee producing countries in the World WW = World Wide

6 GEOGRAPHICAL DISTRIBUTION Coffee is indigenous to Africa with Arabica originating from Ethiopia and Robusta from the African Atlantic coast (Angola, Ivory Coast). The biggest volumes of coffee are produced in Latin America, particularly in Brazil, who produces unwashed Arabica and has dominated world production since Viet Nam, a producer mainly of Robusta coffees, expanded its production rapidly throughout the 1990s and now holds the number two position in the World, bringing Colombia, the largest producer of washed Arabica coffee into third place.

7 For administrative purposes the group of countries that produce washed Arabicas are divided into Colombian Mild Arabicas and Other Mild Arabicas. The Central American countries, Panama and the Dominican Republic all fall into the latter group. Mainly owing to the fast growth of the Vietnamese coffee production the shares of Arabica coffees have decreased from 64% of the world exports during coffee year 1996/97 to 60% in 2001/01 (From 81.9 mm to 89.2mm bags). Domestic consumption in producing countries is estimated to have risen from about 23.2 mm bags in 1995/96 to 26.0 mm bags in coffee year 2000/01.

8 It is characteristic of washed Arabica coffees to grow in high altitudes on mountain sides that require intensive labour practices both for the cultivation and the harvest of coffee. The microclimates in these areas and the washed process used to change the fruit from the ripe cherry to the parchment form from which it is finally transformed to green coffee for export determine the fine cup qualities of Washed Arabicas.

9 In order to plan purchases of coffee and imports buyers in consuming countries must bear in mind that coffee is a seasonal crop and that seasons vary from country to country. All of the Central American countries, Panama and the Dominican Rep have their crop years during the period stretched between the 1st of October of one year to the 30th of September of the following year. Said crop year determines that the largest volumes for export usually become available between December and May. Although washed coffees are kept in parchment form till 2 or 3 weeks before export, the later the shipment happens in the year the greater possibility that the appearance and cup quality are reduced.

10 QUALITY SEGMENTATION OF COFFEES Broadly speaking, coffees can be divided into three commercial categories: Exemplary quality coffees have a high value with a fine or unique cup. They usually have quite a limited availability and are mostly sold as a plantation s coffee ( estate ) or origin names. High quality or premium brands, good cupping coffees, well presented but not necessarily visually perfect. They are often sold as specialty coffee. Mainstream quality, average quality, reasonably well presented but not visually perfect. These commercial coffees offer decent, clean but not impressive cup. They are used in the specialty market for flavoured drinks in which the quality of the underlying coffee may take second place.

11 COFFEES FROM CENTRAL AMERICA PANAMA AND DOMINICAN REPUBLIC

12 Guatemala Bean: Large, blueish, shiny Quality: Lower altitudes : light, fragrant cup Higher altitudes : full-bodied, acid cup. Classification: Good washed : 700 to 850 meters Prime washed Hard Bean : 850 to 1200 meters : 1200 to 1500 meters Strictly Hard Bean : 1500 to 1700 meters Opinion: It is a versatile coffee, when it is light roasted it is mild and full; when it is dark roasted it becomes smoky and powerful.

13 El Salvador Bean + Growths: Central Standards and High Grown are greenish blue and Strictly High Growns are blue green in color. In shape Central Standard beans and Strictly High Growns tend to be flat while High Growns are round. In the cup: strictly high growns have good acidity and are full-bodied, while the lower altitudes are lightly full-bodied. Opinion of Specialty grades: They are well-balanced coffees in flavor with good characteristics for which medium to high roasts are suggested.

14 Honduras Bean + Growths: Available classifications for growths are Standard from 700 to 900 meters altitude; High Grown from 901 to 1250 meters altitude and Strictly High Grown over 1250 meters. This is a good sized bean probably owing to a bigger proportion of typical and bourbon trees that are still cultivated. In general, Honduran coffees have good acidity, are lightly full-bodied and have a soft cup. They are considered to be a nice looking coffee of very good quality that is useful for blending and on its own.

