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Coffee Good to the last drop http://www.youtube.com/watch?v=t-Xilsyd7Xo

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Coffee Good to the last drop http://www.youtube.com/watch?v=t-Xilsyd7Xo * * * * * * * * * * * * * * * * * * * * * * * * * * * Consumers Fair trade coffee Coffee ... – PowerPoint PPT presentation

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Title: Coffee Good to the last drop http://www.youtube.com/watch?v=t-Xilsyd7Xo


1
Coffee Good to the last drop http//www.youtube.c
om/watch?vt-Xilsyd7Xo
2
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

3
  • 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)

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5
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.

6
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).

7
  • 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.

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Good Coffee Growing Conditions
  • Grown in tropical and subtropical regions
    (between 23N and 25S)
  • 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 35C. 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

10
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

11
Coffee Facts
  • Higher altitudes beans are more expensive because
    of its labour intensive harvest and slow growing
    process

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13
COFFEE STAKEHOLDERS
14
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

15
Growers
  • farmers have to sell their beans when they are
    ready to be harvested take whatever price the
    coffee buyers offer
  • governments of many coffee-growing countries have
    very large external debts need to export in
    order to get the hard currency to repay the debts

16
Growers
  • coffee-growing countries are forced into
    competition with each other - each trying to get
    a bigger share of the market

17
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

18
Top Coffee Producing Nations
19
The top coffee producing nations are shown in
yellow
20
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

21
processors
  • 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

22
exporters
23
exporters
  • 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

24
Importers/traders
  • play a vital role in getting coffee from
    producing countries to consuming countries
  • Purchase and store coffee from many different
    origins in bonded warehouses
  • Provide marketing information to roasters
    (developments in producing countries) and
    producers (developments in consuming countries
    and the markets),

25
Importers/traders
  1. Provide financing to both producers and roasters
  2. Take on most of the price risks involved in the
    coffee trade
  3. 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)
  • Taloca (owned by Philip Morris/Kraft based in
    Switzerland)

29
roasters
  • process green coffee beans into a variety of
    end-products
  • 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

30
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
31
roasters
  • NESTLE 13
  • KRAFT 13
  • TCHIBO 4 (SELLS TO GERMANY)
  • PROCTOR GAMBLE 4 (SELLS TO US)
  • SARA LEE/DOUWE EGBERTS 10 (EUROPEAN AND
    BRAZILIAN MARKETS)

32
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

33
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 oNuts 44.1 (2.27 of market)
Millstone 43.5 (2.24 of market)
Seattles Best (subsidiary of Starbucks) 42.8 (2.21 of market)
Eight OClock 38.5 (1.98 of market)
Yuban 37.4 (1.93 of market)
34
Consumers
35
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.

36
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.

37
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.

38
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 -- gt to a
    feeding frenzy by speculators (buying up
    supplies driving price up higher)
  • .

39
Since March 2010
  • 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.

40
International Coffee Agreement (1962-1989)
  • 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

41
International Coffee Agreement (1962-1989)
  • 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 US1.34 per pound, to US0.77 per
    pound for the first five years after
  • New agreement focus on promotion of consumption,
    quality, training and growing practices

42
The top coffee producing nations are shown in
yellow
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48
Coffee Crisis - Ethiopia http//www.youtube.com/wa
tch?vdW7rShq4rqk Global 3000 Coffee crisis
Nicaragua's coffee farmers (Fair
Trade) http//www.youtube.com/watch?vNWCeTtmFJ30
featurerelated Black Gold Interview with the
directors http//www.youtube.com/watch?vUbUr9RLCe
AY http//www.blackgoldmovie.com/CoffeeCalculator
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