Increased coffee consumption forces importers/roasters to consider options

By: | at 08:00 PM | Channel(s): International Trade  

By Karen E. Thuermer, AJOTWith some 400 billion cups of coffee consumed per year, coffee is without a doubt the world’s most popular beverage. In fact, the International Coffee Organization (ICO) estimates world coffee consumption for 2008 to be 125 million bags.
“That’s an increase of two percent over 2007’s 122.7 million bags, and 3.1% over 2006’s consumption of 119 million bags,” says Alan Kaiser of the National Coffee Association of USA, Inc.
With consumption steadily on the rise, importers and roasters have to consider a host of options such as from where to source their coffee, how to transport it (containerized or break bulk), and how to stockpile it to take advantage of consumption trends.
Like any commodity, availability can vary across markets and product types, depending on weather, cultivation techniques, and growing seasons. Consequently, importers/roasters need to be flexible as to how much coffee they roast and how much they store until needed.
CONSUMPTION TRENDS
The US Department of Agriculture (USDA) estimates domestic consumption in producing countries for the 2008/09 year to be 35.7 million bags, slightly higher than USDA’s 2006.07 estimate of 34.7 million bags. The USDA’s estimate of 2005/06 producing country consumption is 33 million bags.
As of December 2008, the USDA forecasts world coffee production for 2008/09 to be 138.4 million bags, down by 2.2 million bags, from its June 2008 projection of 140.6 million bags. Total exports for fourth-quarter 2008 are 23.11 million bags, down from 23.43 million bags in the third quarter, a 1.36% decrease. Compared with previous fourth quarters, the 2008 figure is lower by .64% over 2006, higher by 17.2% over 2005, and higher by six percent over 2004.
Among key markets, Vietnam was lowered by two million bags from the June forecast to total 19.5 million bags because production was overstated. A similar revision was made to Vietnam’s 2006/07 production figure. The forecasts for Brazil and Colombia’s coffee production in 2008/09 remain unchanged to 12.2 million bags, down 200,000 bags from the USDA June forecast. Ethiopia was revised downward 1 million bags to 5 million bags due to below-average rainfall. Honduras coffee production for 2008/09 was raised to 500,000 bags, to total 4.1 million bags primarily as a result of higher fertilizer utilization.
KEY MARKETS
Although some 25 million small producers worldwide relying on coffee for a living, the primary sources for coffee have not changed in decades. Brazil, for example, remains among the top coffee producing countries, producing 17 million tons in 2008.
Steve Sloat, president of the Pacific Coast Coffee Association and the Annex Warehouse in Oakland, CA, points out, however, there’s one significant exception: Vietnam.
“In the last 20 years, Vietnam has gone from a minimal marketplace to the second largest exporter of coffee in the world—behind Brazil, and ahead of Colombia,” Sloat says.
Thanks to a succession of government implemented land reform measures, Vietnam has become a big producer of robusta coffee, producing over 15 million tons of green coffee in 2008. Vietnamese robusta coffees are used mainly in soluble or instant coffees due to their high caffeine content, although robusta coffee tends to be bitter and have less flavor than Arabica coffee.
Indonesia ranks as the largest producer of washed Arabica coffee and the fourth biggest green bean producer in the world.
Arabica coffee is considered more suitable for drinking than robusta coffee, and, consequently, encompasses two-thirds of all coffee cultivated. However, robusta coffee is less susceptible to disease and can be cultivated in environments where Arabica will not thrive.
Columbia, Mexico, and Ethiopia also remain significant. Government changes within Ethiopia’s Commodity Exchange, however, have made it nearly impossible for buyers and importers to know from which farms the coffee is being produced. Many in the industry believe this prohi

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American Journal of Transportation