15 Nicaragua Bean: All coffees are classified strictly high grown but depending on their method of cultivation and preparation they are used for mainstream commercial or for specialty grades. The commercial grades are good blending beans while the top quality beans are very fragrant and good for espressos. Nicaragua s top quality coffees have recently been very successfully introduced into the Specialty market.

16 Costa Rica Bean: The descriptions of sizes of beans vary according to the regions, planters,processing plants and exporters.these are the only coffees that can still be screened on request It is a mild, fragrant coffee with delicate acidity. The Tarrazu region produces richer, more harmonious flavors

17 PANAMA: Coffee from Panama is famously smooth, light bodied and very balanced, and the top quality beans offer real character and good flavour. Their flavour is of good quality with full body.

18 DOMINICAN REPUBLIC: These are mild and full bodied coffees, with good acidity and a pleasing aroma. Their flavour is balanced with fair acidity. Their top qualities command very high prices in the specialty markets.

19 AN UPDATED OPINION ( ) Flexible blending has become so important that due to the strong competition on the basis of price, rather than quality, very big roasters that dominate the main consumer markets tend to look at Central American coffees as a basket more than anything else. As a result of the ever decreasing standard of average quality (due to the very low market prices) the traditional quality differences between the various Central American countries seem to disappear. Only for the true (and very expensive) Specialty coffees the difference between say a SHB from Guatemala and Costa Rica is still important and noticeable, but perhaps considering the relatively limited availability of these coffees, their importance should not be exaggerated. Apart from this the individual appreciation and preference of the roaster is the deciding factor for his purchasing from a particular origin : a medium sized roaster who has bought say a Panama Boquete all his life, will probably continue to do so.

20 In the ''old days' mainstream ''commercial'' coffees were bought for the following characteristics : Panama : acidity (close to ferment) Dominican Republic : body and specific flavor Costa Rica : subtle combination of body, flavor and acidity (which currently is present in very few coffees from this origin) Guatemala : mostly body and flavor, taking into account that there are big differences between the various regions, which would attract interest from specific roasters. Nicaragua : a typical ''filler'' coffee, suitable for ''smoothing'' a blend. Salvador : a great reputation in the past, now used mainly as a ''filler'' which can be substituted with a Nicaragua for instance. Honduras : has improved significantly over the past years and can be and is used as substitute for Guatemala's, but also as general substitute for many other mild coffees. In the old days mainly bought to add body to a blend.

21 The above applies to mainstream ''commercial'' coffees. Situation very different for Specialty coffees that are subject to specific interests from Specialty roasters. Quality is important, but also the ''marketing'' done by the producer : a good presentation (i.e. documentation, nice brand name and attractive presentation on the bags) can add great value to what basically could be an average quality. Apart from this the market in Central America is greatly infuenced by the buying of a company like Starbucks, who can by setting a price for certain coffees (i.e. Costa Rica Bella Vista, 3 Rios) influence/upset the pricing strategy of many producers who feel their coffee is equally good. Basically it is a matter of personal preferences.

22 SPECIALTY COFFEE The term specialty coffee began in the United States. In the beginning it was used to describe coffee sold in dedicated coffee shops, in order to differentiate them from the coffees sold through supermarkets. It has become the fastest growing market segment that shows its appreciation of high qualities through the prices it pays and the close links its participants develop with their sources at origin.

23 CONSUMPTION It is estimated that global consumption in coffee year 2000/01 totalled mm bags. Consumption has grown by an average of around 1.2% a year since the early 1980s. Probably the most spectacular growth has been witnessed in Japan, where consumption has grown by more than 3.5% a year over the same period. Japan is now the third largest importer of coffee in the world.

24 Roasters have two distinct market segments: The retail (grocery) market, where coffee is purchased largely but not exclusively for consumption in the home; The institutional (catering) market, where coffee is destined for the out-ofhome market, i.e. restaurants, coffee shops and bars, hospitals, offices and vending machines. The percentage share of each segment varies from country to country, but in most retail sales for in-home consumption generally account for 70% to 80% of the overall market. There are exceptions, especially in countries such as Greece, Italy and Spain, where eating out is part of the country s traditions. Each segment accepts a wide range of products, the quality and taste of which depend largely upon the coffee growths that make up the blends, the degree of roast, the type of grind, and so on. Most small roasters tend to specialize in one segment, while larger rosters usually service both.

