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Coffee and Tea Reports
from the Front Lines

NCA Reports on Food Import Bills
New York, NY - The National Coffee Association has reported that it has been meeting with the sponsors of Senate bills and House bills regarding will potentially affect the importation of green coffee into the U.S. In a bill entitled S. 1123, the “Imported Food Safety Improvement Act,” submitted in the U.S. Senate, coffee was exempted from the provisions to deny the entry of food from countries that do not have food safety standards equal to those of the U.S. because coffee has not been associated historically with repeated events of foodborne disease and does not pose a serious risk to public health.

In the bill H.R. 30, the “Imported Food Safety Act of 1999,” which would make several changes to the Federal Food, Drug and Cosmetic Act, the FDA would be enabled to prevent the importation of food from countries which do not allow FDA to conduct inspections or “provide for the same level of protection” as provided in the U.S.

In another bill, S. 1126, the “Food Safety Improvement Act of 1999,” U.S. companies would be prohibited from importing coffee from countries that do not have food safety laws equivalent to those of the U.S. Although it is doubtful any of these bills will be passed by Congress in 1999, because of the interest in strengthening food safety regulations, it is likely that legislation will be pursued in future sessions.

World Tea Production at All-Time High
LONDON, UK - Global tea production increased nearly 9% last year to reach its highest level ever. The International Tea Committee (ITC), which gathers data on the main tea exporting and importing countries, put 1998 world output at 2.963 million metric tons, surpassing the previous record 2.724 million tons in 1997. Key producers all brought in record-setting crops last year: Indian production was 870,405 tons; Sri Lanka’s was 280,674 tons; and Kenya’s was 294,165 tons.

Other 1998 production figures included the following: China, 665,034 metric tons; Indonesia, 166,121 tons; Turkey, 177,838 tons; Japan, 82,609 tons; Iran, 60,000 tons; Bangladesh, 55,700 tons; Argentina, 50,000 tons; Vietnam, 42,000 tons; Malawi, 40,360 tons; Uganda, 26,422 tons; Tanzania, 24,333 tons; Taiwan, 22,641 tons; Zimbabwe, 17,755 tons; Rwanda, 14,850 tons; and South Africa, 10,845 tons.

St. Petersburg/Leningrad Area Targeted for Business
BREMEN, GERMANY - Despite Russia’s political uncertainty, the region’s economy continues to offer business outlets. In the coffee trade, Kraft Jacobs Suchard (which have been doing business in Russia for five years) is planning to build a factory to package coffee in the Leningrad region which surrounds but does not include St. Petersburg. Dvas said the plant would initially package 8,000 tons of coffee a year. The factory, which would occupy a 10-hectare site next to the Philip Morris Izhora factory in the Lomonosov district, will be launched in the year 2000 or in the year 2001. Kraft Jacobs Suchards Moscow office said that the initial investment would be US$15-20 million. The company plans on building a factory, which would be easy to expand. Kraft Jacobs Suchard currently sells its products via 17 distributors in Russia. The biggest markets are Moscow and St. Petersburg, where the company sells about 2,000 tons of coffee a year. The distribution network will be doubled in size for the company to target other cities.

The Russian coffee market shrank by 40-45% after the financial crash of August last year, industry analysts said. Before that, the market was about 45,000 tons, nearly 38,000 tons of which was instant coffee.

Plans for Pakistan Tea Auction Center
KARACHI, PAKISTAN - Pakistan is seeking the support of the Bangladesh Tea Board to establish a tea auction center in its Karachi Export Processing Zone, reported London’s The Financial Times recently. Pakistan feels that as one of the world’s largest market for tea, its auction center would attract all the producing countries. The market for tea in Pakistan is around 150 m.kg., big enough to sustain an auction center.

With such an inventory, it is very likely that Afghanistan, whose annual tea imports range from 35m kg to 48m kg, and the countries in the Middle East would bid there. Iran is a big importer at around 30m kg of tea while Egypt’s requirement is placed at about 80m kg. The rest of the Middle East buys up to 110 m.kg.

According to Indian trade officials, Pakistan thinks a local auction center, which would encourage competition, would lead to a fall in the cost of its tea imports. Smuggling of tea, which deprives the Pakistani exchequer of 45% of potential customs duty and local taxes, would also be arrested to a large extent.

India has never been able to gain a foothold in Pakistan. Even though Kenya had a thriving auction center, a good volume of Kenyan tea would come under the hammer in Pakistan, revealed an Indian industry official (Kenya has a predominant share of the Pakistani market, but is now facing stiff competition from Sri Lanka and Bangladesh).

If Pakistan succeeds, it will be the only non-tea producing country to hold auctions in the commodity. Until last year, London had been, for more than a century, the world’s biggest re-export center for tea.



Tea & Coffee - January 2000
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