25 CONSUMPTION IN TAIWAN S NEIGHBOURHOOD It is interesting to note that according to the ICO coffee consumption in China may have been growing by as much as 20% a year since Of the gross import total, 48% comprised processed coffee. Over the last there has been an explosion in the number of new American-style coffee bars and as a result coffee is acquiring a more modern image and is becoming a very popular beverage with the young. The main suppliers of Coffee to China, in that order are: Viet Nam, Indonesia and Colombia, and Nestle, which is the market leader, accounts for more than 80% of all soluble coffee sales.

26 Coffee is the number two beverage in Japan after tea and consumers now drink on the average 11.0 cups per week, up from 7.4 cups per week in Roast coffee is becoming more popular while instant coffee has been seriously declining but canned coffee remains the most popular form of consumption among the young.

27 COFFEE PROMOTION The promotion of coffee consumption is extremely important. The many other drinks against which it must compete are supported by strong advertising campaigns that use much more money than what is used to promote coffee. National generic campaigns are needed especially in new markets to attract new consumers but also to maintain the loyalty of existing consumers. There is a real need to educate potential consumers in said new markets. In promoting specialty coffees the consumer has become an informed and educated customer, not necessarily oriented to a brand. Coffee drinkers need to be informed and reminded that coffee is the right drink for them.

28 THE INTERNATIONAL COFFEE ORGANIZATION (ICO) AND ITS IMPORTANCE TO THE COFFEE INDUSTRY

29 Coffee is one of the world s largest traded commodities produced in more than 60 countries, providing a livelihood for some 25,000,000 coffee farming families around the world. Many of these countries are heavily dependent on coffee, which can account for over 75% of their total export earnings.

30 Among consumers coffee is a universally popular drink, with over US$70 billion in retail sales a year and a world consumption of around 79 million bags a year. Coffee is a major industry and source of jobs even in rich Western countries. According to statistics from the NCA, the main coffee industry body in the U.S., which remains the world's largest consumer in overall volume, the U.S. coffee market accounts for about 150,000 full and parttime jobs. Almost all commodities have an organization representing their interests and coffee is no exception. Because coffee is a complex product that must be farmed and processed thousands of miles from where it is consumed, there are many problems and issues relating to the world coffee economy that can best be addressed through international cooperation.

31 BACKGROUND Coffee became an important commodity in international trade during the 19th century. Since then it has suffered from long periods of over supply and low prices followed by relatively brief periods of short supply and high prices. during the period of severe economic depression in the 1930s and during the Second World War from 1939 to 1945, supply increased, demand fell and prices were low. In the immediate post-war years, however, demand increased and supplies were inadequate to satisfy this rising demand. Between 1950 and 1953, stock levels were below the minimum needs for normal trading purposes, a situation which was exacerbated by the outbreak of the Korean War and a serious drought in Brazil, which was followed by a frost. Prices rose to unprecedented heights in This gave rise to a substantial increase in planting throughout the world and over-production followed. Stocks increased and, in the second half of the 1950s and the early 1960s, prices fell drastically. This led to an intergovernmental initiative to attempt to stabilise the market and to halt the fall in prices which had serious economic and political consequences for a large number of coffee producing countries in Latin America and Africa.

32 Following a series of short-term Agreements between producing countries, a Coffee Study Group was formed to consider negotiating an Agreement to include both exporting and importing countries. The outcome of the Study Group's efforts was the successful negotiation at the UN headquarters in New York of the International Coffee Agreement The International Coffee Agreement is an international treaty which sets out the ICO objectives and the basic framework within which it operates. The treaty is agreed to by Members and lasts for a set period of years. It is renewable and is deposited at the United Nations. The first Agreement was in 1962, followed by the 1968, 1976, 1983 and 1994 Agreements. The 1994 Agreement was adopted for a period of five years, and was extended in September 1999 for two years. The text of the 2001 Agreement was agreed by the Council in September 2000 and entered into force provisionally in October 2001.

33 The ICO was set up in London in 1963 under the auspices of the United Nations because of the great economic importance of coffee. ICO exporting Members account for over 97% of world coffee production and its importing Members are responsible for 68% of world coffee consumption. The International Coffee Organization (ICO) is the main intergovernmental organization for coffee, bringing together 63 (as at Sep 1999) producing and consuming countries to tackle the challenges facing the world coffee sector through international cooperation. It has administered six International Coffee Agreements (ICAs), the most recent of which entered into force provisionally on 1 October 2001.

34 The Agreements contained provisions for the application of quota systems whereby coffee supplies in excess of consumer requirements were withheld from the market. They allowed for the suspension of quotas if prices were high and their reintroduction if prices became too low. Quotas and controls remained in effect for most of the subsequent years. While they were in effect, the Agreement was largely successful in maintaining prices within the agreed range of US cents/lb. However on 4 July, 1989, quotas were suspended and prices immediately dropped to around half their previous level and remained at these lower levels for over four years. Since there was not enough time to negotiate a new Agreement the 1983 Agreement was extended from 1 October 1989 to 30 September 1991, with its quota and controls provisions suspended.

35 Pressure for negotiating a new Agreement gained new impetus with the fall of prices to record lows during 1990/91 and 1991/92, and the Council agreed to further extend the Agreement until 30 September 1993, and subsequently to 30 September Eventually, in the absence of a consensus on price regulation, Members concentrated on negotiating an Agreement that did not set out to regulate coffee prices, but to focus instead on other forms of international cooperation. This concluded successfully with the negotiation of the International Coffee Agreement 1994, which came into force on 1 October 1994.

36 INTERNATIONAL COFFEE AGREEMENT 1994 In line with the general objectives of the 1994 Agreement, the Council approved a programme of action in May 1995 which identified four priority areas: expanding membership; reviewing statistical services and developing new analytical documents and information on the coffee market; developing the Organization's capacity to sponsor projects for financing by the Common Fund for Commodities (CFC); and undertaking studies and surveys. In July 1999 the International Coffee Agreement 1994 was extended for two years from 1 October 1999 that led to the negotiation of the International Coffee Agreement 2001.

37 INTERNATIONAL COFFEE AGREEMENT 2001 The text of the International Coffee Agreement 2001 was agreed by the Member Governments of the International Coffee Council, meeting in London on 27 and 28 September The new Agreement opened for signature at the United Nations in November 2000 and entered into force provisionally on 1 October 2001.

38 New objectives The Agreement includes a number of new objectives: Encouraging Members to develop a sustainable coffee economy Promoting coffee consumption Promoting quality of coffee Providing a forum for the private sector Promoting training and information programmes designed to assist the transfer of technology relevant to Member countries Analysing and advising on the preparation of projects to the benefit of the world coffee economy.

39 OBJECTIVES The objectives of the International Coffee Agreement 2001 are: (1) to promote international cooperation on coffee matters; (2) to provide a forum for intergovernmental consultations, and negotiations when appropriate, on coffee matters and on ways to achieve a reasonable balance between world supply and demand on a basis which will assure adequate supplies of coffee at fair prices to consumers and markets for coffee at remunerative prices to producers, and which will be conducive to long-term equilibrium between productions and consumption. (3) to provide a forum for consultations on coffee matters with the private sector (4) to facilitate the expansion and transparency of international trade in coffee;

40 (5) to act as a center for and promote the collection, dissemination and publication of economic and technical information, statistics and studies, as well as research and development, in coffee matters. (6) to encourage Members to develop a sustainable coffee economy; (7) to promote, encourage and increase the consumption of coffee; (8) to analyse and advise on the preparation of projects for the benefit of the world coffee economy, for their subsequent submission to donor or financing organizations, as appropriate. (9) to promote quality, and (10) to promote training and information programmes designed to assist the transfer to Members of technology relevant to coffee. By implementing the above objectives the ICO makes a practical contribution to the world coffee economy and for the improvement of standards of living in developing countries.

41 ICO Membership is open to all Government of any State member of the United Nations or its specialized agencies expressing an interest in coffee. The representatives of the Member Governments, accompanied by their alternates and advisers can attend ICO meetings. For the most part, representatives come from government Ministries, Embassies in London, and Coffee Boards and Federations, supported by representatives from industry and other advisers as required. Countries that are not members of the Agreement are invited to participate in Council meetings as observers, and a number of intergovernmental and non-governmental organizations with a significant interest in coffee, such as the Food and Agriculture Organization of the United Nations, are also officially accredited as observers and participate in the ICO work.

42 The Council generally meets twice a year, in May and September, and is attended by around 150 representatives of producing and consuming countries, supported by representatives from their industry and other advisers as required, and observers from nonmember countries and international organizations. Government and industry delegates find that the sessions enable high-level contacts and meetings with other Governments and with major players in the global coffee industry, as well as regular access to market information. The ICO most recent statistics are presented and the latest report on the market situation is discussed and agreed by all participants. Information on coffee policy is delivered by experts or top government or industry representatives, and substantive matters such as environment and the coffee market are considered.

43 At the more practical, rather than at the diplomatic and policymaking levels, ICO has developed Promotional activity The ICO enhanced the image of coffee drinking and increased the consumption of coffee in two of the world's largest markets, China and Russia. ICO generic promotion was only one of several factors that influenced consumption, but was widely perceived in China and Russia to have been beneficial. Activities included a high profile concert; production and dissemination of educational materials, including a new "Coffee Story" booklet to create greater awareness of coffee; developing annual Coffee Festivals; and a programme of media briefings, supported by tastings and demonstrations, in order to educate journalists about the benefits of coffee. The development of strong and positive relationships with leading coffee companies, and the increasing extent of private sector participation in ICO promotions, were among the most important achievements.

44 Involvement of the private sector The work of the private sector was strengthened through a new Private Sector Consultative Board (PSCB), established in July 1999 and composed of eight representatives of the private sector from exporting countries and eight from importing countries. The PSCB has been working particularly on issues of sustainability and positive promotion of coffee. World coffee conference In 1999, the Council approved Resolution number 385 providing for a regular World Coffee Conference to bring government and private sector representatives together to discuss matters of common concern to the world coffee industry. The first World Coffee conference took place from May 2001.

45 FACTS AND FIGURES ABOUT THE COFFEE INDUSTRY: Directly and indirectly as many as 500 million people in developing countries depend on coffee but it is a major industry and source of jobs even in rich Western countries. It's everything, from the paper cups to the napkins, the people who sell it and even the televisions and cars which people employed in the coffee industry go out and buy is to some extent funded by the wealth of the coffee industry A total 3.1 billion pounds of coffee is imported annually into the U.S.,at a value of $2.7 billion, which translates into a total annual retail value for the finished product of $19 billion from the 161 million coffee drinkers over the age of 18. The U.S. coffee market accounts for about 150,000 full and part-time jobs. But this figure doesn't account for the much larger share of jobs indirectly created by the coffee industry in areas such as retail, equipment manufacturing, shipping, port and warehousing and packaging.

46 In Japan preliminary figures of a study on the economic importance of coffee in the Japanese job sector show that up to 3.1 million jobs, or 4.6% of the total workforce, are related to the coffee business. In Canada the coffee industry generates 75,000 direct jobs in the country of 30 million people. The Russian Coffee and Tea Roasters Association estimates that about 30,000 employees are engaged in the coffee business there, including processing, distribution, coffee shop business and related trade areas. A survey two years ago by European Coffee Federation found that 40,000 direct jobs are created by the coffee industry, which at the time handled a volume of 30 million 60-kilogram bags, generating trade and business worth $13 billion. But this isn't including coffee shops' employment.

47 The President of the Specialty Coffee Association of Europe estimates that the specialty coffee market in Western and Eastern Europe, including specialty coffee shops as well as "any establishment which serves a quality cup of coffee in a special environment" in total employs close to 500,000 people. Italians drink 70 million cups of espresso every day in 110,000 coffee shops, each of which on average employ three people. The above confirms that coffee is a major international business responsible for creating several million jobs both in producing and in consuming countries and that by fostering an adequate and healthy business environment the International Coffee Organization and its Members positively contribute to the World s social and economic development, to political stability and to the evolution of their own businesses.

48 Thank you for supporting us with your Increasing consumption of our high quality coffees.